Export credit fights Brussels move

CONTROVERSIAL plans to centralise Europe's export credit agencies is to be resisted by Britain. The agencies - under the control of national governments - underwrite lucrative sales of defence, aerospace and civil engineering projects worth more than £100bn that cannot, for political or other reasons, attract ordinary commercial guarantees.

Plans to bring national agencies under the umbrella of a single European body are being backed by senior figures in Germany, France and the Netherlands and by the EC.

Britain signed up to the principle of harmonisation of national agencies when it approved the European export credit directive in 1998. But now the UK is trying to halt any move to put the idea into practice.

A spokesman for Britain's Export Credit Guarantee Department (ECGD) said: 'The Government believes a united export credit agency for the EU would be too costly in various ways and would not be to the benefit of taxpayers and exporters.'

The ECGD has been criticised for underwriting arms sales to Indonesia and Saudi Arabia, British participation in the Turkish Ilisu Dam project, and construction and oil projects in Iraq before the 1991 Gulf War. In the late Nineties, Britain exported Hawk jets and Alvis armoured cars to the former Suharto dictatorship in Indonesia.

Some of the business underwritten by other EU governments is equally controversial. France has provided official assistance for weapons sales to both Iran and Iraq, while Germany's export-credit agency backed the sale of warships to Indonesia. And both France and Germany have underwritten involvement in the Three Gorges dam in China, condemned by environmentalists as a social and environmental disaster.