The Pergau Dam Affair: Civil Aid and Arms Exports
The Government do not link arms sales and aid. Nor do we use the aid programme to finance arms sales.
(FCO Minister, Lennox-Boyd, House of Commons Debate, 4 March 1994)
Progress on the defence exports package negotiated in 1988 was certainly a factor in the final deliberations, in early 1991, on whether or not to commit funds to the Pergau project.
( FAC 1994: para 87)
During the 1980s ministers were active in promoting the British arms industry world-wide. We saw in the study of arms to Iraq (chapter 8) that the Export Credit Guarantee Department (ECGD) was one agency used during the 1980s by the British Government to lubricate arms sales to Iraq in contradiction of the Government's own guidelines ( Scott 1996 D2: D3). Asia and the Far East were increasingly important markets for British defence sales and exports of military material rose from £73 million in 1985 to £306 million in 1989. Total UK sales to the region amounted to almost £1.5 billion between 1987 and 1993 ( FAC 1994(2): 118). Malaysia alone bought some £50 million worth of arms from the UK between 1988 and 1992(ibid: 115-18).
It is therefore not surprising that Defence Secretary George Younger visited Kuala Lumpur in March 1988 and signed a protocol on arms sales with the Malaysian Government. It was to emerge, however, that the protocol had linked a proposed Malaysian order for Tornado fighter aircraft to the provision of civil aid. This linkage came to involve the Foreign and Commonwealth Office's (FCO) Overseas Development Administration (ODA) in funding the Pergau Hydro-electric Dam under