How Thatcher sparked off aid-for-arms deals

• Published in: The Guardian (London)
• Main Authors: Durham, Michael, Nelson, Dean
• Format: Newspaper Article
• Language: English
• Published: Manchester (UK) Guardian News & Media Limited 20.02.1994
• ISSN: 0261-3077

According to the sources, it was acknowledged that giving aid as a quid pro quo for buying British arms would be in breach of aid policy. Instead, the three issues were considered 'parallel elements' in a policy of giving greater support to Malaysia. 'We were pursuing these elements while trying to build up British business in Malaysia. We sell them arms, we give them aid. There is nothing exceptional about Malaysia, except the size of the {Pergau} project,' the source said. The pounds 489m Rural Water Supply project, a water conservation and purification scheme, had been the subject of feasibility studies since 1984. In March 1986 the Malaysians awarded the contract to Biwater, a firm with links to the Conservative Party. According to Labour Party figures, Biwater gave pounds 2,900 to the Conservative Party in 1986, and pounds 15,500 in 1987. Biwater comes fourth in the league table of firms awarded Aid and Trade Provision (ATP) money by the Overseas Development Administration (ODA) since the programme began in 1978. Malaysia, with an average per capita income of $2,500, receives more British aid than Ethiopia, where average income is only $120. Many of the countries receiving most aid, such as India, Indonesia, Nigeria, Malaysia and Thailand, are also heavy buyers of British arms. Comparisons show that arms deals sometimes take place at about the same time as large increases in British aid, although governments deny a connection.