Irangate replay across the Atlantic

A controversy is brewing in Britain over the linking of development aid to an arms deal

Published: Tuesday 15 March 1994

-- A MAJOR, Irangate-style controversy is building up over a L1 billion framework accord on military sales that is ostensibly linked to British aid in 1988 for the Pergau dam project in Malaysia. The Organisation for Economic Cooperation and Development (OECD) has taken a dim view of Britain's aid policy and is expected to criticise it in an upcoming report.

The question is whether the British government violated its guidelines -- and that of the OECD -- by linking the L234 million aid to military sales. Under Britain's Overseas Aid Acts of 1966 and 1980, the government cannot do so. Tim Lankester, permanent secretary of Britain's Overseas Development Administration (ODA), says he had opposed the decision as "a waste of taxpayers'" money.

As things stand, the statement of George Younger, former defence secretary, that "Great Britain plc has come out of all this very well," seems more than a little misplaced. After five years of government denials, foreign office minister Alastair Goodlad was forced to concede in Parliament that a formula was worked out to link the aid to the arms deal. However, he added that Younger had written to the Malaysian finance minister in 1988 that aid and defence sales could not be linked.

Other aspects of the 600 mw Pergau dam are also open to question. The ODA had expressed doubts about the dam's impact on the environment, but these had been overruled by the British cabinet. Now, the ODA's worst fears seem to have been confirmed. A report in the British daily, The Guardian, describes how the Pergau dam project has irrevocably altered the landscape of Malaysia's northeastern state of Kelantan, through which the Pergau river flows. The project has led to large-scale deforestation and destroyed the habitat of a range of wild animals, including the rare Sumatran rhinoceros.

It looks as if the issue will loom large over both Britain and Malaysia in the months to come.

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