BAe licence granted but issue not closed

British Minister for International Development Clare Short has called for a review of her government's export licence system in the wake of her failure to prevent a licence being issued to a British aerospace firm, BAe Systems, allowing the export to Tanzania of a controversial US $40 million air traffic control system, the UK-based Guardian newspaper reported on Monday. Short had argued against her government granting the licence for a system which a World Bank study and humanitarian organisations have said is a waste of money for a country with a per capita income of less than $300 a year. She was overruled in a cabinet committee row in which British Prime Minister Tony Blair is understood to have backed the export plan. Critics, including the international aid agency Oxfam, have said the decision undermines Blair's pledge to put Africa's development on the international agenda, and his government's work to write off the debts of developing countries. Tanzanian President Benjamin Mkapa has said his country needs the new system to replace obsolete technology, but research undertaken for the World Bank suggests that the proposed system is unsuitable and over-expensive. The Bank has estimated that a suitable system should cost about $10 million. Minister for Foreign Affairs and International Cooperation Jakaya Kikwete said on 20 December that the BAe system would enable Tanzania to charge duty on aircraft flying within its airspace and would help generate increased revenue from tourism, Radio Tanzania reported. A Tanzanian air traffic control system would raise $3 million to $5 million for the East African country annually, and boost its struggling economy, according to proponents. The Tanzania Civil Aviation Authority has also said the country needs this particular type of system to boost the safety of its airports, according to Reuters news agency. British supporters of the deal say it is vital to securing 250 British jobs on the Isle of Wight, site of a BAe Systems factory. Speaking on Sky News about the affair after last week's British government decision to give the go-ahead, Short said she found it extraordinary that Tanzania had financed the contract and BAe had gone ahead with building the radar system before the export licence had been approved. "It was an absolute condition of Tanzania's completing its debt relief process with the IMF and World Bank that they gave a written undertaking that they would not go on with this contract until it had been reviewed, and the World Bank would help them find... the best value for money," she said. Tanzania won some $3 billion in debt relief from international donors in November. Mkapa pledged to use the debt relief it had won under the Heavily Indebted Poor Countries (HIPC) initiative to "strengthen support for education, health, water, roads and other priority sectors". Despite rules forbidding indebted countries from taking out commercial loans, the IMF has allowed Tanzania to finance the deal with a $40 million loan from the UK bank, Barclays, according to the Guardian. The loan is to be repaid at rates higher than those normally offered to developing countries by the IMF and World Bank, but below those normally charged by banks such as Barclays, it stated. "Anybody who has ever been to Tanzania knows that its clinics lack drugs and its schools lack books, desks, walls and even roofs," a commentary in the Guardian stated on Monday. "The idea that it should spend scarce resources on an air traffic control system when children are going hungry and dying of easily preventable diseases beggars belief." The UK licence has now been issued, but the deal will not go ahead until the World Bank review process has been completed, according to Clare Short. "We are helping Tanzania a lot, and will continue to do so, and I will continue to help them to get the best way out of this pickle," she said on Sky News. "The extraordinary thing about this is they were all building it and paying for it before the licence was issued," she reiterated. Despite losing the cabinet battle on this export licence to Tanzania, Short said she was pleased the government had agreed to make future export licences subject to explicit sustainable development criteria. Despite the granting of the licence, the battle was "not over yet", she added. In a separate interview, Short said the UK government had a moral duty to put concerns for the world's poor above commercial interests. She said she would keep fighting for an ethical trade policy. Meanwhile, the Financial Times reported on 22 December that the World Bank was to step up pressure on Tanzania to purchase a different air traffic control system from the $40m BAe Systems radar facility, in order to deliver a system geared towards civilian needs rather than military uses. Documents obtained by the newspaper suggested that the Tanzanian government was willing to take advice from the International Civil Aviation Organisation about possible changes to the BAe contract, as proposed by the Bank, it reported. The ICAO said in October that the BAe deal that "the system, as contracted, is primarily a military system and can provide limited support to civil air traffic control purposes". "In giving the green light, Mr Blair has shown that when it comes to the crunch, he will put corporate profits before fighting poverty," the Financial Times on 21 December quoted Oxfam as saying. "Barclays Bank should not be lending this money to a poor and debt-ridden country. It threatens to push Tanzania back into the mire of debt," the Oxfam policy director, Justin Forsyth, said last week. Oxfam has noted that $40 million would pay for basic health care for 3.5 million people.