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Mr. Richard Page (Hertfordshire, South-West) : The hon. Gentleman makes much of the fact that the machine tools were sent to make weaponry. Will he take it from someone who has operated most types of machine tool, that I know of no tool that cannot be converted to a
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military purpose? Can he tell me whether, in 1986 or 1987, he or the Labour party asked for all sales of machine tools to Iraq and Iran to be banned?Mr. Cook : Surely the hon. Gentleman's logic should make him question whether the machine tools should have been exported if they were all capable of being converted. The hon. Gentleman does not seem to have been listening. I have been arguing that there was no need for Saddam Hussein to convert the tools, as they were pre-programmed and specified to produce fuses and shell cases. Before they were sent, the Matrix Churchill factory produced fuses and shells with them to find out whether they worked.
Several Hon. Members rose --
Mr. Cook : I shall not give way.
Several Hon. Members rose --
Madam Speaker : Order. I understand that the hon. Gentleman does not wish to give way. Is that correct?
The 1985 guidelines did not merely ban lethal equipment but also any defence equipment which would significantly enhance military capability. Between 1988 and 1990, we did just that, and Ministers knew it, because in 1989 they received a report from the Ministry of Defence entitled : "British Assistance to the Emerging Iraqi Arms Industry", which listed in its appendix five pages of companies providing defence equipment to Iraq, and which came to the conclusion that assistance from British companies had helped to build "a very significant enhancement to the ability of Iraq to manufacture its own arms, thus to resume the war with Iran." The Ministry of Defence concluded that Ministers had broken the guideline not to enhance military capability.
I notice that, in the amendment, the Government accuse us of "sensationalised" disclosures. If we have been sensational, it is only because we have published documents that show what Ministers did in meetings. I would not disagree with their choice of words. The picture that emerges from those documents is of Ministers arming one of the world's most brutal regimes and breaking their guidelines to do it. I agree with those on the Government Front Bench that that is sensational, and the Government knew it. We know that because, when the document was first produced in 1989, it was unclassified. In December 1990, it was marked "Restricted" in handwriting. Why? Would someone on the Government Front Bench like to tell us? It was not as if the document would have been of any value to our enemy in the Gulf war. Saddam knew what we had provided--he knew rather more than the British Parliament. The document was reclassified because the Government became embarrassed at the major role which Britain had played in rebuilding a war machine that British troops had to fight.
There is another reason why Ministers might well be embarrassed. They not only helped to arm Saddam, but it looks as if Britain will have to pick up most of the bill. The Government agreed a new credit facility to Iraq in 1987, and the then Chief Secretary to the Treasury approved it--he is now the Prime Minister. Before he denies it, I accept that no one told him what he was approving. I am sure that no one showed him the letter of November 1987 from the Export Credits Guarantee Department, which said :
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"A notional 20 per cent. has been set aside for military business"--no nonsense there about dual use or general purpose machinery, only a clear credit facility for military business.
Today, a written answer from the DTI confirms that £830 million is outstanding, on which the ECGD might be invited to honour guarantees, in respect of exports to Iraq. If we assume that a notional 20 per cent. of that sum was for military business, the British taxpayer stands to foot £170 million to pay for the equipment that we provided for Saddam's war machine. We did not just arm his forces--we paid for them into the bargain.
I hope that no one today will claim that it was right to approve those exports on commercial grounds, because, judged as a commercial decision, it was a disaster for which the British taxpayer is still paying.
Mr. Phillip Openheim (Amber Valley) : Will the hon. Gentleman give way?
Mr. Cook : I cannot resist the hon. Gentleman, and I shall do so in a moment.
That £830 million is not that much less than the annual budget of the President of the Board of Trade when it is stripped of the swollen redundancy payments for miners. How much better would British industry benefit if that money had gone into supporting investment and training in British industry rather than in arms exports to a foreign power.
Mr. Oppenheim : I thank the hon. Gentleman for his courtesy in giving way. Will he answer the question posed by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page)? At any point in the middle or late 1980s, did Her Majesty's Opposition formally urge the Government to cease the export of machine tools to Iraq? Yes or no?
Mr. Cook : The answer is that, for once, we were naive enough to trust what we had been told by the hon. Gentleman's colleagues on the Front Bench [Interruption.] There is no point in the hon. Gentleman intervening if he does not listen to the answer. We were told by Ministers that they would not allow the export of lethal equipment or any defence equipment that enhanced the military capability of the Iraqis or the Iranians. We now know from the documents, however, that Ministers knew perfectly well that it was not general purpose machine tools that were being exported, but defence equipment that would produce some of the most sophisticated weapons. That was a clear breach of what the House had been assured.
Mr. Winston Churchill (Davyhulme) : Will the hon. Gentleman give way?
Let us consider the defence that the Government have put forward. The commercial defence--the fact that we needed the money--is at least better than the most contemptible defence of all, which is to dump all the blame on Alan Clark. The idea is that the rest of them did not know what he was up to : he sneaked in by the back door at night and took all the decisions after the rest of them had gone home. That will not wash, because Alan Clark left the DTI in July 1989, and the most controversial decisions were taken after that date.
That defence will not wash because the Government are trying to blame the one man who told the truth. That is the
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real crime of Alan Clark, according to the Government. It is not that he participated in secret meetings to export arms to Saddam, or that he misled Parliament, but that he let the cat out of the bag. If the President of the Board of Trade wants to point the finger at any colleague, let him point it at those who have yet to own up. Let him point it at Lord Trefgarne, who, in October 1989, said that the case for the guidelines had"weakened to the point of extinction"
Let the finger point at Nicholas Ridley, who, in July 1990, wrote to the Prime Minister pressing for another "thorough review of policy". Let the finger point at the current Foreign Secretary who, on 19 July 1990, chaired a meeting of Ministers to review that policy, which resulted in a decision to release material for Saddam's Asa rocket project in the two weeks in which we now know he was massing his troops for the invasion of Kuwait.
I noticed that, just before the weekend, journalists were briefed that Ministers had really wanted to tell Parliament about the outcome of the meeting on 19 July--it was just that the summer recess came too soon to tell us. I have my doubts about how sorry they are that they did not tell us. First, as Ministers are well aware, anyone who had made such a statement in the last week of July 1990 would have looked a proper ass the next week when Saddam walked into Kuwait. My second reason for doubt is even more compelling. If Ministers are really sorry that they did not tell us before the summer recess about what they had agreed at that meeting, they could always have told us after the summer recess. After the invasion of Kuwait, they were given many chances to do so by my hon. Friends, who wanted to know the truth about those exports. Not once in the answers that we were given was there even a glimpse that the guidelines had been bent.
On 3 December 1990, the then Minister for Trade, the right hon. Member for Hove (Mr. Sainsbury)--he is still a member of the President of the Board of Trade's team at the DTI--said in the House : "The guidelines were set out on 29 October 1985, and since then they have been scrupulously and carefully followed"--[ Official Report, 3 December 1990 ; Vol. 182, c. 29.]
In August 1991 the right hon. Member for St. Albans (Mr. Lilley), who is still a Cabinet colleague of the President of the Board of Trade, told the Select Committee on Trade and Industry :
"Our examination of the records shows that the policy announced in Parliament in 1985 was adhered to both in the spirit and in the letter."
Not a word there about the fact that, in December 1988, the letter of the guidelines was changed without any announcement in Parliament and that, by November 1989, the spirit of the guidelines had been extinguished.
It is not surprising that we were not told. It is a repeated theme of the minutes and memoranda disclosed to the court that Parliament should not be told and that the public must not be allowed to know. As one official expressed it :
"There seems to be considerable merit in keeping as quiet as possible about this politically sensitive issue."
When Alan Clark proposed that the guidelines be relaxed, he added in his letter :
"I would not propose an announcement of any decision."
When one reads the documents, one becomes persuaded that the problem that Ministers perceived was
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not that Saddam might use the machines to make weapons ; what they were really worried about was that the public might find out what they had decided.Mr. Phil Gallie (Ayr) : Does the hon. Gentleman at least acknowledge that Ministers were under pressure at that time from Opposition Members who were keen to maintain their constituents' jobs and constituency businesses? Is not he aware of the pressure brought to bear on Ministers by Opposition Members?
Mr. Cook : No, I am not aware of any such pressure. If the hon. Gentleman has knowledge of any hon. Member who exerted such pressure, he owes it to the House to disclose who he is talking about. In case he gets hold of my reply and misrepresents it, as the hon. Member for Harlow (Mr. Hayes) has sought to do with other information--I note that the hon. Gentleman has already left the Chamber ; he is probably out researching this point even as I speak--I should say that I met representatives from the Machine Tool Technologies Association a month ago. I have written to that association to learn what minutes it had written up of our meeting, just so that we are both clear about it.
Those representatives presented me with their demands for the machine tools industry. Those demands did not include any demand that we should sanction exports to dicey regimes that might use them against British troops. However, those demands contained a full list of the added help that is needed to provide investment in small industry and the stimulus for business to buy machine tools, as well as the help it needs for training. It is that pressure that my hon. Friends have constantly applied to the Government, and to which they never received any response.
Mr. Churchill : Will the hon. Gentleman give way?
I have recited the replies that we received in the House. Earlier this year, the Prime Minister released the document entitled "Questions of Procedure for Ministers", in which he said that Ministers had a
"duty to give Parliament and the public as full information as possible about the policies, decisions and actions of the Government."
If hon. Members play back the answers that we have received on exports to Iraq and asked themselves whether those questions provided
"as full information as possible about the policies of the Government"
on arms exports to Iraq, the answer must clearly be a resounding no. I doubt if even Conservative Members are convinced about that. No one else in the country is--at any rate, according to the latest opinion poll, 3 per cent. believe that Ministers have told the whole truth, while 83 per cent. do not.
There is, rather remarkably, one person among that 3 per cent.--I presume that he must be counted among that group--who was possibly the most curious victim of all the statements to Parliament. It turns out that the Prime Minister himself was misled by those ministerial statements. Until two weeks ago, he really believed that his Ministers had always observed the guidelines. He was shocked when one of his former Ministers said otherwise in court two weeks ago.
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The Prime Minister's defence is well known. It is simple, if inelegant : nobody told him. When he was Foreign Secretary, nobody told him that his No. 2 was in dispute with the Department of Trade and Industry over Matrix Churchill exports. Nobody told him that the Foreign Office was in dispute with the Northern Ireland Office over the Iraqi purchase of the Learfan factory. Nobody told him even when he was briefed to meet the Iraqi Foreign Secretary, and nobody told him when he was Chancellor and his private office was warned of Customs' concern over Matrix Churchill. Nobody told him what happened at the meeting of 19 July, to which he was invited but could not make it--no doubt because nobody told him where it was being held. It would take another John Bunyan to do justice to that Pilgrim's Progress around the key offices of state, preserving such invincible innocence. I am driven to wonder whether he ever asked why nobody told him. Since Alan Clark's appearance in court, has he had in any of his officials and asked them why they did not tell him what was going on? They knew--they told Lord Howe when he was Foreign Secretary about the controversy, and they briefed the present Foreign Secretary about the controversy.The Prime Minister had the same private secretary as those other two Foreign Secretaries--Mr. Stephen Wall. Mr. Wall knew what was going on, because he briefed those two Foreign Secretaries. Did it never occur to the Prime Minister to ask Mr. Wall why he was allowed to continue to state that the guidelines had been observed, when half of Whitehall knew that they were being broken?
It will not be difficult for the Prime Minister to question Mr. Wall, because, after he moved to 10 Downing street, he appointed Mr. Wall to advise him on foreign policy affairs. I presume that it was Mr. Wall who advised him before he said in the House, two weeks ago, that, from 1985 until the Iraqi invasion of Kuwait, the Government operated under guidelines set out by the Foreign Secretary in 1985. There is one way to convince me that nobody told the Prime Minister--for him to haul Mr. Wall over the coals for having done such a rotten job of briefing him. If he will not do so, the implication will clearly be that, either at the Foreign Office or at Downing street, Mr. Wall shared all he knew with his boss.
The President of the Board of Trade has a better defence that the Prime Minister. He has an alibi, because, during the key period of 1988-90, he was nowhere near the scene of the crime. He was busy writing books calling for a strategy for industry, a partnership with business and a programme for the steel, aerospace and car industries. Those books provide such embarrassing proof that his private views diverge from his public policy that I daily expect him to slap a public interest immunity certificate on the Library to prevent if from disclosing the fact that it has a copy.
That brings me to the third charge against the Government. First, they armed Saddam ; secondly, when he used those arms against a British ally, they covered up the fact that they had provided the arms ; and thirdly, as the cover-up unravelled, rather than own up, they were willing to see three executives of Matrix Churchill go to prison.
The President of the Board of Trade is one of four members of the Government who signed certificates seeking to prevent disclosure of documents vital to the
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defence of the three executives. I have read all three certificates, and admit that the President's certificate was worded carefully and with great attention. I suspect that his was the only one drafted personally rather than by an official. It has the mark of being signed by a man who was troubled by what he had been asked to do. I cannot say the same about the certificate signed by the Home Secretary. It does not have the same stamp of an agonised conscience. There is one notable difference between the Home Secretary's certificate and those signed by the other three. The other three Ministers all signed that they had read the documents in front of them, whereas the Home Secretary's certificate said that the documents"have been shown to me".
Such a formula will come in handy the next time he is asked whether he has read the Maastricht treaty.
Let us be clear about the purpose of those certificates. The parent certificate, as acknowledged by the President in his certificate, is the one signed by the Minister of State, Foreign Office. In its opening paragraph, that certificate says :
"The purpose of this certificate is to explain to the court why, for reasons of public interest, such documents should not be so disclosed."
Over the page, the certificate says :
"The production of such documents would be injurious to the public interest"
and
"it is necessary for the proper functioning of the public service that the documents should be withheld from production".
The intention behind that certificate is plain : it was to persuade the judge not to disclose the documents. Let there be no pretence about the purpose of the certificates : they were submitted with the purpose and in the hope that those documents would not become public property.
Back in 1956, under another Conservative Government, the then Lord Chancellor, Lord Kilmuir, said that the Government would never claim immunity in a criminal case. The reason for that is easily understood. It is wrong in principle that, when liberty is at risk, evidence that could be vital to the defence of a defandant should be withheld. It was exactly that principle that Ministers endangered when they sought to prevent the defence from getting those documents.
Let us suppose that Judge Smedley had accepted the arguments in the certificates and had decided that disclosure was contrary to public interest. Let us suppose that he had not released those documents to the defence and that the three business men had been convicted. Would the Government be confident that they had done the right thing? Could they persuade themselves that they had behaved honourably when those three executives went to prison?
If they do not answer those questions to the House, they must do so to their own consciences, because the public interest also requires that there should be a fair administration of justice. It is in the public interest that justice be done, and justice would not have been done had those documents not been released.
I fully understand why the Attorney-General was so keen to advise Ministers to keep the documents locked away, and why the Government would not wish to release them for another 30 years. They tell a tale of deceit, of how Ministers agreed in private to arm Saddam, even though they knew how brutal he was. They tell of how they conspired to conceal from Parliament what they were doing ; how they desperately tried to cover up what they
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had done when they found Britain at war with Iraq ; and how they let three business men face prison rather than release the documents that would show what Ministers had done.Those documents have convinced the nation that it was not the executives of Matrix Churchill who should have been in the dock but the Ministers who approved what they were doing and who deserted them when they were caught. We have given Parliament an opportunity to return a verdict on the conduct of those Ministers. Tonight we shall vote to record our contempt for the Ministers who misled the House, deceived the public and tried to muzzle the courts.
5.18 pm
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine) : I beg to move, to leaveout from House' to the end of the Question, and to add instead thereof :
notes that up to August 1990 Her Majesty's Government granted export licences for the supply of goods to Iraq in accordance with guidelines which had as their overriding consideration not to supply any lethal equipment and which also restricted the supply of any defence equipment ; recognises that it will be for Lord Justice Scott, under the terms of his inquiry, to consider whether these guidelines were followed ; welcomes the Government's decision to give the inquiry wide terms of reference which will enable Lord Justice Scott to examine all of the facts, including the decisions taken by those signing public interest immunity certificates in the Matrix Churchill case ; and deplores the sensationalised attempts of Her Majesty's Opposition to anticipate the inquiry's findings.'.
It may be for the convenience of the House if I set out at once the order in which I intend to cover the principal issues raised by the debate. First, I intend to explain the procedures within which British export policy was conducted in the context of the changing pattern of events from 1984 onwards. Secondly, I shall refer to how the rules were applied. Thirdly, I shall discuss the trial of the three directors of Matrix Churchill and the role of Ministers in issuing public immunity certificates. Fourthly, I shall cover the establishment of the Scott inquiry, its terms of reference and related matters.
In December 1984, the Government drew up a set of guidelines to govern the export of defence equipment to Iran and Iraq. Those guidelines were formalised in 1985 when Lord Howe, the then Foreign Secretary, announced them to the House of Commons on 29 October 1985.
The then Foreign Secretary said that there were four constraints. He said :
"(i
(We should maintain our consistent refusal to supply any lethal equipment to either side ;)
(ii
(Subject to that overriding consideration, we should attempt to fulfil existing contracts and obligations ;)
(iii
(We should not, in future, approve orders for any defence equipment which, in our view, would significantly enhance the capability of either side to prolong or exacerbate the conflict ;)
(iv
(In line with this policy, we should continue to scrutinise rigorously all applications for export licences for the supply of defence equipment to Iran and Iraq."--[ Official Report, 29 October 1985 ; Vol. 84, c. 450. ]) Scrutiny was to be carried out by the interdepartmental committee on exports to Iran and Iraq, which comprises officials from the Foreign and Commonwealth Office, the Ministry of Defence, the Department of Trade and Industry and other Departments as necessary. Not only would individual licence applications need to be
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scrutinised, but it was obvious that, in many cases, a judgment would have to be exercised as to whether or not certain potential exports came within the rules. I draw attention only to the words "significantly enhance" or "prolong or exacerbate", so that the House may appreciate the detail of the judgment that was bound to be necessary.I make two observations. First, by no means all our major competitors were so constrained-- [Interruption.] I should have thought that Labour Members would welcome the fact that we gave a lead in the matter. Secondly, it is obvious that any interpretation of those rules required careful consideration of individual export licence applications. The embargo did not prohibit the export of all defence-related equipment.
The substance of that policy remained in place until it was overtaken by the United Nations embargo on all trade with Iraq that came into effect after the invasion of Kuwait in August 1990. A change in the wording of the guidelines was obviously necessary to reflect the fact that there had been a ceasefire in the Iran-Iraq war. Questions have been raised about the nature of the change in the guidelines and why it was not announced to the House. Those matters will need to be explored by Lord Justice Scott on the basis not only of looking at the numerous documents, but of talking to the Ministers and officials involved in making those decisions at the time. I should like to stress one point. It has been suggested that a change in the wording of the guidelines meant that dual-use goods and industrial equipment, such as machine tools, would no longer be caught because they did not provide direct assistance in the conduct of operations. In fact, during that time, scrutiny continued of dual-use goods, including machine tools.
In June 1990, my predecessor, Lord Ridley, wrote to the then Prime Minister suggesting a consideration at Cabinet Minister level of changes in the guidelines. In July 1990, Ministers discussed the desirability of a continuation of the rules under the chairmanship of the Foreign Secretary against a background where circumstances appeared to have changed beyond those that gave rise to the rules in the first place--
Mr. D. N. Campbell-Savours (Workington) rose--
Mr. Heseltine : I shall not give way as I must explain the context of what I am saying. I shall certainly give way later, but it is important that the sequence of this part of my speech should be heard in one piece.
The circumstances had changed beyond those that gave rise to the rules in the first place. Equipment from all over the world was being sold to Iraq. British companies were at risk of losing orders. I shall remind the House of the background circumstances. In 1990, Iraq was purchasing industrial and dual-use equipment in the world market from a wide range of countries, including the United States, west Germany, Japan, France and Switzerland. The group of Ministers decided to recommend to their colleagues in government that a collective decision be taken to revise policy, but not to permit the export of lethal equipment. That same group of Ministers also concluded that any change should be announced to Parliament. The hon. Member for Livingston (Mr. Cook) made a number of grave allegations today, one of which was that
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when the facts were fully revealed it would become clear that Ministers had no intention of announcing the change to Parliament. I merely wish to tell the hon. Gentleman that he is absolutely wrong. [ Hon. Members-- : "Prove it."] I am only making the point that I have read the papers that Lord Justice Scott will read, and I am telling the hon. Member for Livingston that what he has said today is utterly without foundation.Mr. Bruce Grocott (The Wrekin) : Is the strategy of the Secretary of State today to be as follows : when documents of which he is aware appear to support his argument, he will quote them to the House, but when documents of which he is aware do not support his argument, he will say that we must wait for the inquiry?
Mr. Heseltine : That is not my strategy. The hon. Member for Livingston gave an impression of what is contained in certain documents-- which he cannot have read--that is diametrically wrong. I happen to have read the documents, and can tell him that I am diametrically right.
Sir David Steel (Tweeddale, Ettrick and Lauderdale) : On that point, will the Secretary of State explain why the then Minister of State, Foreign and Commonwealth Office, the right hon. Member for Bristol, West (Mr. Waldegrave), said at a meeting with Lord Trefgarne and Alan Clark that he was prepared to anounce publicly then--as he was in January--the form of words adopted and agreed in January?
Mr. Heseltine : As the right hon. Gentleman will know, that was not the meeting to which the hon. Member for Livingston was referring. The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) is referring to an earlier meeting, but the meeting that is of consequence-- and on which the House is rightly focusing--is the meeting at Cabinet level chaired by the then Foreign Secretary. It was at that meeting that it was decided that it was appropriate to change the guidelines and announce them to the House of Commons. That did not happen, because by the time that it would have been possible to do so, the Iraqi invasion of Kuwait had taken place.
Mr. Robin Cook : The President is absolutely correct. A fortnight after the meeting that apparently relaxed the guidelines, Saddam Hussein invaded Kuwait. However, the President has not explained why, if the meeting at Cabinet level decided that the House of Commons should be told, when Ministers were repeatedly asked questions during the next two years, not a single reference was made either to the meeting in 1990--which the President now regards as critical--or to the changes in the guidelines in 1988 or the many decisions in between that represented a weakening of those guidelines to the point of extinction. If it was decided in July 1990 to tell Parliament, why was there a failure to do so in the subsequent two years?
Mr. Heseltine : Because they never changed the guidelines. That is the point that the hon. Gentleman cannot understand. The meeting decided that it would recommend a change in the guidelines and that if a decision to do so was taken, that would be announced to Parliament. However, the guidelines were not changed, so it was not appropriate to make an announcement to Parliament.
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Mr. Robin Cook rose --
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