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Debate ECGD and ethics

Trade and industry secretary Stephen Byers wants the Export Credits Guarantee Department to consider ethical and moral issues when underwriting risk on overseas construction projects. But this has led to fears that UK contractors and consultants will lose work to less ethical foreign competitors.

This week we ask: Will British companies be hurt by the ECGD's demands?

Yes

In the last three years a growing number of contractors and consultants - including the wellestablished - have chosen to turn their backs on difficult markets to concentrate instead on Europe and North America.

So what has gone wrong with the pioneering spirit, for which British business overseas was so well known? Unjustified moral opprobrium, reducing incentives, and burnt fingers are demotivating even the most willing.

The Pergau dam is still quoted at meetings where development and export trade are discussed in juxtaposition. The resulting climate is not one in which the two function healthily and profitably together. From some, British exporters receive scant encouragement, and are at times actively condemned. There is a refusal to recognise that our national interest lies in everyone rooting for British business - a puzzle and source of delight to our competitors! The irony is that trade is the real source of poverty alleviation.

Following successive Government measures that reduced financial support for exporters, it was no surprise that a review of ECGD followed. So it was a pity that the principal aim was not the enhancement of financial support to encourage British firms working overseas. Most countries would have seen this as a reasonable national objective.

Important, but of lower priority, is clearly ensuring that sensible government safeguards are in place to ensure ethical trading etc, etc. Moral issues must not always be allowed absolute domination and a sense of perspective is needed.

I for one am left wondering whether ethical considerations or sound business sense will rule the day in ECGD support.

And what of pioneering markets where support is vital? If not ECGD, alternative Government financial support is needed, please, on the laudable Kosovo Power or Turkey models. If competitors receive financial backing, so should we. As with Aid Untying, acting unilaterally by limiting guarantees for British firms is not in Britain's best interests.

No

I see ECGD's demands as mere confirmation of what many overseas clients already view as UK consultants delivering technical excellence with 'inbuilt' ethics.

Of course there will always be instances of unconventional rules of play.

Nevertheless, increasing transparency and accountability concerning the disbursement of development funds from governmental and multilateral donor agencies will ultimately favour companies who can demonstrate a genuinely ethical and moral approach to project implementation.

My own company has always stood by these principles and has enjoyed significant success in securing overseas projects.

Despite a few let-downs, we have no intention of changing our approach.

It is worth noting that in recent years ECGD has progressively tightened up the conditions for underwriting projects overseas.

This latest action is part of a wider trend. It seems that the primary function of ECGD is to provide cover to encourage trade with countries where without that cover the trade would not happen. By the very nature of the cover it is most likely to be required in countries that are experiencing transition and where the regulatory framework is weak.

It is in these places that, for example, inflation is often rampant and officials are either poorly paid or have not been paid for months.

Here there is room for much misunderstanding, at least where people of less than robust ethics are involved. For what is simply oiling the wheels of an administration that is grinding along and what is unethical and immoral?

And probably more importantly for the UK Government - which countries does it want to assist and what sensible guarantees need to be available to assist UK plc?

The facts

The ECGD helps UK firms by insuring about £3bn to £4bn a year of capital goods and services and exports and investments overseas.

In August 1999 58% of projects insured by the ECDG were civils related. Aerospace and defence each represented 21%.

Heavily Indebted Poor Countries owe around £1.6bn to ECGD - although the Chancellor of the Exchequer announced in 1999 the Government's intention write off this debt.

Trade and industry secretary Stephen Byers produced a review of the ECGD's mission and status in July 2000 in which it demanded environmental and human rights issues were taken into greater consideration.

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