Despite a new "Ethical Foreign Policy" implemented by Blair's Government, a British company (Alvis) sold 100 Scorpion tanks to the Suharto regime in Indonesia - one of the most brutal and corrupt in the world. The Indonesian army used the light tanks to slaughter rebels, directly breaking promises made to the British government (i.e. we promise not to kill lots of civilians with the weapons you sell us).
The deal made £160m revenue for Alvis.
Unfortunately, Indonesia could not afford these expensive weapons, and so slipped further into debt. No longer able to afford to pay Alvis, Indonesia defaulted on the debt - but never fear, the British tax payer stepped into the void to protect Alvis.
We paid £93m tax revenue to Alvis, so that the Indonesian Government could keep murdering its civilian population. We have been repaid only £7m, and will probably never see the rest.
The deal was made while the Tories were in power (1996), but delivery took place once New Labour had taken over. The new Ethical foreign policy was shelved with the argument that they could not break contract (although Indonesia has by using the weapons in breach of international law).
The Indonesians also bought Hawk fighter planes (particularly good for shooting people who are running away from you) from BAE Systems. According to Labour, this didn't contradict the "ethical policy", even when it was shown that the equipment was used to massacre civilians - again in breach of promises made when they were purchased.
Indonesia made it quite clear that they did not consider any of their promises to be binding, and General Suharto is widely considered to have stolen more than £18billion from Indonesia while in power. Furthermore, it is known that most deals with him and his family required substantial bribes to ease their agreement.
Alvis are now accused of paying a bribe of £16million to Suharto's daughter to clinch the sale of tanks that we ended up paying £93m for. Needless to say, they do not wish this to be made public. Neither do their new owners - guess who - BAE systems!
BAE have their own problems at the moment. They are accused of operating a £60m Saudi slush fund to ensure they get contracts from one of the worst human rights abusers in the world - the Saudi Royal family. For example, payments of about £1m a month were made with false invoices - and signed off by "independent auditors" KPMG! The stock market has not reacted much to this despite arrests by the Serious Fraud Office as it is generally accepted that illegal practices lead to arms deals.
You may ask why it is that commercial sense and legal propriety are shelved so quickly to aid weapons deals. The argument used to be that we needed to protect the jobs. This red herring was mentioned in relation to the ban on fox hunting (which would lose a few hundred jobs maximum), but not for the Miners (where whole communities were cut off from work).
The number of jobs in the arms industry in Britain has fallen from 470,000 in 1985 to 200,000 in 2004. 65,000 are employed in arms export (0.25% of the workforce), but the tax payer pays subsidies estimated to be between £450m and £930m a year. Funnily enough, these subsidies were not available to protect miners´ jobs.
It should also be noted that anyone who lost a job in the arms industry would be very likely to find work again - being highly educated and trained with transferable skills.
We appear to love our position as the second biggest weapons dealer in the world - even if it costs our tax payers millions to maintain and contributes to the spread of "terrorism" (most of the world's terrorists hail from areas where we have armed one side only, e.g. Palestine, Indonesia, Saudi Arabia, Afghanistan). When we have finished training one bunch of terrorists (our allies) we leave them to abuse their population with weapons we sold to them, or using training provided by our Armed forces (e.g. Osama Bin Laden, Saddam Hussein, The Northern Alliance).
Personally, I think we should be ashamed of ourselves. The fact that our Prime Minister has the hypocrisy to claim we are support democracy and human rights while selling weapons to brutal dictators merely show how much we are prepared to lie to ourselves.
Tony, if you want to win the war on terror, stop selling weapons to immoral regimes. If you asked your buddy George to do the same, almost 95% of the world's supply of weapons would dry up.
There are three main types of subsidy which we, as tax payers, are funding
1. Direct subsidies (Defence Export Services Organisation), pays for use of the armed forces for promotion and the Defence Assistance Fund. COST £31m.
2. Export credits providing insurance to exporters and buyers of UK equipment at premium rates a year in case their customers (usually 3rd world countries) can't afford to pay for their weapons COST £222m.
3. Procurement policy - Ministry of Defence buys kit inferior to or more expensive than that available from non-UK sources to promote exports COST £200m annual subsidy (£483m with research and development).
According to Oxfam, each year the world spends about £30bn on aid and £490bn on defence.