Dr. John CunninghamTo ask the Secretary of State for Foreign and Commonwealth Affairs what agreements Her Majesty's Government made with the Government of Malaysia with respect to arms contracts and an overseas aid package; when those agreements were made; and if he will make a statement.
§ Mr. HurdDuring discussions in 1988 about the proposed memorandum of understanding on defence sales, the Malaysians expressed their wish to make a reference to aid. A protocol was signed during the visit to Kuala Lumpur in March 1988 by the then Defence Secretary, my noble Friend Lord Younger of Prestwick. This set out the Malaysian Government's intention to buy defence equipment from the United Kingdom, with the details to be elaborated in the later memorandum. The protocol included a reference to
aid in support of non-military aspects under this programme.After consultation with ministerial colleagues in London, the Secretary of State for Defence wrote to the Malaysian Minister of Finance in June 1988 to say that aid could not be linked to defence sales. As a result, the issue was not taken up in the memorandum of understanding on defence procurement which the British and Malaysian Prime Ministers signed in September 1988, and which did not cover aid. Our aid programme is not linked to arms sales.
Malaysia has been eligible for support under the aid and trade provision since the scheme was introduced in 1977; and 23 of the 270 ATP projects financed since then have been in Malaysia. The Malaysian Government have been well aware of the availability of ATP, which was reaffirmed in 1988. Malaysia is expected shortly to graduate under OCED rules from eligibility for aid credits such as ATP. British aid has contributed to Malaysia's rapid economic development and to the productive relationship which we have with Malaysia in many fields of activity, including trade.