§ Sir Harmar Nichollsasked the Secretary of State for Trade and Industry whether Her Majesty's Government are to support the S.U.M.E.D. project; and whether their decision represents a change in the policy followed by Her Majesty's Government in the use of Export Credits Guarantee Department facilities.
§ Mr. John DaviesThe Government have authorised E.C.G.D. in principle to support credit cover up to a maximum of £12 million for participation by British suppliers in the construction of a pipeline to be built in the U.A.R. from the Gulf of Suez to the Mediterranean coast. In the light of the security which is now offered, I consider that British participation of the order of £12 million is acceptable and have, therefore, instructed my officials to work out the details. Our participation will be subject to three conditions: first, that finance for the whole project is available; secondly, that agreements are concluded in advance with users, guaranteeing throughput at or near the pipeline's capacity; and, thirdly, that satisfactory arrangements should be made for the repayment of loan monies through a special account with a European bank.
Our agreement to participate does not signify any change in E.C.G.D.'s general policy towards credit for this market. I am authorising the provision of cover for the S.U.M.E.D. pipeline only because of the special financial arrangements already mentioned.
It is not Her Majesty's Government's intention to change the basis upon which E.C.G.D. operates under Section 2 of the Export Guarantees Act. Although this Section provides for business to be covered "in the national interest" this has for many years been operated through the exercise of E.C.G.D.'s judgment on the economic and commercial risks involved. We intend to follow these criteria in assessing risk.