When Iraqi forces sparked off eight years of bloody conflict by invading Iran in September 1980, the UK government declared a principled stand of neutrality. It also announced that it would not licence the export of lethal weapons to either side. But behind the closed doors of Whitehall, the reality of UK policy was rather different. The recently-published report by Sir Richard Scott* shows how the UK government sanctioned the sale of defence-related equipment to Iraq throughout the 1980s and then secretly relaxed guidelines on arms sales to Baghdad in the two years preceding Saddam Hussein's invasion of Kuwait.

In September 1980, official policy on arms exports to the two countries was simple, concise and even-handed: lethal arms and ammunition, as well as any goods that might prolong or exacerbate the war, would not be supplied to either side. However, ministers agreed in private in January 1981 that 'every opportunity should be taken to exploit Iraq's potentialities as a promising market for the sale of defence equipment; and to this end 'lethal items' should be interpreted in the narrowest possible sense, and the obligations of neutrality as flexibly as possible'.

There were few reasons to extend that flexi bility to Iran. The UK's closest allies in the Gulf were virulently opposed to the new Islamic republic and the US was lobbying its allies hard to limit trade with Tehran. Sales to Iraq presented no such difficulties and if UK companies were restricted, Baghdad would simply find suppliers elsewhere.

Trade with Iraq was facilitated by cover from the Exports Credits Guarantee Department (ECGD). Under a series of financial proto cols negotiated between the two sides in 1983, medium-term cover worth £250 million a year was offered to Iraq. Following strong representations by the Iraqis and UK defence manufacturers, 10 per cent of credit for 1984 could support the purchase of non-lethal defence equipment. In 1985, the proportion was raised to 20 per cent. 'The defence allocation that was made available to Iraq out of successive financial protocols in order to facilitate the purchase by Iraq of defence-related equipment was not, in my opinion, consistent with the government policy of strict impartiality or even-handedness towards the combatants in the Iran-Iraq war,' Scott says.

UK exports to Iraq rose from £201 million in 1979 to a peak of £874 million in 1982.

Exports subsequently fell back, but due to Iraqi economic problems rather than any change in UK policy. Between 1980-1984, Scott says, UK defence-related exports to Iraq totalled not less than £184 million. This contrasts with no more than £13 million exported to Iran. Throughout the 1980s, further UKmanufactured defence-related goods were secretly exported to Iraq via Jordan.

In 1984, news that Iraq had used chemical weapons became widespread and government ministers were pressed to clarify UK policy on defence sales to Iraq and Iran. This prompted the foreign office to instigate a review of policy on defence sales culminating in the Howe guidelines, authorised by the then foreign secretary Sir Geoffrey Howe.

The use of chemical weapons did not alter the de facto policy of favouring Iraq. Nor was there any significant change in the UK's statement of policy in 1980. Howe admitted to the Scott Inquiry that one of the main purposes of the guidelines was simply to provide a formula by which government policy could be publicly expressed and defended.

The Howe guidelines restated that government policy was to prohibit the supply to either Iran or Iraq of lethal weapons or any defence equipment that would prolong or exacerbate the conflict. But as Scott points out: 'The Howe guidelines prescribed circumstances in which licences for export to Iraq to Iran would be refused.

They did not prescribe circumstances in which licences would be granted'.

The hollowness of the government claims of neutrality in the Iran-Iraq war was implicit in the then prime minister Margaret Thatcher's comments during a visit to London by the then Iraqi foreign affairs minister Tariq Aziz in December 1985. When Aziz asked Thatcher to end all defence sales to Iran, Thatcher was recorded as replying: 'We had terminated the supply of weapons to Iran and even the supply of items which might possibly have a military application.' At the same time ECGD was allocating credit for the export of defence-related goods to Baghdad.

The Howe guidelines remained official policy until August 1988. News that Saddam Hussein had used chemical weapons against Iraqi Kurds in March 1988 did not prompt any review of exports to Baghdad. It only heightened the secrecy surrounding government policy. With public opinion hostile to Iraq, ministers decided against publicising their decision in August 1988 to relax restrictions in light of the Iran-Iraq ceasefire. 'It could look very cynical if, so soon after expressing outrage over the Iraqi treatment of the Kurds, we were to adopt a more flexible approach on arms sales,' Howe told the inquiry.

Much of the interest in the Scott report surrounds the issue of whether UK policy was changed in 1988, and if it did, why ministers neglected to tell parliament. Scott does substantiate the government claim that there was never a formal change to the Howe guidelines. In 1988, a review process began which would have been translated into new policy guidelines in late 1990, had Saddam Hussein not invaded Kuwait.

However, between August 1988 and July 1990 a consensus was reached by junior ministers to interpret the Howe guidelines more liberally. This allowed previously prohibited machine tools to be exported to Iraq. But the decision to relax export rules was not common knowledge. Not only did ministers fail to tell parliament of the relaxation of the guidelines, but Customs & Excise, which subsequently took the UK-based Matrix Churchill to court for attempting to export prohibited goods, was also kept in the dark.

From the ceasefire in 1988 to the invasion of Kuwait in August 1990, the scope of goods permitted for export to Iraq expanded. The change in govern- ment attitudes was evident in April 1989, when UK companies were prominent at the Baghdad International Military Production Exhibition. That year export licences for non-lethal defence equipment worth £130 million were approved. Radars, computers and communication equipment were now freely being exported to Iraq.

In 1990, UK government policy on defencerelated exports to Iraq came under closer scrutiny. In the spring of that year; UK journalist Farzad Bazoft was executed by the Iraqi regime, directors of the London-based company Euromac were arrested on charges of attempting to export to Iraq electrical capacitors allegedly intended for use in triggers for nuclear weapons and Teesside Customs officials intercepted metal tubes intended to form the barrel of the Iraqi supergun. A far-reaching review of UK policy towards Iraq became inevitable when Iraqi forces swept into Kuwait in August 1990.

UK policy towards Iraq from 1980-1991 had a number of costs. Financially, ECGD's exposure in Iraq in 1990 stood at £658 million.

There seems little prospect of that money ever being recovered. There is also the cost of UK and allied personnel killed in 1991 by an army using equipment supplied by UK companies.

Only now, with the publication of the Scott report, will it become clear if there will be a political cost to pay by the members of the current government who played their part in moulding UK policy in the 1980s.

*Report to the Inquiry into the export of Defence Equipment and Dual-Use Goods to Iraq and Related Prosecutions, by Sir Richard Scott. Published 15 February 1996 by HMSO, London.