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The Guardian 4 February, 2009

Editorial

In the business of killing

While the world gave AU$162 billion in development aid in 2006, world military expenditure in the same year was $1,800 billion.

The US spent $25 billion on aid, compared with $610 billion on military purposes, a figure larger by a factor of 24. Britain is the third-largest exporter of arms to developing countries.

In fact, from 1998 to 2001, the US, Britain and France earned more income from arms sales to developing countries than they gave in aid.

In the past five years, Britain has exported $82.6 billion of arms. And, last year, it had the dubious honour of topping the list of global exporters, with a record $32 billion in orders.

The United Nations Development Program has named military expenditure by developing countries as a major barrier to achieving the Millennium Development Goals.

Using databases which have not been seen before outside financial circles, the report exposes the fact that all five banks have shareholdings in Britain’s largest arms companies. Four hold shares in all of the top UK arms companies.

Royal Bank of Scotland has a stake worth $81 million. Halifax Bank of Scotland and HSBC have vast holdings, worth $912 million and $1 billion, respectively.

With $1.6 billion in shares, Lloyds TSB ranks as the UK banking industry’s second-largest shareholder. Barclays’ investments in the arms sector total $3 billion, the highest total among UK banks. Barclays holds, by far, the largest amount of shares in the global arms sector, with $16.2 billion invested in total.

One bank, HSBC, has gone much further than just producing a report on corporate social responsibility. It has, since 2000, publicly stated its commitment to "avoid certain types of business, such as financing weapons manufacture and sales" and to have had that policy "fully in place" for two years.

With the exception of HBOS, all of the banks have given loans to at least one cluster munitions producer in the last decade.

Cluster bombs are designed to scatter dozens to hundreds of smaller bomblets over a large area. The effects are devastating, resulting in high levels of civilian casualties both during attacks, because of their indiscriminate, wide-area effects, and long afterwards. Unexploded ordnance turns fields, roads and even schools into minefields. One in four cluster munitions victims are children.

While the complicity of banks is the focus of the UN report, the arms trade should, ultimately, be abolished. However, with Western governments determined to pursue military adventures around the world, the arms trade remains big business.

Now is the time to act to put an end to banks’ support for arms companies.

As a result of the financial crisis, there are now unprecedented calls for regulation of the banking sector. It is understood that the light touch of deregulation has been a major cause of the current financial crisis.

Calls have focused on the social functionality of banks as providers of finance to small business and mortgages. There must now be regulation of bank lending and investment with respect to other social criteria.

Governments must introduce regulations which prevents banks from supporting the arms trade whether through loans, investments or other banking services.

(All figures in Australian Dollars)

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