◆ SpookStack

CONFIDENTIAL te- Treasury Clhimbcrs-, Hiili-Hiit'iit Street. S W 1 P 3A(1 The Rt. Hon David Owen MP Secretary of State for Foreign Affairs Foreign & Commonwealth Office , -~ "" ~ZZ^ Downing Street » CAB.NET OFFICE London A 5 4 ^ 12 December 1978 \\ re, 'UvU, A F1LIHG INSTRUCT1OMS FILE No ECGD CREDIT COVER FOR TANZANIA You sent the Chancellor of the Exchequer a copy of your minute f k December I978 to the Secretary of State for Trade, about ECGD Section 2 cover for arms sales to Tanzania, on which the Secretary of State for Trade has commented in his reply of 8 December. I entirely agree with John Smith that on economic grounds cover is not justified: I have no doubt that all the reasons he gives are valid. Indeed, in economic terms I believe that we shall be doing both ourselves and Tanzania a disservice if we encourage her to acquire large additional amounts of military equipment. 2. However, given the strong political case which you urge, and the comparatively small additional amount involved, I am prepared to accept that the national interest justifies our making cover available for the arms sales immediately in question, provided that the amount does not exceed £4 million aid that normal credit terms for such sales are applied. 3. I am sending copies of this letter to the Prime Minister, the Secretaries of State for Defence, Industry and Trade and Sir John Hunt. , JOEL BARNETT