Storm clouds gather over Qatar’s $7 billion Typhoon deal

If Qatar fails to pay up, responsibility for settling the bill with British Aerospace will fall on the Treasury — which means British taxpayers. (Defense Ministry of Qatar)
Updated 07 September 2018
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Storm clouds gather over Qatar’s $7 billion Typhoon deal

  • The concept of the government underwriting a contract such as the Typhoon deal with Qatar was not unusual
  • ‘This is an example of the cozy and compromising relationship between arms companies and government’

LONDON: Qatar could saddle British taxpayers with a bill for billions of pounds by defaulting on payments for military equipment ordered from the UK.
According to one expert, while it was not unusual for buyers to miss payments for various reasons, it was hardly likely to be necessary for Qatar, one of the wealthiest countries in the world.
Jeremy Binnie, Middle East specialist on the publication Jane’s Defense Weekly, questioned whether Qatar needed the 24 Typhoon supersonic fighter jets it has ordered from British Aerospace as part of a £6 billion ($7.7 billion) package, including weapons, pilot training and maintenance.
“The Qataris are also buying from the French and the Americans. Do they need three types of fighter jets? The Ministry of Defense dismisses the suggestion that they don’t,” he said.
Andrew Smith, of the Campaign Against Arms Trade, said the concept of the government underwriting a contract such as the Typhoon deal with Qatar was not unusual.
“But the fact that Qatar has already defaulted has obviously set off alarm bells in the Treasury and calls the entire deal into question,” he said.
“This is an example of the cozy and compromising relationship between arms companies and government. It is risking billions of pounds in order to support military sales to a repressive and authoritarian regime at a time of severe regional tensions.
“The risk is made even greater by the Qatari government’s disregard and the complete lack of transparency in its military spending, on which zero information is publicly available.
“The sale of these fighter jets is totally irresponsible and so is this deal,” he said.
A deal to sell the jets — the biggest export contract in a decade for Typhoon fighters — to Qatar was struck last December during a visit by the UK Defense Secretary, Gavin Williamson, to Doha.
By underwriting the deal through UK Export Finance (UKEF), the government’s credit agency, the UK Treasury guaranteed that Britain’s defense industry and its employees would not lose out financially if the buyer failed to honor the contract.
However, under the arrangement, if Qatar fails to pay up, responsibility for settling the bill with British Aerospace will fall on the Treasury — which means British taxpayers.
Doha does not appear to have shown any concern either for taxpayers or for the thousands of jobs potentially at risk at the British Aerospace plant in northwest England, where the Typhoons will be built.
Leaked documents from the Treasury show that the Qataris wanted Britain to finance most of the cost of the deal and also use British guarantees to reduce interest payments.
The documents describe the arrangement as “unprecedented” and indicate there is concern over whether Qatar can meet its obligations.
“The transaction amounts to an unprecedented level of support from UKEF to one buyer, skewing the UKEF portfolio by concentrating about 25 percent of their portfolio risk in one transaction,” the Treasury memo said.
Qatar has already missed the July deadline for the first instalment. Embarrassingly, this was revealed just after the emir of Qatar’s visit to London.
The situation is not especially unusual, said Binnie, since such deals are sometimes announced before all the financing is in place.
That appears to be the case with Qatar, which was still trying to arrange $4 billion of financing in July. According to British Aerospace, the new deadline for the first payment is now the end of September.


Uber agrees to pay VAT in Egypt

Updated 18 February 2019
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Uber agrees to pay VAT in Egypt

  • Egypt introduced a law last May regulating ride-hailing apps Uber and Careem
  • Uber has said that Egypt is its largest market in the Middle East
CAIRO: Uber has agreed to pay value-added tax on its services in Egypt, Egyptian officials said on Monday, a move that may help resolve a long-simmering feud with traditional taxi drivers.
The agreement would also apply to other ride-hailing companies, the head of the Egyptian Tax Authority, Abdel Azeem Hussein, said. Egypt’s value-added tax (VAT) rate is 14 percent.
“Reaching an agreement and determining the tax treatment that will be applied to the company Uber and other companies operating in the same area will enhance confidence and cooperation between the authority and the tax community,” state news agency MENA quoted Hussein as saying.
Uber Egypt was not immediately available for comment.
Egypt introduced a law last May regulating ride-hailing apps Uber and Careem, after Egyptian taxi drivers filed a lawsuit arguing that the two companies were illegally using private cars as taxis and were registered as a call center and an Internet company, respectively.
An Egyptian court suspended Uber and Careem’s services in March last year after the taxi drivers’ suit but another court stayed the suspension ruling in April, allowing the companies to operate while the case was appealed to a higher court. A verdict is expected on Saturday.
Careem could not immediately be reached for comment on whether it will pay the VAT.
Uber riders and drivers in Egypt have said they faced various technical difficulties with the Uber app in recent weeks, which two security sources said was linked to data-sharing disputes with Egyptian authorities.
Uber has faced regulatory and legal setbacks around the world amid opposition from traditional taxi services. It has been forced to quit several countries, including Denmark and Hungary.
Uber has said that Egypt is its largest market in the Middle East, with 157,000 drivers in 2017 and 4 million users since its launch there in 2014.