Salmond under fire over visit to seek Middle East loans

Published on Sunday 28 September 2008 22:31

ALEX Salmond, the First Minister, has been accused of going cap in hand to the Middle East for money because his schemes to pay for Scotland's infrastructure have failed.

It has been revealed that Mr Salmond will visit Qatar to ask for loans for projects such as the new Forth Road Bridge.

The practice of borrowing Middle East money is being considered by many Western governments, because there are religious-based laws there against charging interest on loans.

But if Mr Salmond is successful, it will see Scotland in hock for decades to a country that has been the subject of concerns from Human Rights Watch.

And political critics have claimed that it is the latest sign of the failure of his Scottish Futures Trust (SFT), which was meant to fund infrastructure projects in Scotland.

There is still no sign of the SFT operating or commissioning projects after 18 months of SNP government.

Liberal Democrat finance spokesman Jeremy Purvis pointed out that the SFT was "sold" to the Scottish electorate as patriotic Scots buying bonds in Scottish projects.

This has since been changed to most projects being funded through an alternative version of private finance initiatives, which the SNP promised to end. The new system is called not-for-profit distribution (NPD).

"When it comes to funding capital projects, the SNP are in a shambles. Ministers have failed to abolish PFI and they are failing to build the new schools Scotland needs," said Mr Purvis.

"Before the election, Alex Salmond promised that patriotic families would be able to buy bonds for an iconic bridge across the Forth. He never said he meant Qatari families."

Labour's finance spokesman Andy Kerr said that the need to go to Qatar was born out of the delay in getting the SFT up and running.

In particular, he said Scotland was still waiting for the first schools project to be commissioned after an SFT promise to match the previous Scottish Executive's pledge for 200 new schools.

"It is clear from these reports that the SNP's SFT is in absolute chaos," said Mr Kerr. "In over a year since they came to power, SNP ministers have failed to commission a single new school."

However, financial experts have said that borrowing money from the Middle East is a sound move.

A source close to Mr Salmond said that the opposition party claims were "exaggerated".

"It is true that the First Minister plans to visit Qatar, but a date has not been set," he said.

"Borrowing money will be one of the topics discussed, although there are no particular projects in mind as yet."

He added that the SFT was progressing well since Sir Angus Grossart was appointed as chairman and an announcement on the funding of the Forth Road Bridge will be made later this year.

PROFILE

QATAR, a former pearl-fishing centre and once one of the poorest Gulf states, is now one of the richest countries in the region, thanks to the exploitation of large oil and gas fields since the 1940s.

Dominated by the al-Thani family for almost 150 years, the mainly barren country was a British protectorate until 1971, when it declared independence, refusing to join the United Arab Emirates.

In 1995, Crown Prince Hamad bin Khalifa al-Thani deposed his father in a bloodless coup and became ruling monarch. His son, Sheikh Tamim bin Hamad al-Thani, is chairman of the Qatar Investment Authority, (QIA) the investment arm of the State of Qatar, worth 60bn.

In June this year, the QIA offered 1.7bn for 7.7 per cent of Barclays, then increased its stake in supermarket chain Sainsbury's, which it tried to buy last year, to 25.3 per cent.