THE £1.7m in student fees and donations accepted by two Scottish universities from the Libyan government of Colonel Muammar Gaddafi and oil companies in the country, revealed in The Herald today, show the extent to which the shortfall in higher education funding is driving universities to take risky decisions.

It appears the universities of Strathclyde and Dundee failed to heed the alarm bell ringing in March when Sir Howard Davies resigned as director of the London School of Economics over its ties with the Libyan regime. Universities across the UK are all seeking outside sources of income to boost the funding gap and the recruitment of more overseas students has become vital to their balance sheets. Like other British businesses, universities were no doubt encouraged by Tony Blair’s 2007 “deal in the desert” to regard Libya as a country with which, despite its despotic ruler, they could have links without losing respectability.

Tory MP Robert Halfon has accused institutions that have taken money from Libya as having lost their moral compass. Is that true of Strathclyde and Dundee? There is an argument to be made that offering young people from a dictatorship an education in the west will encourage the spread of democratic values. As Gaddafi’s forces cracked down on rebels earlier this year, however, it was surely time for a reappraisal at both institutions.

Strathclyde University has accepted nearly £1.2million from Libyan sources since 2008, mostly in student fees as well as more than £85,000 from three oil companies. In the same period Dundee University has received £814,600 from Libyan sources, again mainly in fees. Both point out that the funding has been used for the education of Libyan students who are entitled to study in this country. The Gaddafi regime that is now waging war on its own people is abhorrent and British universities should not be involved in propping it up. Nevertheless it is important to keep a sense of proportion. Educating dentists and engineers is not the same as supplying weaponry; nor, if the students fulfil all the requirements of their courses, does it call into question the academic standing of the universities.

There are also significant differences between accepting Libyan students and the issues that prompted the resignation of Sir Howard Davies from the LSE. He admitted errors of judgment in accepting £300,000 for research from a foundation run by Col Gaddafi’s son Saif (just before he was awarded a Ph D) and visiting Libya to advise its regime about financial reforms (even though his fee was put into a scholarship fund).

Scottish universities have always attracted a high proportion of students from overseas but the income generated in this way is an increasingly important element. As they face a significant funding gap compared with competitor institutions in England, it will be essential to seek new income streams, including donations and collaboration with business. That must not be at the expense of academic rigour or independence. As Scottish universities await the outcome of the review of university governance, they should seize the opportunity re-examine the basis on which they seek and accept funding. They must also check their moral compasses if they want to continue to attract the brightest and best.