HC Deb 21 March 1929 vol 226 cc1862-6
Mr. HAMMERSLEY (by Private Notice)

asked the Chancellor of the Exchequer whether he can make any statement as to the reported financial Agreement with Egypt and whether it will require ratification by this House?


asked the Chancellor of the Exchequer whether he can give the details of the recent financial Agreement with Egypt?


With your permission, Mr. Speaker, and the indulgence of the House, as this to some extent affects the course of affairs outside, I should like to be able to make a short statement on the subject of the arrangement reached between the British and Egyptian Governments.

I am glad to say that the Egyptian Government have now ratified the financial agreement which was arrived at last month, for the settlement of the financial questions outstanding between the British and Egyptian Governments, and in particular that of Egypt's liability for the Ottoman Guaranteed Loan of 1855.

The terms of the agreement will be presented as soon as possible but it may be useful if I summarise the main provisions in a few words. As regards the 1855 Loan, the Egyptian Government agree to pay the arrears of the Egyptian contribution to the service of this loan which have been withheld since 1924, amounting to £328,600. They also undertake to pay to His Majesty's Government the amount required to cover the service and redemption in future of a share of the loan, which has been agreed at £1,386,000. This liability will be discharged by an immediate cash payment of £302,000 and by 16 annual payments of approximately £90,000 each. In return for these payments His Majesty's Government give Egypt a full and final discharge from all claims in respect of this loan. As regards other matters, the Egyptian Government agree to make a payment of £849,000, in settlement of certain outstanding war claims of the War Office and Shipping Liquidation Departments.

On the other hand, His Majesty's Government for their part undertake to grant Egypt a share (amounting to 464 of 1 per cent.) of British Empire Reparation receipts. The amounts due under this head will be set off against the liability of Egypt for the 1855 Loan, Egypt receiving any surplus and paying over any deficiency: but, provided the German payments continue on the scale of the Dawes annuities, the Egyptian liability for the 1855 Loan should be fully covered by their receipts in respect of reparation.

I have thus summarised the general arrangements. But in view of the reports which have appeared in the Press I feel that I should make clear the position as regards the redemption of the 1855 Loan. His Majesty's Government are not, strictly speaking, under any legal obligation to redeem this loan, nor does the arrangement with Egypt impose on us any such obligation. But we have in the past applied the surplus of the so-called Cyprus Tribute, over and above the amounts required for the service of the loan, to the purchase of bonds and we have by this means acquired altogether £642,400 of the loan, as the nucleus of a sinking fund. During the discussions with the Egyptian Government, it was agreed that these bonds should not be taken into account in calculating the Egyptian share of liability for the loan and we now propose to cancel them.

Further we propose that, in future, the surplus of the payments made both by Egypt and by Cyprus, over and above the amounts required for the service of the outstanding portion of the loan should be applied by the Treasury from time to time either to the purchase of bonds of the loan in the market, if they can be obtained at a reasonable price—in which case those bonds would be cancelled—or to the purchase of British Government securities which would, in that case, be accumulated as a Sinking Fund till the whole of the outstanding loan could be redeemed, after notice, at par. It is estimated that the period required for this purpose will be between 30 and 40 years.

The agreement made represents concessions both on the part of His Majesty's Government and of the Egyptian Government, but I am sure that the House will welcome this settlement of these long outstanding questions between the Egyptian Government and ourselves.


In view of the complicated nature of the Agreement just stated by the Chancellor of the Exchequer, may I ask whether this will require to be ratified by this House and will it have to be ratified by the Egyptian Parliament also?


It has been ratified by the Egyptian Government.


Not by the Parliament?


I cannot answer that question without notice. It would be very unfortunate if I gave a wrong answer, and it might involve, I gather, some delay. A White Paper on the subject will be laid in the Vote Office, so that the Agreement can be examined in detail. I felt it my duty to trespass upon the indulgence of the House, because it came to my knowledge that certain market transactions were taking place, and it is absolutely necessary that the public should be informed exactly what is the position of the 1855 Loan.


Do I understand the right hon. Gentleman to say that he is not able to tell us at the present time whether it will have to be ratified by this House?


Whatever is right will certainly be done.


Does not the right hon. Gentleman realise that, the constitutional Government in Egypt being suspended, a future Egyptian Parliament will have the entire right to repudiate this Agreement?


No one knows more about repudiation than the hon. Member.


Fully accepting the right hon. Gentleman's description of my aptitude to judge of these matters, does he accept my decision that this Agreement is not worth the paper on which it is written, because a constitutional Parliament in Egypt will never agree to such a robbery arrangement with Great Britain?


I hope that I shall never be reduced to accepting the decision of the hon. Gentleman or any of his Friends.

Lieut.-Commander KENWORTHY

Without questioning the equity of this Agreement, which I have not had the opportunity of reading, may I ask the right hon. Gentleman with regard to the Egyptian side of the question? Are we to understand that ipso facto this must be followed by it coming before the Assembly of the Egyptian Parliament for ratification?


I am certainly not going to answer any question of a constitutional character connected with Egypt without due notice.


Will the right hon. Gentleman agree not to accept finality without full consultation with the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy)?


Does the right hon. Gentleman not think that it would be unwise on the part of the Government to conclude an arrangement such as this with the Egyptian Government when the constitution is suspended, and when, therefore, that Government is lacking in democratic or popular support?