HC Deb 03 July 1947 vol 439 cc1518-20
Mr. Dalton

I will, with permission, make a statement arising out of the Financial Agreement just concluded between the United Kingdom and Egypt, on which a White Paper was made available in the Vote Office last night.

At the outset of the negotiations in London on 6th June, I made it clear that British public opinion does not recognise the moral validity of the debt of some £400 million arising out of the wartime association of Egypt and the British Commonwealth. I, therefore, urged the Egyptian representatives to make proposals for the cancellation, in whole or in part, of this war debt arising out of our war effort, so costly both in blood and treasure in defence of Egypt. The Egyptian Government have not so far felt able to respond to this appeal, but the clear judgment of His Majesty's Government is on record.

In these circumstances) we have made an interim arrangement whereby, between now and 31st December next, without any commitment thereafter, the amount released from the balances will not exceed £8 million sterling and, in addition, we shall make available to the Egyptian Government a working balance of £12 million sterling. These sums will be available for expenditure in any currency area in accordance with the terms of the Anglo-American Financial Agreement. Egypt's current earnings of sterling as from 14th July will be similarly available.

The rest of the sterling balance; now standing in the books, will, by mutual agreement between the two Governments, be frozen from now onwards, except in so far as it may be required to meet confirmed credits up to 30th June, 1947, in favour of British exporters to Egypt. It is further agreed that Egypt should cease to be a member of the Sterling Area, and should thus become subject to United Kingdom, as well as to Egyptian, exchange control arrangements. The Agreement provides for this with effect from 14th July.

I am confident that this Agreement will help to consolidate, in this new chapter which is now opening, the longstanding financial and commercial relationships between London and Cairo.

I would like to take this opportunity of paying a tribute to the helpful attitude displayed during these weeks of negotiation in London by the Egyptian Delegation, headed by His Excellency the Egyptian Ambassador.

Mr. Oliver Stanley

Is the right hon. Gentleman aware that we on this side of the House entirely agree with his view as to the moral validity of this claim that is being made on us, and that we shall be prepared to support him in the resistance he puts up to any acceptance of a claim which we believe to be wholly unjustified? Secondly, might I ask him whether the House will be given an opportunity to debate the agreement in view of its many complicated provisions, some of which require examination and would be very difficult to deal with by question and answer?

Mr. Dalton

Such a question should, of course, be addressed to the Leader of the House, but I should just like to say that this is the first agreement of its kind and that we may be having others in the course of the next few weeks. It might be inconvenient to take them piecemeal, but that is a matter for discussion through the usual channels.

Mr. Stanley

I am asking for information. Is it not a fact that certain of the consequences of this agreement do in fact require acceptance by the House of Commons to be brought into force?

Mr. Dalton

I think not, Sir. I will certainly check up on the point, but my present impression is that that is not so.

Colonel Crosthwaite-Eyre

Can the Chancellor give any indication of the additional liability due to these confirmed credits and to private assets in the National Bank of Egypt?

Mr. Dalton

Confirmed credits cannot, of course, be checked up with total precision at the moment, but we put them at about £12 million sterling for services rendered and goods supplied. The private credits are relatively small.

Sir Henry Morris-Jones

With regard to Egypt leaving the Sterling Area, can the Minister say whether that applies also to the Sudan and, if so, whether he will make the necessary concessions to British personnel in that area who may be affected by the change?

Mr. Dalton

The hon. Gentleman is raising a question which is wider than that which arises under this Agreement. The Anglo-Egyptian Sudan is, of course, linked with Egypt so far as currency is concerned and, therefore, it is technically true that the Sudan as well as Egypt is outside the Sterling Area under the Agreement, but it would be rash to draw any wide-reaching conclusions such as the hon. Gentleman seems to draw.

Dr. Segal

Is not the withdrawal of Egypt from the Sterling Area a new precedent which His Majesty's Government are not anxious to encourage?

Mr. Dalton

The simple point is that within the Sterling Area there is no exchange control. We have reached the view, and the Egyptian Government have accepted and agreed with it, that there must be exchange control in future as between this country and Egypt, particularly in respect of these sterling balances. There is no way in which this can be brought about so long as Egypt remains in the Sterling Area. Therefore, the purpose which led us to seek Egypt's agreement—which we have obtained—to her leaving the Sterling Area was to enable exchange control, which we hold to be absolutely indispensible in this case, to operate.