BURMA (COMMONWEALTH LOAN)

HC Deb 09 May 1950 vol 475 cc206-74

3.30 p.m.

The Minister of State (Mr. Younger)

I beg to move, That this House welcomes the intention of His Majesty's Government to combine with other Commonwealth countries in providing a loan for internal expenditure to the Government of the Union of Burma. The main facts about this loan were very briefly set out in a joint public statement issued by all the Governments concerned on 25th March. It is brief, and I do not think I can do better than read it to the House. It is as follows: In response to the request which was made by the Government of the Union of Burma to the Governments of Ceylon, India, Pakistan and the United Kingdom, these Governments, together with the Government of Australia, offered the Union Government a loan of £6 million. The Government of the Union of Burma have accepted this offer and expressed to the Commonwealth Governments concerned their thanks and appreciation of the gesture of friendship and the desire to help which the offer of the loan represents. The loan is for a period of two years, and will be drawn by the Government of the Union of Burma as and when required for internal expenditure. The Burmese rupees for such expenditure will be obtained by the deposit of loan of sterling with Burmese Currency Board in accordance with existing provisions of the currency laws. The loan will bear interest at a rate equivalent to that earned by the Burmese Currency Board through the investment of sterling, and will thus in effect be interest free. I do not think there is very much beyond that I need add about the terms and details of the loan, except to mention the shares which will be borne by the respective contributing Governments. The total amount, as I have indicated, is £6 million, of which the United Kingdom will be contributing £3¾ million, India £1 million, Pakistan and Australia £500,000 each, and Ceylon £240,000. All the contributing Governments are now ready to sign the agreement in Rangoon. The Burmese Government are anxious to draw the first instalment, and all the contributing Governments have stated their readiness to implement their share immediately upon signature, or, at any rate, very shortly afterwards.

The House will therefore appreciate that the Government are anxious to get its approval without delay. Provision has been made already in the Foreign Office Grants and Services Estimates for 1950–51 for this sum, but these Estimates may not come before the House for quite a number of weeks, and the Government wish to get approval in principle for the loan now in order that an advanced payment may be made.

Before I deal with the purposes which have prompted the Government to contribute to this loan, I think I ought to tell the House something of the origin of the proposals and of the loan negotiations. From the beginning it has been a joint Commonwealth enterprise. In May, 1949, shortly after the meeting of the Commonwealth Ministers in London, a statement was issued by the Governments of India, Pakistan and Ceylon stating that their Prime Ministers had agreed in London to support the Government of Thakin Nu, within the limits of their powers, with a view to restoring peace in Burma.

Later in the year a request for help was received from Burma, and in October discussions began between representatives of the Burmese Government and the Committee of Ambassadors, the Ambassadors of the four countries concerned, in Rangoon. In these discussions the Government was, of course, represented by our Ambassador to Burma, Mr. James Bowker, and his Financial adviser, Mr. Potter, who carried on these negotiations and to whose skill in the matter I should like to pay tribute. Following on these conversations there was the Colombo Conference in January, at which agreement was reached on the scope and form of the aid which should be given to Burma. It was at this stage that the Australian Government agreed also to participate. A formal offer of the loan was made to Burma early in March, and this offer was accepted on 25th March.

The House will therefore see that the loan represents not only the United Kingdom view but the view of four other Commonwealth Governments on the best practicable way of giving assistance to Burma. The reasons for this concensus of opinion are not very hard to understand when one considers the situation in South-East Asia generally, and in Burma in particular. I think it is now generally recognised that South-East Asia is one of the critical areas in the world politically, and that there is a great deal of anxiety about the situation in a number of different parts of that area. I hope it is also generally recognised that in these circumstances we should not merely be spectators but, so far as we can, should pursue a positive policy of helping our friends in that area to carry out the immense task which faces them.

Our objectives in the area are broadly to encourage the development and stability of the independent national states there, to help them to raise their standard of living and to maintain their independence. It is only in this way that they can check the spread of Communism, which, of course, thrives on disorder and misery. We have embarked upon a process of Commonwealth co-operation to this end, in which the biggest step so far has been the Colombo Conference. One result of the Conference is this loan, and another is the Economic Conference at Sydney which is taking place this month.

As regards our policy towards Burma in particular, it is natural that we should take a particular close and friendly interest in this country because of our historical connections, and because of the friendly relations we have with Burma arising from the 1947 Anglo-Burma Treaty. That Treaty speaks of the complete freedom, equality and independence of Burma, and of the need for consolidating cordial friendship and good understanding between our two countries. In the last two years since the Treaty was signed, the Government have done everything in their power to live up to the spirit of that agreement and to their pledges. It is in that spirit that they have approached the Burmese request for aid in this instance.

Already we have had some discussion in another context of the present conditions in Burma, and there has been, and, indeed, still is, a good deal of anxiety about the situation there. As the House knows, throughout the whole of the period under discussion the Burmese Government have had to deal with a number of insurrections in different parts of the country. There has been considerable disorder, disruption to communications, trade and production, and a consequent loss of life and of property. Troubles of this kind are, of course, paralleled in varying degree throughout the whole of the South-East Asian area, but in regard to Burma there are, I think, rather special conditions which are responsible for this situation. It is right to remember that they not only have to deal with the aftermath of the Japanese occupation of their country, fought over with great ferocity in two separate campaigns, but that this has left behind a legacy not only of destruction but of regional factions, with a population which in many areas is heavily armed—what one might call private armies surviving from the war-time days.

It is clear that the actual independent state of Burma has had very great and exceptional difficulties to contend with. It is our view that the Government of Thakin Nu have been and still are struggling manfully against these difficulties. They have had a considerable measure of success, and increasing success, in recent months, and there is no doubt, whatever anxiety may still remain, the situation is undoubtedly appreciably better than it was 12 months ago. It is also better than it was two or three months ago, and there are one or two tangible signs of improvement such as the re-opening of major lines of communication which had been closed for a considerable period, like the eastern road between Rangoon and Mandalay. I am told that quite recently road barriers around Rangoon which have been there for a great many months have been removed. In general, there are some signs of increasing stability and the opening up and pacification of certain areas.

I have already referred to the support for Thakin Nu and his Government, which was expressed some months ago by the Governments of India, Pakistan and Ceylon. His Majesty's Government entirely share the view, and it is a happy coincidence that we are debating this subject when Thakin Nu himself is arriving in this country as the guest of His Majesty's Government for a short period. I should like to take this opportunity of welcoming him to England and of assuring him of our high regard for him. As the House knows, he was a signatory with my right hon. Friend the Prime Minister of the Treaty in 1947, and since then his leadership and courage in extremely difficult conditions has been of inestimable value to his country. The relations between our two countries——

Mr. Beverley Baxter (Southgate)

I do not want to interrupt the design of the Minister's speech, but he says that this is a Commonwealth loan. Why have certain Commonwealth nations held out, and will he say why they have held out?

Mr. Younger

Perhaps the hon. Gentleman will allow me to explain this matter in my own way. He should address himself to the other Commonwealth Governments if he wants to know what their motives were, and not to me.

We believe that Thakin Nu and his Government are fundamentally friendly to the Commonwealth and wish to have increasing and steady relations with it. We also are convinced that his Government wish to establish democratic methods in Burma, and therefore, we feel we should help them when we can. As the House knows, His Majesty's Government gave considerable help to Burma at the time of the transfer of power, and have since forgiven some of the money which was then loaned. There has also been assistance given in various forms with a view to assisting in the maintenance of law and order, and I put it to the House that it was very much in our interests that, following on the recent improvements in condition, the Burma Government should have some breathing space in which to restore order. That is a prerequisite of any further rehabilitation.

I would emphasise in that connection that as new areas become pacified and opened up to normal trade, the financial operations of the Burma Government for restoring damage automatically increase. Therefore, they have at the moment increased responsibility in the financial field as a result of the improvements in the situation with regard to law and order. We believe that this loan will assist them in tackling this task in the coming months.

The only stipulation which appears in the loan agreement as to the use to which the loan shall be put is that it shall be for internal expenditure. The Government of Burma have a discretion within that wide phrase as to how it shall be used. We visualise that it might be used for such services as the payment of the police and troops, for restoring communications or essential matters of that kind. The Minister of Finance of Burma has assured us that it will be used with the utmost care. The manner in which the Burmese have recently been conducting their finances entitles us to think that the money will be used with care, because for some months past they have been pursuing a highly selective policy of austerity in regard to their expenditure. All the Commonwealth Governments contributing to this loan have agreed to make the loan in this form and without any more detailed conditions.

We hope that the friendly relations which a joint loan on this basis should promote will also bring benefit to British interests in Burma. The treatment of some of the British interests in that country up to date has frankly been disappointing, and if we have not sought to lay down any conditions in respect of them in connection with this loan, it is not because we do not feel concern on that account. It is because it is our view tht the future of British interests in Burma must depend upon the good faith and the stability of the Government of Burma.

We hope that the loan which we are now proposing will contribute to that stability, and I think we are entitled to remind our Burmese friends in return of their obligations to us. We do not regard this loan primarily or indeed at all as a commercial deal. We regard it rather as a co-operative contribution on the part of the Commonwealth towards objectives which all of us share with the Government of Burma. We feel certain that the Government of Burma will regard it in this light, and will use it to promote those common ends. It is upon that ground that I commend it to the House.

3.48 p.m.

Mr. R. A. Butler (Saffron Walden)

On this side of the House we have regarded it as essential that a discussion should take place before the House approves the Motion which the Minister of State has moved. We had information that it was in the interests of the Commonwealth generally and naturally of the Government and people of Burma, that an early decision should be come to, but that did not in any way subtract from our view that an early Debate on this matter was essential. It is not the intention of the Opposition to divide the House on this Motion, but I want to make it clear on behalf of my right hon. and hon. Friends that we regard the responsibility for this transaction and its results as being the responsibility of His Majesty's Government.

In the absence of any more convincing statements which may be made later in the Debate, we are by no means clear that this loan in its results is likely to be effective. We realise that this is a Commonwealth Loan, and we respect the initiative taken by the various Commonwealth Governments concerned. We have been aware of the initiative taken by Mr. Spender in Australia and the part that the Australian as well as the other Governments of India, Pakistan and Ceylon have played in this matter.

We do not regard this—I hope I am correct in this—as part of what is known as the Spender plan, but it is an integral part, as we see it, of the approach which should be made, and which in our view should have been made earlier, to the problems of South-East Asia as a whole. It is, in fact, to use an expression used by my right hon. Friend the Member for Warwick and Leamington (Mr. Eden), a "curtain raiser" to further big developments, of which we are just seeing the start in the whole realm of South-East Asia. Before the curtain is raised it is, in the view of my, right hon. and hon. Friends, essential to express frankly any doubts and anxieties which may exist in our minds.

Before I come to express some of these I should like to say that we realise that the situation in Burma must be seen against the background of the whole Far Eastern and South-East Asian position. I would emphasise that it has been our wish to debate the whole of this question long since, and that it has only been owing to circumstances quite beyond our control that the Debate has not been possible. I wish further to stress that the Opposition desire at an early date to have a debate on South-East Asia and on the problems connected with Far Eastern policy. It may even be that had such a debate taken place at an earlier date it would have put the whole of this discussion today in a better perspective.

While we have intense uneasiness about the probable effectiveness of a loan, our decision today not to oppose it by a vote springs from a desire not to take any action which might be misrepresented at a time when the policy of the United States is moving towards positive action in the Far Eastern and East-Asian area. I should like in this connection to welcome Mr. Dean Acheson's statement, made in Paris, on the subject of help from the United States for Indo-China. This and other matters are subjects for the Debate which we have for so long wanted to hold on these subjects. I would extend on behalf of my right hon. and hon. Friends a welcome to the American Secretary of State when he comes to this country. Many of us have studied with the closest interest his massive and important speeches, especially upon this part of the world. I remember his speech made on the Far West coast on 15th March, when he said, about American aid: The aid we extend must be of a kind appropriate to the particular situation. It must be fitted into the responsibilities of others and it must be within the prudent capabilities of our resources. I could not possibly find any better language to govern our consideration of any aid this country might give in any possible circumstances. In fact, we might well apply to this loan the three criteria used by Mr. Dean Acheson, and urge the Prime Minister when he replies to give us further assurances on a variety of subjects which I propose to raise. Let us take the first point set forth by Mr. Dean Acheson: The aid we extend must be of a kind appropriate to the particular situation. Here I address myself to the remarks of the Minister of State on the subject of the internal position of Burma. We have never had the slightest doubt about the gravity of that situation. We took part in a Debate upon some Supplementary Estimates on 23rd March last, and in one of those discussions I used these words: I appeal to the Government, in regard to the granting of money which has been made and in regard to their future policy, so to conduct their attitude towards Burma, in company with the Commonwealth countries, that law and order, to which reference is made in this Supplementary Estimate, is re-established, and so that future aid we give, either from the British taxpayer or other sources, may be spent to the best possible advantage. It would be very wrong"— I said at that date— to allow these Estimates to pass without expressing the great anxiety we feel about the internal situation in the country, despite the aid of the Government and many other high-minded people to improve the situation."—[OFFICIAL REPORT, 23rd March, 1950; Vol. 472, c. 2243.] The hon. Gentleman says that the situation is improving. It is true that our latest information coincides with his that the Eastern Road between Rangoon and Mandalay has been reopened and that, from the point of view of the actual liberty of the Government to move about, there is slight improvement. No one in this House must be under any illusion that the situation in Burma internally is not extremely grave, that the communications are re-established and that there is not the utmost anxiety whether the present Administration will be able to cope with the problems in the Prome area or with the whole Communist menace which is at present threatening the country. There is the gravest possible doubt in our minds whether a Debate of this sort can show that a loan of this magnitude or type will be effective. There is a further doubt whether a process of financial aid with uncertain or no results can possibly continue at this pace.

For example, the Americans themselves have come to regret bitterly much of the money that was put, however honourably, into China, and from which there appeared in the end to be no reasonable dividend. We were in much the same position. I think it is legitimate to talk absolutely frankly during this Debate, and to look back upon the extent of the financial aid that we have hitherto granted to Burma. I calculate that the total help which we have given in all forms since the end of the war in 1945 is about £72 million.

A vote of credit to the end of the year 1945–46 amounted to about £12.81 million. A loan in 1946–47 amounted to about £30 million. British military expenditure before the establishment of civil government amounted to about £15.5 million. An item for Army and Civil Supply Stores for which no payment was made amounted to £8.7 million. Some military, naval and air force equipment handed over under the defence agreement amounted to £5 million. Those sums amount to a total of about £72 million. I should like to remind the House that of item two, the loan of 1946–47, £15 million has been absolutely waived. The third item, military expenditure before the establishment of civil government, has equally been waived entirely. The last item, for military, naval and air force equipment handed over under the Defence Agreement, has also been waived. Therefore, a sum of £35.5 million has been donated by this hard-pressed country to Burma. I calculate that a sum of about £1.1 million has so far been repaid out of this total, and that in future we have to look forward to payments of 20 equal yearly instalments from 1952, with no interest.

In face of these massive figures it is not surprising that there is a considerable reaction of opinion, not only on this side of the House but in the country as a whole, whether—to go back to Mr. Acheson's own expression—we are conducting these financial matters within the capabilities of our own resources. The British taxpayer is already the most heavily burdened in the world. We heard in the course of the financial discussion which we had recently that 43.5 per cent of the national income of this country is taken away in taxation. I think it is legitimate occasionally to mention the poor British taxpayer. At any rate, this British House of Commons exists to ventilate the feelings of the ordinary man every time.

The taxpayer, the citizen of this country, has noted with the utmost regret Burma's decision to leave the Commonwealth. At the same time he—or she—notes the numerous requests from our own family overseas for help. Take for example Colonial development and welfare It would be possible at any time to transmit more money to that excellent and desirable object, but at present we have to say that we are unable to afford to help our own family overseas. I must press upon His Majesty's Administration the fact that there are very strong views that the process of giving money to Burma without adequate results must finally come to an end, unless we find that the results are more satisfactory than those we have seen hitherto.

However, we have further political, or, rather, I would say, in the immediate subject which I am going to raise, moral anxieties. All the information at our disposal shows that the relations between the Burma Government and the Karens are as strained and tragic as ever, and I must say that we were bitterly disappointed when the hon. Gentleman made no reference to this subject in moving this Motion. There are in this country strong feelings of affection and loyalty towards the Karens. We remember their gallant service on our side during the war which is, frankly, more than one can say of a great many people in that area. We know of their affinity with us in the Christian religion.

We further reflect with shame upon our too ready agreement with the Government in their assurances given at the time of the negotiation of the Panglong Agreement. We were told at that time, I remember, that nothing but a junior Member of the Government would be sent to discuss the Panglong Agreement with the minorities in the hills and in the plains, but we were assured that that agreement would result in the protection of the minorities in Burma. We have been totally deceived both by the development of events and by the undertakings given at that time by His Majesty's Government.

I should like at this point to stress the respect which I and my right hon. and hon. Friends on this side of the House feel for Burmese nationalism. Many of us have had long and close associations with the Burmese people. No words of mine will be designed in any way to derogate from the desire of the Burmese people to be independent and to act independently, and no words of mine must take away from any admiration which I have felt and still feel for the Burmese people as a whole. But it is equally vital, if one is expressing one's belief in national development and national feeling, that there should be a responsibility for minorities and that the nationalism should not take on a totalitarian form.

The nature of the Karen problem is a very difficult one. We all know that in the plains the Karens mix freely with the Burmese themselves—they are, in fact, intermingled—and it is very difficult to get an easy solution of the problem, but I should like to welcome something that I have heard, namely, that Kareni representatives are in touch at the present time with the Burma Government. When the Prime Minister replies I hope he will give us some assurance that on the occasion of the discussion of this loan in Parliament there has been at least an attempt to bring these two parts of Burma and these two peoples of Burma more closely together. I trust that on the occasion of the visit of the Burmese Prime Minister, whom we on this side of the House welcome in this country and whom some of us hope to meet on the course of his visit, discussions will take place with a view to achieving some alleviation of the Kareni problem.

I said that we had political and moral anxieties. We have also economic anxieties. The hon. Gentleman referred to the position in regard to British interests in Burma and said that it was, frankly, disappointing. I need hardly remind the House that Burma's prosperity depends upon the development of her natural resources. Taking the question of rice alone, a prosperous Burma producing the three million tons of rice she used to in the old days could substantially alleviate the whole feeding problem not only of India but of the South-East Asian region, and could also relieve the pressure on wheat supplies which is upsetting the whole balance of the world in this respect.

Burma must at the same time, for her own good, attract foreign capital. Indeed, when we look back on the period of Burma's prosperity of not so many years ago we see how much she depended upon British capital, enterprise and skill, and there is no disposition whatever on this side of the House to feel the least ashamed of our record in those glorious days of Burma's prosperity. There has since then been a melancholy story of the expropriation and decline of valuable assets in Burma and, further, we have every reason to be dissatisfied with the manner in which the Burma Government has interpreted the letter which was written by the present Prime Minister of Burma to our Prime Minister in London on 17th October, 1947. Mr. Thakin Nu there wrote: The provisional Government of Burma agree that they will not take action which will prejudicially affect existing United Kingdom interests in Burma in the legitimate conduct of the businesses or professions in which they are engaged. The Provisional Government of Burma also agree that if convinced of the necessity of such action in any particular case they will consult with the Government of the United Kingdom in advance with a view to reaching a mutually satisfactory settlement. The second paragraph of that letter deals with the problems that would follow on expropriation or acquisition in whole or in part of existing United Kingdom interests in Burma, and it says: The Provisional Government will provide equitable compensation to the parties affected. This was a letter exchanged between the present Prime Minister of Burma and the Prime Minister of this country.

I want to make it quite clear to the House that if any action is taken which is prejudicial, Mr. Thakin Nu has written here in this annexe to the Treaty of 1947 that proper consultation shall take place between the Government in Burma and the Government of the United Kingdom. I want to ask the Prime Minister to say if such consultation has taken place and if His Majesty's Government have done their best to look after British interests which we think have been so woefully neglected over these years.

What has in fact been happening in Burma is that the spirit of that agreement has not been carried out, and now we are asked to approve a loan and apparently to sit absolutely silent without expressing our views upon it. It is our view that an immediate consideration and settlement of outstanding claims should take place. I have in mind, for example, the forest assets which were taken over in 1948 and outstanding bills due by the State Agricultural Marketing Board since 1948 and many other matters. I have also in mind not only the interests of the large companies, because their past and their future is inextricably bound up with the prosperity of Burma, but also the need to look after the interests of small traders who have suffered terribly from the whole of this calamity in Burma.

I have a letter here from a small trader who says: I can speak for other small traders. There were only about six of us in Burma. My own capital loss was £20,500. The assessors whittled this down by certain disallowances to £13,600. Of this I have received from the grant only £3,600. That is typical of the grave losses sustained by those who were fortified and buoyed up by the statements made in the Treaty and letters annexed.

I therefore consider that the Government should give a more convincing answer than they have hitherto and give better assurances before we can possibly feel satisfied that this loan is going through in the right atmosphere. We believe that it would be possible, if the Government showed rather more determination than they have hitherto, to get proper understandings not only about the Karens but also about the whole position of our trade and interests in Burma. It is certainly wrong for His Majesty's Government to let things slide and not so to conduct their negotiations as to ensure that the objectives that we have in mind are attained.

There is another suggestion which I have to make. It comes from our own experience as a country which has obtained considerable aid from America. Presumably, we are as proud a nation as any other, and we have been very glad to receive the aid which we have had from overseas. I want to suggest that just as there has been appointed an E.C.A. administrator for Europe a Commonwealth administrator should be appointed so that this loan may be satisfactorily expended. We have no desire to interfere with Burma's national sovereignty or independence. I only draw to the attention of the Burma Government the experience that we have readily agreed to in our own case in Europe.

As Mr. Acheson said, "Aid must be fitted into the responsibilities of others." There must be co-operation on the part of those who receive as well as those who give. I am quite ready to accept that the Burmese have shown considerable integrity and skill in the conduct of their finances, but I consider that the loan would be in much better hands if we could consider the kind of suggestion that we ourselves in Europe agreed to on the occasion of the aid that we have received.

It is in this spirit that our approach to the whole problem of South-East Asia must be made. The Opposition is in the gravest doubt whether our Debate today, or this loan, will of themselves satisfy the Burmese people or achieve the objectives we have in mind. We know that the avoidance of a complete collapse of all authority in Burma is a prime factor in Commonwealth policy, and it would be a bastion against that Soviet "Colonialism" and all the sinister threat which that word contains to Burmese nationalism and to the countries of South-East Asia.

Before I sit down, may I resume the general argument I have been putting: that we desire from the Prime Minister, when he replies, the assurances for which I have asked: First, that there shall be an honourable settlement with the Karens; secondly, that internal conditions in Burma are fortified so as to reestablish authority and restore the confidence of foreign capital; and, thirdly, that the loan is administered as a joint responsibility of those who give and those who receive assistance.

Mr. Harold Davies (Leek)

Before the right hon. Gentleman sits down, may I ask him one question? I did not like to interrupt him before in view of his invariable courtesy in giving way. While I appreciate his suggestion about appointing somebody, as we have done in respect of E.C.A., does he not think that, by putting outsiders in Burma to watch over the expenditure of this loan, we should create the very thing we want to prevent, the suspicions of the Communist groups inside Burma?

Mr. Butler

With your permission, Mr. Speaker, and the permission of the House, I would say in reply that in Europe many nations who are as proud of their national independence as Burma is, and some nations who even have Communists inside their borders, are perfectly ready to accept a system such as is arranged under the E.C.A. administration. This derogates in no way from national sovereignty and causes satisfaction to the American Congress and to the American people. It is a plan which might be helpful if organised on these lines.

4.13 p.m.

Mr. Clement Davies (Montgomery)

I intend to intervene for only a few moments on this occasion. I agree with the right hon. Member for Saffron Walden (Mr. R. A. Butler) that the time has come when we should have a much fuller statement with regard to the position in South-east Asia, and that this House should have a full opportunity of debating it. On this occasion, however, the matter before us is on a much narrower basis, namely, whether this House should approve of the agreement made already by India, Pakistan, Ceylon, Australia and ourselves to come to the assistance of Burma.

It is right that before we vote any money we should discuss our grievances, and I would find myself much more in agreement with all that has been said by the right hon. Gentleman if this had been done through our own initiative and if it had been a matter merely between Burma and the British Government. It is right that we should also call attention to the fact that there is a limit to the amount of assistance which this country can give to other countries in view of the difficult financial situation here at home. Every one of us will approve of what the right hon. Gentleman said with regard to the money which has been spent already in Burma. Be it always remembered that Burma would not be independent and free today but for the tremendous sacrifices that this country has made on her behalf, not merely in the money and material mentioned by the right hon. Gentleman, but in the tremendous loss of life and the sacrifices which the people of this country have made.

What has happened is that Burma, which is undoubtedly in difficulty—and has been in difficulty from the time she asked for her independence and this House and this country granted it—is anxious to try to establish a more stable Government. She has made her application, which has been listened to, not merely by this country but by her near neighbours—India, Pakistan and Ceylon. What pleases me much more is that instead of this being made an all-Asia matter, as it might well be, with all the consequences which might have arisen from that, we and Australia have been brought into this matter as a positive act of co-operation by members of the Commonwealth to come to the assistance of another country. This shows the kind of mutual feeling we have that the trials and tribulations of one are not to be considered as the concern only of that one, but that we are all ready to take our part.

Therefore, this agreement having been made by the countries of India, Pakistan, Ceylon and Australia, I feel, without going fully into the matter, that in those circumstances this House has no option but to approve and welcome the agreement that has been made.

4.17 p.m.

Mr. Diamond (Manchester, Blackley)

I am delighted to hear what the right hon. and learned Gentleman has just said and I can only echo his remarks that the whole House should be delighted to support this loan. I am sure that is the interpretation we are to put on the remarks of the right hon. Member for Saffron Walden (Mr. R. A. Butler). It is a little difficult always to understand the procedure of this House. On a previous occasion when we were debating a smaller loan for a limited purpose, it had to be made clear that the reason why the Conservatives were saying "No" was because they meant "Yes." On this occasion we understand that they will not say "No" because they are doubtful whether they mean "Yes." I hope the result of the discussion now taking place will remove any doubts that the right hon. Gentleman and his friends have in mind.

I support what the right hon. Member has said with regard to the attitude and the approach of the Burma Government and its people towards British interests in Burma. Also I should like to say, as a Socialist, that we do not believe in expropriation or in near-expropriation and that it is only right and sensible that if you want foreign capital to be invested in your country you must afford reasonable facilities for the entrance and for the working of that capital. There is nothing which will more chill those who would be interested in assisting in this way—and this form of assistance is undoubtedly necessary in the case of Burma in addition to the assistance we are discussing now—than action which seems to be unjust with regard to the determination of the real values of the money and capital invested. I am glad, therefore, to be able to support what the right hon. Gentleman has said, and to remind him that the recent Parliamentary delegation in Burma said that on all sides and made it quite clear in that country that this was the joint view.

The right hon. Gentleman asked one important question which I hope I may be allowed to help him to answer. He asked, would this Debate and this loan satisfy Burma and our objectives in Burma? So far as the speech of the right hon. Gentleman was concerned, there were one or two things he could have added to what he said to make this really satisfactory. It will have become quite clear to the whole House that there is no difference at all with regard to our objectives. The right hon. Gentleman mentioned support for British industry in Burma. Of course, the way to support British firms in Burma is to support Burma, on which these British firms depend. He also mentioned support for the establishment of law and order, and an honourable settlement of the Karen question. We all share in those same objectives, but are we to achieve them by this somewhat half-hearted support for the present loan?

In my view it is not only the amount of the loan which is the important item; it is also the spirit which goes behind it. Nobody can say with regard to a loan of £3,750,000 that it can determine absolutely the course of events either for Burma, or for this country should the loan not be repaid. But the spirit that goes behind it, and what is said in this House and in this country, is of importance. Nothing impressed me more in Burma than the sensitivity which exists there for British public opinion. What is said in Paris, in New York and in other capitals is of almost no importance compared with what is said in London, in Britain, and in particular in this House, with regard to the affairs of Burma. I have no doubt that the hon. Member for Hornsey (Mr. Gammans) always bears that in mind in making his remarks.

I hope, therefore, that in making this loan we can assure the people of Burma that there are no strings attached; that the reason why there are no strings attached is that we want to make this a token of our appreciation of what they have done—and they have done a tremendous amount in a short time in very difficult circumstances; that we want to make this evidence of our desire to co-operate with the people of Burma. We want to show them that we have the greatest respect for individual rights and for individuals who say that they want to paddle their own canoe, and that we believe that one of the reasons for fighting the last war was to set people free; that we have no objection whatsoever to people pursuing their lives in their own way, and that we only hope that they will co-operate with us as we would like to co-operate with them. It is for that reason that it is of fundamental importance that we should make it quite clear that with the loan go the best of our good wishes and that there are no conditions attached which would be unacceptable to any sovereign nation.

One further point which, I think, the right hon. Gentleman could have added to his speech to make the matter fully complete and to achieve, what I am sure he wanted to achieve, that this Debate and the loan should satisfy Burma and their objectives. He could have filled in some of the missing points with regard to the trouble between the Burmese and the Karens. We all, of course, want an honourable settlement. We all would be most glad if this problem could be solved, because then the other insurrections, in my view at all events, would quickly come to an end. If this problem cannot be solved it may very well be that the troubles which are already there and those which are beyond the border will grow and be magnified.

Surely, it is the view of everyone in this House that when one wants an honourable settlement to anything, the way to achieve it is by getting together round a table, leaving one's rifle outside and discussing matters as between man and man. That is something which the Prime Minister of Burma has endeavoured to do and has succeeded in doing on one occasion, but unfortunately without result, because such agreement as he was able to achieve was not carried out when those with whom he reached it returned to their own side.

It should be borne in mind by everyone of us here that the simple facts are that the Karen insurrection is an insurrection. If we have a difference of views between the two sides, as we do occasionally, we debate the matter through our appointed representatives and we abide by the conclusions of the majority. If there are differences of view between Burman and Karen, and there obviously are great difficulties and complex matters to be solved, then surely what we should concentrate upon is giving them our best wishes for a solution of those difficulties and inviting them to get round a table together to solve them. The prerequisite of getting round a table is, as I have said, to leave one's rifle outside and to get together and discuss the matter in a normal way.

Mr. Gammans (Hornsey)

As the hon. Member is by implication blaming the Karens for this matter, would he say whether when he recently went to Burma he met the Karens or merely heard the side of the Government of Burma?

Mr. Diamond

I am not by implication blaming anybody. The whole point of what I am saying is that it is not for this country to try to settle the matter between two communities in a foreign country. We have the greatest goodwill towards the Karens and also towards the Burmans. We are parties to an agreement for the establishment of a union of Burma, and all the parties who partook in that agreement and who agreed to join in a union of Burma should, presumably, get together and discuss their differences, as they have done. I am sure that the hon. Member for Hornsey (Mr. Gammans) does not believe that the right method of solving difficulties is by rebellion, and I am delighted to find that we are all agreed that the getting together for discussion is the sensible approach which we cannot but welcome. Once people have got together round the table, it is for them to sort out their difficulties.

I hope that we shall all bear these things in mind in making our speeches with regard to the affairs of Burma and that we will bear in mind particularly that the Burmese listen most carefully to every word which is said in this place. They are most anxious to achieve the goodwill, co-operation and respect of the people of this country. In view of what they have achieved within this short time and of the benefits which they have brought to their own people—bearing in mind the history of events and that when people achieve their freedom they have to learn how to practise it in their own way—I for one bear them the greatest possible goodwill, and I congratulate my right hon. Friends in joining with the Commonwealth in putting forward this loan.

4.28 p.m.

Mr. Wakefield (Derbyshire, West)

This is the first occasion on which I have had the privilege of addressing the House and I therefore ask for the indulgence of hon. Members. I shall not detain the House for long. The first point I should like to make is that it seems to me vain, idle and utterly valueless to debate, as is often done, the question of whether the grant of independence to Burma was a supreme act of statesmanship, the crown and consummation of our achievements in Burma, or a gross betrayal of faith. That is something which relates to the past. My own personal view, for what it is worth, is that the grant of independence to Burma in 1947 was an Act of historic necessity. I think that in the circumstances of 1947 there was no practicable alternative. But what matters now is not the past, but the present and the future.

In relation to the future, the first question which I ask myself is this. Burma is a foreign republic. What obligations have we to a foreign republic? I suggest that we do have obligations to this foreign republic, obligations arising both from the past and from the future. Arising from the past, we have the obligation to ensure, as far as we are able to do so, that the achievements of our race in Burma over the greater part of a century are not wholly cast away. In regard to the future, we have the obligation to confirm and strengthen in its resistance to Communism any country, such as Burma, which we hope may be ranged in the struggle for world power with the forces of freedom.

Accepting that we have obligations to Burma, the problem arises of how we can fulfil them. That is a most difficult problem. It can be argued that political conditions should be attached to any loan we grant to the Burma Government; but that argument seems to ignore completely the natural viewpoint of the Burma Government themselves. Some hon. Members on both sides of this House had the privilege of enjoying a classical education at Haileybury. Those hon. Members—and others—will, no doubt, recall that when Zeus overcame Chronos and became king of Olympus he banished Prometheus to a distant peak in the Caucasus. He chained Prometheus to a rock and sent vultures to peck at his liver. But Prometheus was a philosopher and, in spite of the attacks on his liver, he gave expression to a very sage observation. These were the words which Æschylus put in his mouth, [...] which I will translate as follows: Those who have newly come to power are always intractable to begin with. That is true. We know how at school new prefects always throw their weight about and it takes a term or two of office before they find their balance. In the domestic government of this country, as of other countries, we see how parties newly come to power are sometimes, shall we say, a little inconsiderate before the responsibilities of office mellow them.

We cannot be surprised, therefore, if the Burma Government should resent—in my view rightly and naturally resent—the attachment of political conditions to a financial arrangement such as this. I do not suggest that treasure should be ceaselessly poured into Burma without any conditions. The history of American ventures in China has shown how fatal and disastrous such a policy can be. How, then, can we help Burma? How can we fulfil our obligations to that country? Money is not enough, even if we could spare it in sufficient quantity. Ultimately—I repeat "ultimately"—I believe that we can only help Burma by the service of Britons to that country, by the help of industrialists and merchants in the development of the physical resources of the country, by the help, in administration, of British officers, impartial and competent. I know that if we offer those services now, such an offer would be refused. I know that; but that does not mean that such an offer will always be refused.

We know that responsibility does, in fact, mellow people who are called to power. Zeus, in the old story, eventually grew more tolerant and released Prometheus from that distant peak in the Caucasus. At school, prefects eventually cease to swagger about in the way they first did when given their powers. And even political parties new to power sometimes temper, in the course of time, the first fine careless rapture which inspired them when they first acquired power. Surely we may hope that the new rulers of Burma, rightly proud as they are now of their new position of authority, will in time become mellowed. In time: But there must first be a lapse of time; and, in the meantime, I suggest that the only reasonable course of action which this country can take in its relations with Burma is to show, in season and out of season, sympathy and goodwill.

I think, moreover, that this loan is an example of such goodwill. I regard it as a token of goodwill and I believe that the Burma Government will regard it as a token of goodwill. But if we take the view that this is not just a token payment, but represents something tangible and substantial—the output of British brains and British hands—so much the better. It shows that our goodwill is not merely a matter of superficial sentiment, of fine words and phrases, but that it goes deeper, our goodwill is a matter of real substance and real significance.

4.36 p.m.

Mr. Harold Davies (Leek)

I am sure the House listened with interest and avidity to one of the most excellent maiden speeches which we have had the privilege of hearing—a speech which will do much to eradicate any misunderstanding there might be in Burma about the general feeling of the House concerning the prosperity of Burma. I hope that we shall frequently have the pleasure of hearing the hon. Member for Derbyshire, West (Mr. Wakefield) taking part in our deliberations and I am quite convinced that if his contributions are as constructive and valuable as his first contribution has been, he will do much to maintain the traditions of this honourable House.

In discussing this loan we should realise to the full the colossal task with which this young Burma Government has been confronted. The new constitution of Burma was an excellent document expressing a national resolve for unity in the Union of Burma and within it is clearly chiselled the fact that there will be no racial victimisation and that there is the desire for all races to live side by side. The new government is enthusiastic and energetic and, maybe, enthusiasm and energy do not always make up for lack of experience, but the Burma Government have courageously and to the best of their ability tackled economic affairs in agriculture, commerce and industry.

One of the outstanding problems which was created for the new government was that right away it decided to re-establish peasants on the land. It hoped to provide them with credit and to encourage thrift and it hoped to give to the P.V.O., a force estimated at one time as some 800,000, useful work after their period of service in the equivalent of what in Britain we called the Home Guard. It has all along aimed at trying to balance Burma's economy. This is a problem with which we are confronted in the whole of Asia and South-East Asia, and it is because of that that I join with hon. Gentlemen opposite in hoping that this House will very soon have an opportunity for a full-dress Debate on the problems of the Far East and South-East Asia. It hopes to industrialise and eradicate some of the difficulties caused by having all its economic eggs in one basket and I, as I am sure would some hon. Members on the other side of the House, would like to pay tribute to the zeal displayed by Thakin Nu in his difficult position as Prime Minister.

Unfortunately, in this period of doubt mistrust grew up between the nationalists and the old officials who were in power. For that we British must take some of the blame. Little had been done by the British Administration to encourage Burmans to take over responsible administrative posts. I will give one or two examples. Of 20 departmental chiefs two only were Burmans; of seven divisional commissioners only two were Burmans, and they were merely "officiating." There were about 50 civil police officers above the rank of district superintendent, of whom only three were Burmans. The medical services were below strength when the new Government took over, and of 38 senior appointments 25 were vacant, while of the other appointments only three were filled by Burmans. Out of that grew a lack of belief in the British Government and a lack of confidence throughout Burma.

The job of creating a new country in what I might describe as a volcanic transition in the history of Asia was thrown on to the backs of young, very inexperienced Burmans. I maintain that they have made as good a job of re-creating Burma as have America and Britain in trying to create a Western Germany and a Western Europe. I maintain that they have made as good a job as, indeed better than, the Americans have made in Korea and Japan because they are trying to base their system on the realities of the nationalist movement in Burma whereas America is failing to observe that principle in the whole of the Far East. I consider that the investment of American arms in Bao Dai will in the not too distant future prove to be tragic for the whole history of Asia. This is not the occasion to develop that point, but I will do so with pleasure if I have the opportunity on another occasion.

As a parallel on which to base our criticism, let us look at much of the chaos which we Britons and Americans have on our hands in many parts of the world, with all our skill, with our dollars, our technological knowledge, machinery and business men. Judging by that parallel I would say that the achievements of the young Burma Government was worthy of our trust and worthy of the demonstration of that trust which is illustrated by this loan.

I believe, although hon. Gentlemen opposite will probably not agree with me in this, that we have wasted time because British business men and British interests are suffering from Victorian nostalgia in the belief that they can rebuild Burma on the old business pattern. Those days have gone, and while none of us on either side of the House can give a complete answer, we should now be trying to cooperate with honest Asiatic nationalism to find a new pattern of business for negotiation and common trade at present. I hope that this loan will help.

It will take perhaps a generation for Burma to stand on her own feet. If the Opposition want to encourage the development of democracy in Burma I would say to them that their differences of opinion, as already illustrated by speeches that have been made on the other side of the House, are not conducive to bringing that about and to building that confidence in Burma which we all desire. I wish that the Opposition, before we have these full-dress Debates, would agree in their private party meetings about what they would say and what they would send out to the world, because already the division of opinion on the other side of the House has been shown.

I noticed the following in the "Statesman" of Calcutta, of 8th April: Independent quarters share the official feeling that bright prospects are ahead"— in Burma— for the first time since the country became independent two years ago. … All quarters here are looking forwards to early restoration of surface communications between Rangoon and the interior. This restoration, and especially the re-opening of the Rangoon—Mandalay railway, will mean freer movement of goods inside the country with a resultant reduction in the cost of living. According to the bank reports that we are now receiving from Burma it clearly appears that—and this is an extract from the report of the Union Bank of Burma— The economic outlook for the future is governed to a large extent by political developments not only in our country and the rest of South-East Asia, but also throughout the world. Given a measure of internal security, the immediate task would be to rehabilitate the fields, the forests and the mines, which are the basic pillars of our economy. The long-term plan would be to introduce a fair measure of industrialisation in order to overcome the weaknesses inherent in a one-crop economy and to make for self-sufficiency in some respects. I believe that this a constructive loan which will not be spent in the barren way in which the American loan which was handed over to China was spent and the way in which American aid to Bao Dai will be spent, but will help in promoting the peaceful affairs of the country and enable it to proceed to build up its economy so that people can live. I believe that it is a part of the Spender plan for South-East Asia, that we on both sides of the House will welcome the loan and that it will prove that we have been justified in our belief in the Burma Government.

4.49 p.m.

Brigadier Smyth (Norwood)

I suggest that in our consideration of this loan to Burma today we should examine it from the point of view not only of its giving us an opportunity of helping the Government of Burma to restore law and order and to stand on her own feet again, but also of benefiting the people of Burma. In our discussions on this subject we think all too little of the Burmese people. My background so far as Burma is concerned is entirely sentimental. My father lived the whole of his working life in Burma, and died there. My son was killed in action there. I myself took part in one of our big military disasters of the war, when we were overwhelmed by the first Japanese invasion and flung out of Burma. All we could say at that time to those Burma people, the Karens and other hill tribes, who remained loyal to us, was, "Don't worry, Britain always wins the last battle. When we come back the loyal element will be rewarded and the rebels will be punished." We were very wrong when we said things like that to those who helped us in those dark and tragic days, because the loyal element who assisted us are the very ones who have suffered, while the people who either took no part in assisting us at all, or worked actively against us, are the ones who have flourished I feel very badly about it. I feel we still have a moral responsibility for those friends of ours in Burma who helped us, and who have come out of it extremely badly.

Mr. Sorensen (Leyton)

May I ask the hon. and gallant Member how and why the Karens have suffered?

Brigadier Smyth

They have suffered because we have not supported them, and we are still not supporting them.

Mr. Sorensen.

In what way? Would the hon. and gallant Member say in what way we should support them at present?

Brigadier Smyth

By saying more about them in this House. The right hon. Gentleman who opened the Debate for the Government could have helped them if he had only mentioned their names. They like to feel that they exist, and that we still regard them as our friends. As has been mentioned before, the people of Burma take a lot of notice of what is said in this House, and when a Government spokesman, in a Debate of this kind, does not mention them at all they do not regard it favourably.

Mr. Sorensen

May I ask the hon. and gallant Member another question?

Brigadier Smyth

I have given way twice, and I think I should now be allowed to go on with my speech. I feel extremely badly about the people of Burma. Before the war they were a happy people. They may not have been happy in their work, because they are not terrific workers. In fact, the only time they get really hot and bothered is when they see a job approaching. Nevertheless, they were happy, and they were content that the British and Indians should do most of the work in their country before the war. There was law and order in the country, which is something we can be proud of having given them. Today, Burma is a very unhappy country. It is disunited and torn by strife, dacoity and banditry; it certainly cannot be argued that the freedom, or whatever we call it, that we have given to Burma has made life happier for their people.

The troubles which face Burma today cannot be solved by pouring more and more money into the country. We have tried doing that before. It is not merely a matter of money; it is what is to be done with the money and how it is to be used. The object of the loan is, first of all, to restore law and order throughout the country and to help the people to produce more rice. If we do that we shall benefit other parts of the world and deal a blow at Communist infiltration. We might help Burma today by giving them the advice and assistance of British administrators who have spent many years in that country. They could be of the greatest assistance to a young Administration.

I remember very well an occasion when Lord Halifax, then Lord Irwin, was Viceroy of India, and he was in Calcutta watching a polo match between a British team and an Indian team. There was great communal feeling at the time, and whenever the Indian team did anything good the thousands who were watching the game roared their applause. But there was dead silence when the British team did anything at all. Playing back for the Indian team was a Britisher, and whenever he did anything good he got just as much applause as the three Indians who were playing with him in the team. I was very much impressed when Lord Halifax said to me, "That is the sort of thing I would like to see in India—a Britisher playing in an Indian team."

That is what I would like to see in Burma today. I would like to see some of our experienced British administrators going back to Burma, not as rulers of the country as they were before but as advisers and assistants. I have not given up all hope that the Burma Government will mellow with time, as was said by my hon. Friend the Member for Derbyshire, West, (Mr. Wakefield), who made his maiden speech this afternoon. I have not given up all hope that they will become so mellow that they will apply to come back once more into the haven of the British Commonwealth and Empire.

4.58 p.m.

Mr. Wyatt (Birmingham, Aston)

The hon. and gallant Member for Norwood (Brigadier Smyth) rather over-simplified the problem of Burma. He made the Karens sound like a collection of heroes who ought to have the right to run the entire country, and he made the Burmans sound like a lot of company directors who ought to be evicted. On mature reflection, I am sure he will agree that that is a great over-simplification of the situation.

In listening to the right hon. Member for Saffron Walden (Mr. R. A. Butler), who opened for the Opposition, my mind went back to the Second Reading of the Burma Independence Bill, when there was a very different atmosphere and when his right hon. Friend the Leader of the Opposition made the speech; when the right hon. Member for Saffron Walden was not present in the Chamber and his name could not be found in the Division lists that evening when his own party voted against the independence of Burma. So we must recognise straight away that the right hon. Gentleman himself has won something of a victory inside his own party of backwoodsmen. He has begun to make them realise something of the nature of the new Commonwealth which is developing; he has persuaded his right hon. Friend to keep silent on this occasion, and that is no mean achievement.

Of course, it was part of the price he had to pay for this concession—that his right hon. Friend would not speak this afternoon—that he himself, in his approach to this loan, should have to take up a rather meaner attitude than he would have liked; should have to make a lot of carping criticisms of this loan which ordinarily, as I know from his own very generous outlook on these problems, he would never dream of making at all, if he had not to concede something to his right hon. Friend to keep him quiet. That accounts for the extraordinary balancing from one foot to another as his speech developed. At one moment it seemed that he was a little bit against the loan. At another moment he was anxious to show that he was enthusiastically behind Dean Ache-son in giving £75 million to the Emperor Bao Dai of Indo-China; but it was another matter to give £3¾ million to Burma. He was able to gloss over the fact that we have supplied Western Germany with about £250 million since the end of the war, and goodness knows how much in Palestine. Nevertheless, any small contribution to Burma must be weighed, and weighed again, in the balance.

I particularly welcome this loan, because this is the first time that the Commonwealth, acting as a Commonwealth, has taken joint action in the fight against Communism. This is a most welcome prelude to the Sydney Conference on the Spender plan. We may feel confident that, with this loan in the background, it will be easier to persuade the Commonwealth to go forward in taking greater steps in the economic development of the under-developed areas of South-East Asia.

It has been suggested that there should be certain conditions attached to this loan. The right hon. Gentleman the Member for Saffron Walden talked of our relationship with America and said that we did not object to having an E.C.A. administrator for the Marshall Aid plan. In the first place, of course, the Marshall Aid loans are a trifle bigger than £6 million, and one might reasonably expect an administrator under those circumstances. In the second place, and this is the great difference, we in Europe are old and established nations. America won her independence from us: we did not win our independence from America. Therefore, the whole psychological climate is entirely different. It is quite another matter for us to say to Burma that we must put an administrator of the loan into Burma and apply certain conditions. That is different from America requiring certain supervision over the outgoing payments to old and established countries.

Whether one likes it or not, whether it is reasonable or unreasonable, if any conditions of any sort were attached to this loan, so extreme is the nationalist feeling in Burma today that the loan would be rejected.

Mr. Erroll (Altrincham and Sale)

Are we pressing the loan on Burma, or did she suggest it?

Mr. Wyatt

I intend to suggest, if the hon. Gentleman will do me the courtesy of waiting, that it is much more to our advantage that Burma should take the loan than it is to Burma's advantage. I see that the educative process begun by the right hon. Gentleman the Member for Saffron Walden has not yet penetrated very far into the ranks of the Conservative Party. He has made a good beginning, but there are still many tough ones behind him.

If the Government of Burma were to fall, there would be no alternative to it but some form of Communism. That is an absolutely inescapable fact. There is no opposition whatever to the governing party in Burma except for the Communists and P.V.O.s, who are near-Communist in their attitude. I am sure that hon. Members have studied the map before discussing this subject this afternoon, but for those who have not had time, I would remind hon. Members that Siam and Malaya are, broadly speaking, on one side of Burma, and India and Pakistan are on the other side. China is directly to the north. It is clear that if the Communist advance from China is to be held, then Burma must present an orderly front to the Chinese border. It certainly would not be possible to meet a full-scale onslaught from China, but it is essential that conditions inside Burma should not be so chaotic that it would be easy to infiltrate Chinese Communists over the border in response to some faked appeal from some local Communist so-called Government set-up in Burma. It is important to keep that frontier tidy.

If the Communists once gained control of Burma, it would then become impossible to maintain Malaya and increasingly difficult for the present Governments of India and Pakistan to remain in the saddle, because infiltration of active Communism from both sides would grow apace. The whole of our position in South-East Asia would crumble to nothing. The whole of the cold war against Communism in South-East Asia would be lost before it began with any effort on our side, if we lost Burma. That is one reason why it is just as important for us that Burma should take the loan as it is important for Burma that she should take it from us. Burma needs this loan because of her post-war difficulties, and also because of the difficulties which arose out of the disorders.

I will not pretend that Burma is as well governed as Great Britain. [Interruption.] I hope we can encourage the right hon. Gentleman the Member for Woodford (Mr. Churchill) to join in this Debate a little later, and to explain his new views on the Empire about which he is toeing remarkably silent today. I remember well his remarks during the Debate on the Second Reading of the Bill which gave independence to Burma, when he said that the British Commonwealth was running away as fast as the American Loan. He put Burma in the same category as India and Pakistan. He seemed to think that both those latter countries had wrongly vanished from our grasp because they were longer dominated by us. Indeed, if he had been our Prime Minister for the last five years, there would now be no British Commonwealth, because he would have destroyed it by his policy.

Mr. Churchill (Woodford)

I did not make public declarations, like the Chancellor of the Exchequer, that I wished to liquidate the British Empire, nor other triumphant assertions that after a great many years "This is exactly what we have done."

Mr. Wyatt

My right hon. and learned Friend the Chancellor of the Exchequer certainly made that statement. He took a great part in liquidating the British Empire and transforming it into the great new and voluntary British Commonwealth. The history books will show, perhaps, that this has been the greatest achievement of this Government, greater even than any of the great works of social security which we have been able to put through in this country. The fact is that we have transformed the British Empire into a great new Commonwealth which is with us voluntarily and which is not dominated by us.

The Burma Government, because of the disorders which have gone on throughout the country, have been obliged to call upon us for this loan so that they may meet certain payments to their officials and their Army. If they cannot meet these payments——

Mr. Churchill

In dealing with this question relating to the present Government having transformed the British Empire, right hon. and hon. Gentlemen opposite might perhaps reflect that they shed even more blood in the British Empire in their five years of reign than was shed by the whole of Great Britain and her Armies in the war.

Mr. Wyatt

There is a very simple answer to the right hon. Gentleman. If we had not done this, then far more blood would have been shed than has been shed. If he doubts me, let him look at the position in Indo-China where the French have carried through exactly the policy he would have wished us to carry through in Burma; where they are pouring out French blood and French money; where the situation has become chaotic beyond belief; where the Americans do not really know how to make a start to try to repair the situation, and where the whole of Western policy in South-east Asia has been bedevilled by exactly the sort of policy that the right hon. Gentleman wanted in Burma.

Mr. Churchill

Four hundred thousand lives in India alone.

Mr. Wyatt

Does not the right hon. Gentleman realise that if we had insisted on maintaining that iron lid on top of India, there would have been so vast an explosion that it would have been a case of 4,000,000 lives not 400,000. I had hoped that his right hon. Friend the Member for Saffron Walden had been able to work upon him during these last few years and had pointed out to him the error of his ways and had made him realise that, during the first few years after the war, every time he made a speech about the British Commonwealth he multiplied the enemies of this country. He was, in fact, doing as much harm to us in peace-time as the great good he did for us in war-time.

Mr. Churchill

I am not seeking any compliments from that quarter.

Mr. Wyatt

If we may return to the actual Debate, the money that we and the Commonwealth propose to lend to Burma will not in any way be wasted, because there have been great signs of improvement in the internal position of the country over the last year. A year ago, when I was in Burma, the road to Mandalay was closed. It was quite impassable. Today, it is open, and that is a substantial improvement. So is the road which runs north of Mandalay, which has never been closed. Today, the railways, which have not been running for a year are now running as far as Toungoo, which is a substantial way from the capital. The Communists have been driven into a small area around Prome and there has been a split between them and their guerrilla supporters of the P.V.O. The Karens are now right away from any town and hold no front whatever, having been driven into the hills.

I agree with those who say that the Karen problem is the key to the problem of law and order in Burma today. If that problem were solved and the Karens were fighting on the side of the Government, there would be no internal problem in Burma. They would be able to deal with the Communists. But it is an immensely difficult problem, as all minority problems are. Unfortunately, it has been inflamed by some people from this country. There was the celebrated case of a Mr. Campbell, a "Daily Mail" correspondent, and a Colonel Tulloch, of Force 136, who went in for an extraordinary kind of schoolboy adventure in encouraging the Karens to believe that, if they started a revolt, they would get help from the City of London and that arms would be supplied from the same source. Of course, they have no business to say so, and British business men in Burma were bitterly against Campbell and Tulloch when the story was exposed. There is no question of British help for the Karens, even though they were made to think so.

A year ago, the offer was made to the Karens by the Burma Government of a fully autonomous state within the framework of the Union of Burma, and also of a safe-conduct to their homes for all those who had been engaged in the insurrection. Because there has been so much suspicion between the Burmans and the Karens, today that offer has never been accepted; and there are difficulties in the Karens giving up their arms because, certainly a year ago, I do not believe the Burma Government could have implemented that safe-conduct guarantee which was given by them. Today, I think the position may be different, and I hope very much that talks will be started between the Burmans and the Karens, and that they will at last realise that co-operation between the two communities is of advantage to both.

Certainly, from my conversations with the Burma Prime Minister and other members of the Cabinet, I am quite satisfied of their good faith when they offer these guarantees to the Karens, and they certainly have not in any way betrayed their word to the other hill tribes. The other hill tribes had a similar guarantee of a semi-autonomous State, and the arrangement has worked well. There is no dissatisfaction among the other hill tribes with the Government. That is shown by the voluntary request of the Chins and the Kachins and Karennis to assist in restoring order. They are now being armed to some extent and formed into regiments to help the Burma Government. Obviously, therefore, the other hill tribes feel no uneasiness on the score of co-operation with the Government.

There are other signs of improvement in Burma. There is the much greater willingness of the Burmans to co-operate with the Military Mission than was the case a year ago. There is a feeling of greater confidence so far as the British and their intentions are concerned. There is better co-operation with British business interests, and a growing realisation in this newly nationalist state that, in fact, they cannot carry on without some form of assistance from the foreign business element. Recently, they have agreed to a double taxation arrangement between our two countries, and compensation is now being paid to the Irrawaddy Flotilla Company and the Electric Supply Company has been taken over and is being compensated.

Mr. Erroll

May I correct the hon. Gentleman on a point of fact? The Electric Supply Company has not been taken over, nor has compensation been paid to the Irrawaddy Flotilla Company.

Mr. Wyatt

The hon. Gentleman is quite wrong. Only a week ago, the Irrawaddy Company received the first instalment of £150,000 of agreed compensation of £300,000.

Mr. Erroll

rose—

Mr. Wyatt

I have been interrupted quite a lot, and I have not much more to say.

So far as rice is concerned, the right hon. Gentleman the Member for Saffron Walden said that once upon a time Burma was able to export three million tons of rice a year. Of course, that was true before the war, but Burma has been ravaged twice by two armies during the last war, and it has not fully recovered and it would be unreasonable to expect that her production should already be as high as it was before the war.

Mr. Churchill

Which two armies?

Mr. Wyatt

The British Army and the Japanese.

Mr. Churchill

I deny that the British Army ravaged Burma.

Mr. Wyatt

The right hon. Gentleman was Prime Minister at the time, and, on the instructions of the Prime Minister, tremendous blowings up and explosive destructions took place in Burma in order to deny the country to the enemy. That was an official policy, and it was perfectly correct. I have never stated that the British Army was wrong to deny the ground to the enemy, and, so far as that was done, it was perfectly correct.

Mr. Churchill

It is an insult to the British Army to put it on the level of the Japanese invaders and to say that it ravaged Burma, when it rescued Burma.

Mr. Wyatt

I was only trying to state the objective fact that two armies ravaged Burma. It is in the nature of war that armies fighting over a territory ravage it, and there seems to me to be nothing insulting to the British Army in saying so. I fully agree that the British Army did recapture Burma, and it was certainly not the American Army that did it, although much praise has been bestowed on Americans for doing something which, in fact, the British did.

Mr. Walter Fletcher (Bury and Radcliffe)

Will the hon. Gentleman do himself justice, as well as the British Army, which takes precedence over him in this matter, by agreeing that the fault is in his use of the word "ravaged"? Burma was not ravaged by the British Army, which carried out a policy of destruction. They had nothing against the population, but only attempted to deny to the enemy certain facilities. There is all the difference between that and the use of the word "ravaged."

Mr. Wyatt

I do not mind whether we use the words "damage," "ravage" or "destroy." I was not talking about the population, anyway; I was talking about the ground.

Mr. Churchill

What I object to is the Japanese Army, which invaded the country, being placed on the same level with the British Army, which rescued it and liberated the people.

Mr. Wyatt

I am sorry that the right hon. Gentleman has been so disturbed by my strictures on his earlier attitude towards the Commonwealth that he is now allowing himself to join in a ridiculous argument about whether armies ravaged Burma. I suppose I should be putting the Japanese and British Armies on the same footing if I said that they both used rifles.

So far as rice is concerned, last year the Burma Government were able to export a million and a quarter tons of rice, despite the fact that disorders had been taking place in the country. This year, the target is 900,000 tons, and they have already got out 850,000 tons. It looks as if they will reach a million tons, which does not seem to suggest any lack of stability on the part of the Burma Government. I believe also that this Government is genuinely anti-Communist, which wants to be a part of our sort of world rather than a part of the sort of world being created by Russia in China today. It is because of that that Burma has come to us for assistance, and, despite the fact that the right hon. Gentleman the Leader of the Opposition made so many inflammatory speeches against her, she still wishes to have our friendship. As a result of that, she feels that her place is with us, and against the Communist bloc.

I know it is quite true that the Burma T.U.C. has recently announced that it wants to join the World Federation of Trade Unions, but that action, I understand, has been thoroughly disapproved of by the majority of the Socialist Party, and there are talks now in progress to see if that decision cannot be overturned. It should also be remembered that the trade unions in Burma are extremely weak, and represent only a handful of people. Therefore, it is not really a serious thing that that should have happened.

The linchpin of our policy in South-East Asia is, I am sure, the country of Burma. If that falls, then the whole battle is lost to the Communists in South-East Asia. It is vital that we should assist Burma in every way we can, and we are fortunate that this Burman Government have learned from their experience, and are altogether more responsible than they were a year or two ago. When we have a Debate on South-East Asia, further consideration should be given to the question of whether this country should not urge upon the Commonwealth that the Commonwealth as a whole should serve notice on the Government of China to the effect that we will not tolerate any interference in the internal affairs of Burma; and that, possibly, we would have to consider announcing a line in South-East Asia beyond which any action by the Communists in China would be considered an aggressive action against the whole British Commonwealth.

5.23 p.m.

Mr. Gammans (Hornsey)

If I listen to many more speeches from the benches opposite, I shall come to the conclusion that we ought to be grateful to Burma for taking the money from us. In fact, I am not sure that we should not be doing ourselves a very great benefit if we doubled, or even trebled, this loan. It is a new social situation in the world when one finds Father Christmas as a suppliant, begging people to take money from him.

Let us come down to stark realism. I understand from what the Parliamentary Secretary said towards the end of his speech that there is only one reason which really justifies this loan—the sincere belief of His Majesty's Government that it will save Burma from Communism. The country is already in a state of chaos, verging on complete collapse, and the argument is that unless we produce this money the hammer and sickle will fly over Rangoon. If that is the case, and if the granting of this loan will save Burma from Communism, then I think we shall be justified in giving it. That is really the only question we ought to discuss here today.

But what are the chances that a loan of this amount will succeed in that purpose? If I were asked to give odds on it, I would give 10 to I against its succeeding. We can only look at this transaction from the point of view of hard-boiled realism and not sentiment. Burma has gone out of the Commonwealth of her own free will, and, therefore, we must regard the question of this loan in the light of whether or not in our own interests, and in the interest of free countries throughout the world, Burma can, in fact, be saved from Communism. No one can accuse us of having lacked generosity towards Burma when, as my right hon. Friend said this afternoon, over £70 million of British taxpayers' money has been poured into Burma in one way or another since we left it.

I suggest it is time that this House became more jealous than it appears to be of every penny which we spend, either at home or abroad. Let us realise that every penny we waste is money which we ought to be spending, but cannot spend, on something else. Look what we could have done with this £70 million within the Colonial Empire. Think of the schools, the irrigation schemes, and also of the universities and hospitals that need to be built in every part of Africa and the Colonial Empire, and of the great schemes we could have opened up in British Guiana and British Honduras with this money. Let us realise that if we waste this money on Burma, it is the people of this country and of the British Colonial Empire who will go short. We cannot hold the Empire together if we court those who spurn us, and treat with meanness those who are friends. Money will not save Burma any more than the Americans saved China by pouring untold millions into that country.

I suggest to the Government that there are three conditions which must surely be observed if Burma is to maintain her independence. The first is that there must be internal peace and security. We have been assured by several hon. Members opposite that conditions in Burma are now better. I sincerely hope that is correct, and that they will remain better. But I wonder how many hon. Members opposite have the faintest idea of what has happened in Burma during the last two years. There has been a strict censorship on the Press in Burma, and anyone who dared to criticise the Government of Burma was not allowed to send out his dispatches.

There has been a farce of a Government in Burma which controlled only Rangoon and odd places up country. It was like this Government controlling London and districts no farther south than Guildford and no farther north than St. Albans, and trying to maintain a precarious hold on, say, Manchester, with no communication by road or rail between these places. It is just as if the Scots, both in Scotland and the expatriate Scots in London, the Welsh and the people from Yorkshire were in revolt against the Central Government. Those have been the conditions in Burma, and to hear hon. Members opposite talking about the great progress made in the country's economic affairs in the past few years brings the whole thing to the verge of farce.

There is one thing about which I feel very strongly, and that is the Karens. I think all of us in this House should have a bad conscience about the Karens. They stood loyally by us in the war, and the point is that they never wanted to cease being British subjects. They only signed the Panglong Agreement when we made it perfectly clear that we were going to abandon them anyway, and they have been shockingly treated by the Burmese since that time. I wonder how many hon. Members in this House have ever heard of the massacre of the Karens when they were going to church on Christmas Day, 1948? That is one of the things that did not come out of Burma. Can we wonder that the Karens do not trust the Burmese today? The Prime Minister of Burma is over here to attend——

Mr. Wyatt

Has the hon. Gentleman been to Burma since she became independent, and, if not, how does he know that the facts which he has given us are true?

Mr. Gammans

Of course I know. I have many friends in Burma and many in the Far East. My source of information is not restricted to what appears in the "Daily Herald."

The Prime Minister of Burma is at present in this country to attend the Memorial Service at Westminster Abbey on Thursday. We are glad he has come, but what a travesty of the situation that at that Memorial Service to the British Army there will not be a single representative of the Karens present? It was they who stood by us and fought with us, and, surely, it is they who ought to be invited to a service of this sort?

Today in Malaya His Majesty's Government are lamenting the fact that the Chinese are reluctant to give assistance and information. Can they wonder at it after what happened in Burma? The Chinese are looking over their shoulders and saying, "Look what happened to the Karens who were loyal to you. You walked off and left them. Are you going to walk off and leave us in the same way?" That is the main reason why today the Government in Malaya cannot get the assistance they want. I contend that the first condition for saving Burma from Communism is that there must be peace and law and order within the country. The second condition is that the standard of living must be maintained, and, if possible, raised.

But the outstanding feature of the present régime in Burma is that the standard of living has been lowered, not raised. Today Burma, of all countries in the world, is importing oil and Burma which, before the war exported between three million and four million tons of rice, now cannot export one million. Burma is being reduced to a bullock cart civilisation and the whole country is becoming a vast tropical slum. If Burma wants to save herself from Communism and raise her standard of living one of the things that obviously she must do, as my right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler) said in his opening speech, is to accept the advice and help of outside capital. But who, in his right senses, would invest a penny in Burma today when we consider the way British assets have been treated in that country?

Surely the third way in which a country can resist Communism is that, if necessary, it must be prepared to resist it militarily. I believe one of the most dangerous fallacies in the world today is that one can prevent Communism coming into a country merely by economic means. What we have seen in Czechoslovakia, where we had a prosperous and democratic country over-run by Communism, should teach us that economic prosperity alone will not save a country from Communism if there is a military force outside determined to dominate it.

Before we dole out money like this we ought to ask ourselves whether Burma is prepared to come into any Pacific pact, any anti-Communist pact that we, the Commonwealth, and the United States might be able to form in the near future. It is obvious that she cannot defend herself by her own exertions. If so she should say what facilities she is prepared to give to the Commonwealth and the United States to help defend her. We in this country do not think it derogatory to our dignity and independence to give air bases to America. How shall we or anyone else be able to defend Burma if she is going to try and rely entirely on her own means? Those are the three conditions under which Burma can be saved from Communism.

When we consider those things, how puny and fantastic it is to think that this loan can hope to save the country at all. I believe Burma to be in very grievous danger today. Recently, a treaty has been signed between the Kremlin and Peking, between Mao Tse-Tung and Stalin. Some of the clauses of that treaty have been published, but it would not be according to the pattern of a normal Soviet treaty if there are not secret clauses. I shall be very surprised if one of those secret clauses is not that China shall be allowed to invade Burma if she wishes to do so.

What a farce it is to pretend that a loan of £3½ million from this country can cope with a situation like that. What a travesty it is to suggest passing over this money without any conditions attached to it and without any attempt to get peace and order, without any attempt to raise the standard of living and without seeing that there are any military guarantees to defend the country! What nonsense it is to suggest that by so doing we can render Burma any real service. I suggest we say to the Burmese that, if they want any real sense of security and want their independence to be anything but the hollowest of hollow mockeries, the first thing they have to do is to make peace with the Karens. Secondly, they must stop expropriating outside assets and so restore the standard of living. Thirdly, they must enter into a real pact of friendship and alliance with those only countries upon whom in the end they can depend.

5.35 p.m.

Mr. Sorensen (Leyton)

I am quite sure that some hon. Members on this side and perhaps some hon. Members on the other side of the House cannot but feel the contrast between the method and spirit of the hon. Member for Hornsey (Mr. Gammans) and that of the hon. Member for Derbyshire, West (Mr. Wakefield) who made his maiden speech about half an hour ago. It revealed to us that there are in the Conservative Party those who approach this matter constructively and sensitively and those who approach this very vital question in a very different and altogether more lamentable mood.

I suggest that we had better make up our minds what we are going to do. If we are going to extend this aid to Burma we might as well do it with goodwill and graciousness and not with a sneer. What is the alternative to the extension of this very modest loan? What do we expect if we say we shall not give it? Do we imagine that is going to encourage the Government and people of Burma to greater appreciation of this country? Do we imagine that that kind of rejection is going to have a great beneficial influence in Pakistan and in India? Is it going to assist the Commonwealth, which, I beg to remind the House, now consists mainly of dark-skinned and not white-skinned peoples? I suggest that from the standpoint of our own self-interest, if we like, the best way in which we can encourage the continuation of the Commonwealth and its further integration is to recognise that this loan is needed by the Burmese people and that we should give it with graciousness, goodwill, friendship and understanding.

A few more speeches such as that of the hon. Member for Hornsey would do incalculable damage to future prospects of friendship between this country and Burma. As it is, we are accustomed to his approach and we understand it. I am happy that he does not represent the whole of the Conservative Party, as is evident from the speech of the hon. Member for Derbyshire, West and that of the right hon. Member for Saffron Walden (Mr. R. A. Butler). I hope, despite what has been said by way of schizophrenic revelations of the Conservative Party, that very soon we are going to be told quite clearly that on this occasion all sides of the House are going to support this loan. I hope, as has been asserted elsewhere, we are going to prove that on matters of this kind we can rise above mere partisanship and prejudice.

It is quite true that Burma at present is in very dire straits economically and politically. Can we entirely blame the present Burma Government? Is it not true that it was not Burma that decided to enter into war? It is true our armies went there to prevent the Japanese who were invading. It is true we did so with the best of intentions, but the fact remains that Burma is politically and economically chaotic today largely because she was involved in a war she herself did not choose.

Mr. Gammans

Who did choose?

Mr. Sorensen

We chose to make war with the Japanese. I am not saying we should not have done so; that is not the point at all. The point is that whether it was the Japanese or the British who decided to make war, it was certainly not the Burmese. They did not ask the Japanese to drop bombs on Pearl Harbour or for us to come and attack the Japanese. [Laughter.] The laughter of hon. Members opposite is a revelation that they know the Burmese were involved in war not through their original choice.

It was useful for us that we could utilise Burma as part of our defence against the Japanese. It is true that in the course of war great destruction has to be inflicted, as was done in Burma. The effect of that was felt by the Burmese, and when the war was over that was one of the factors then confronting the new Burma Government. It is equally true that the Burma Government were confronted with Communist uprisings. Again surely we are not going to blame the present Burma Government because there were, in fact, two Burma Communist armies attacking that Government.

As to the Karens, we all have sympathy with them, of course, but when we talk about the Karens suffering, we must face the fact that they are suffering today because they themselves have rebelled in association with the Communists. Therefore, if we are going to show sympathy to the Karens, which we should, we must be frank and honest and implore the Karens at this time to make their peace with the Burmese. Can any one suggest that the Burma Government have not offered the most generous terms of settlement? Is it not true that many Karens are now fighting with the Burma Government at the present time? Is there any Member present who, on examination of the facts, would not honestly say that it was wrong for the Karens to have taken up arms in association with the Communists in order to destroy the Burma Government?

In those circumstances, I cannot understand some hon. Members on the opposite side of the House. I should have thought that they would have occupied their time better today in appealing to the Karens to recognise the damage they are doing to their own country. It is true that in the past the Karens fought with us, and the Burmese sometimes did and sometimes did not, but the fact is that in the end we recognised the right of Burma to please herself as to whether she remained inside the Commonwealth or not, and we recognise the present Burma Government. In that case the right thing for us to do is to appeal to the Karens, with every sympathy and every appreciation of what they have done in the past, to recognise that they are injuring their own country by continuing this bitter civil strife.

So much has been said this afternoon about the Karens as a reason for holding back the loan, or at least only advancing it with all kinds of qualifications and conditions. I suggest that that is the wrong way to go about the rehabilitation of Burma. Burma is politically and economically chaotic today. On the other hand, it is equally true that Burma has enormous economic potentialities. Given the right opportunity, given proper capital investment, given a period of internal peace, I am convinced that the Burmese people in co-operation with others will be able to re-establish their country and make it an example of Eastern prosperity.

But I do plead that this loan shall not be extended to Burma merely in order to help her to fight Communism. I would put it on a higher plane than that. If there is squalour and misery, those are the conditions in which Communism breeds—we have seen it elsewhere—but I submit that a far better approach to this matter is not to extend the loan mainly, merely or exclusively in order to assist Burma to fight Communism, but because it is right for us to assist Burma, because we want friendship with Burma and because although Burma is now outside the Commonwealth, we still believe that she is our friend.

In that case I say, let us realise at this present time, when the whole world is apprehensive about the future, that we are not going to get out of this terrible and intimidating mood of fear by extending such aid as is necessary grudgingly and almost maliciously. We shall encourage a new spirit and a new alignment of forces only by being gracious and by extending such aid as we can with goodwill. The £3¾ million which has been asked for at the present time by Burma, spread over a considerable period if need be, is a very small part that we can play in assisting to rebuild Burma and make her some day not only a prosperous country but once again a happy country and, I hope for all time, a country friendly with ourselves.

5.45 p.m.

Mr. A. R. W. Low (Blackpool, North)

I have often heard the hon. Member for Leyton (Mr. Sorensen) speaking about the affairs of the East, and it has always seemed to me, as it has seemed to me today, that he relies very much on the sincerity of his thoughts and the hopes which he sincerely entertains for the fulfilment of his wishes. I think it is our duty today to consider this loan from the point of view of the object which the Government have told us about—that is, to strengthen Burma in the fight against Communism, to strengthen freedom in Burma—and to see whether this loan is going to achieve this purpose.

I sympathise with many of the hon. Gentleman's hopes and wishes, but I wish that he would sometimes direct his mind towards some of the practical problems. I, sometimes agree with him, and perhaps I am a little bit at variance with my hon. Friend the Member for Hornsey (Mr. Gammans)—[HON. MEMBERS: "Hear, hear."] Just wait and see what it is, because the rest of my speech will support everything that my hon. Friend has said. I am a little bit at variance with him in his statement that we should forget about sentiment. I do not think that in dealing with the East we can forget about sentiment. That is one of the things I learned when I went there after the war, and I have always found this to be true whenever I have gone back to those parts, as I have, from time to time.

We have been told that this loan is for internal purposes. I should like the Secretary of State for Commonwealth Relations to tell us whether that means that the sterling, which is placed presumably in the Burma Currency Board's hands in London, is going to be blocked. I ask that question because if the sterling is not blocked it can be used for external purposes and for buying goods from overseas.

The Secretary of State for Commonwealth Relations (Mr. Gordon-Walker)

The equivalent amount of rupees will be paid to Burma, and they agree to use those rupees for internal purposes That is one of the terms of the agreement

Mr. Low

That has not quite answered my question. What I want to know is whether they are going to be allowed to use this sterling freely. I am not saying now whether that is a good thing or a bad thing, but I want to know whether there is going to be an addition to what we call unrequited exports.

Mr. Gordon-Walker

They will not be receiving sterling. They will be receiving rupees from their Currency Board here.

Mr. W. Fletcher

Would the right hon. Gentleman try to make the position more plain?

Mr. Low

I think the right hon. Gentleman had better clear up this point when he makes his speech at the end of the Debate. It is important that we should know whether the sterling is usable or not. If the sterling is blocked, then this loan will introduce into the economy of Burma an inflationary tendency, because it will produce more money with no goods for that extra money.

It is as well that we should have this point clear. If the sterling is not blocked but is free, then the loan is not just for internal purposes but can be used for external purposes. It really is as well that we should understand exactly what is happening. I have every reason to expect that we shall find that there is a sort of half-way house, that the sterling is not blocked but that it is not expected that the sterling will be used. If that is the situation, then this is just one more of those occasions when we in the country have parted with sterling for what I consider, and for what I believe the House considers, is a good reason.

Before I come to my next point I should like to ask this question. Is it not about time that this House considered the whole problem in our external aid in South-East Asia, including the release of sterling balances, which is a major part of this kind of aid to the countries of India and Pakistan in particular? Ought we not to consider this question of financial aid anew? We have never discussed the release of sterling balances, which has recently been justified, and which I think can be justified, on the grounds of international political influence. If that is its true justification, we should discuss this release and the policy behind it just as much as we are discussing this loan today.

If I understand this loan correctly, it is merely the forerunner of other loans which we shall be asked to make in accordance with the Spender plan, when that plan has been worked out and the countries gathered together at the conference in Australia have decided among themselves what they want to do and how much they can spare. I suggest to the Government that they should consider giving the House an opportunity of discussing the financial aspect, as well as the very important political, strategic and other economic aspects of the problems of South-East Asia, about which I hope we are to have a Debate in the very near future.

I was interested when the Minister of State, in his speech today, set this loan against the background of affairs in South-East Asia and I was also glad that mention was made of the military aid announced today for Indo-China. There seems to be a very grave difference of opinion on the Government Benches about whether that is a good thing or a bad thing. I studied the faces of right hon. Gentlemen on the Front Bench opposite when certain of their hon. Friends behind them were talking and I was really very depressed on their behalf.

Mr. Sorensen

Did the hon. Member also see the expression on the face of his own Leader, the Leader of the Opposition?

Mr. Low

Owing to the fact that my eyes are not boomerangs in vision, I am afraid I did not—but I think that for the time being I have made my point, as is shown by the alacrity with which the hon. Member for Leyton (Mr. Sorensen) leapt to his feet.

One of the most important parts of this loan arrangement which we ought to be considering, is how we can best make this small loan effective, bearing in mind, as I am sure we must bear in mind, that if it is to be of real use it has to be followed up. I emphasise that because it is important to my argument. Hon. Members opposite have stressed the fact that if conditions were attached to the loan, that would make it wholly unacceptable to the Burma Government, and one of my hon. Friends, the hon. Member for Derbyshire, West (Mr. Wakefield), in what I thought was a most excellent maiden speech—if I may modestly say so —pointed out that new governments, new peoples, are suspicious, indeed over-suspicious, particularly of those who have been looking after them in the past.

It may be that it is quite impossible to attach conditions to loans such as this, but I think it is right to say that if grown-up countries, such as our's, are prepared to accept conditions to their loans, then the time must soon come when countries in South-East Asia should also be prepared to accept conditions. I do not think that time has come yet, however, and we have, therefore, to consider what is the next best thing for us to do in order to see that this loan is effective—because that is our object—and also in order to see that, if it is effective, it can be followed up.

Though conditions may not be attached to the loan, I think the Burmese themselves would be wise to realise that if the objects sought by this country and the Commonwealth in giving this loan are not fulfilled, then that will seriously affect the prospect of further aid. It is for that reason that I believe we should seriously consider, in the Commonwealth, the appointment of one man or of a group of men in Rangoon as administrators of this loan, if only to see how the money is spent. They could report on behalf of the Commonwealth to the successor to the Colombo Conference on how the money has been spent—whether it has been spent well or spent badly.

I cast my mind back to the Debates which have been held in Congress in Washington about the European Aid Programme. One realises how interested other countries may be in money which they have loaned to us and it is also right that we should be interested in the disposal of money loaned to Burma, if only because we want to see that the purpose which we set ourselves is fulfilled. I hope, therefore, that the Government will think most seriously about the proposal put forward by my right hon. Friend the Member for Saffron Walden, in his opening speech, that an administrator might be appointed.

Let me add to those points, support—if I may so put it—of the three points advanced by my hon. Friend the Member for Hornsey as essential, in his opinion, to the strengthening of Burma against Communism. A lot of things have been said about the Karens. From time to time, perhaps much too much is said about the rights of the Karens without modifying that with some of the things which have happened in the past two years and which, to my mind, have been a little wrong. That does not prevent it from being true that the Karens have been loyal to us and it is right that we in this country should still be interested in their future, as I think we are, on both sides of the House.

I think it is also true to say that the Burma Government have done something to see whether they could establish peace with the Karens but it remains the fact that, whoever is at fault, peace has not been established. It is in the interests of our objective—that Burma should be strengthened against Communism—that there should be peace between the Karens and the Burma Government as quickly as possible. I am sure we should like to know a little more about what is being done to achieve that.

Reference has also been made to the obligations of the Burma Government under the Treaty they signed and the letter attached towards British interests in Burma. To my mind it is very important that the Burma Government should honour those obligations. The Minister of State, quite rightly, said that the Burma Government had conducted their finance on strictly orthodox and correct lines, but it has been made much easier for them to do so because of the fact that they have not paid their just debts to a great many British firms. It is about time they began to do so, and in particular, in this connection, I would emphasise the two points mentioned by my right hon. Friend. It is also important that there should be no doubt in anybody's mind that there is no discrimination in Burma against British firms.

I was very glad to see, in the report of the Union Bank of Burma—the last paragraph of which was read by the hon. Member for Leek (Mr. Harold Davies)—that importance is now attached by the Government of Burma and the Bank to the provision of foreign capital in Burma and also to arrangements for foreigners to run their businesses unimpeded by threats of expropriation. That is certainly an advance, and a substantial advance over the constitution of Burma itself, but we want to see that advance maintained.

The last point mentioned by my hon. Friend the Member for Hornsey to which I attach great importance was that Burma should herself show that she is prepared to co-operate with other nations in the area against Communism. The idea of a South-East Asia plan, as it were, under the Spender plan, will not work if the only co-operation is that between the donor countries. There must also be cooperation between those countries who receive aid. I hope the Government will accept those points which I have advanced and the suggestions which I have made.

I would close on this note: I attach as much importance as did my right hon. Friend to the recognition and the strengthening of the nationalism in South-East Asia. I believe that as that spirit of nationalism grows, in a healthy way, the fight for independence will turn to the realisation of the importance of interdependence. It is right that we in this House should ask the Burmese to turn their attention a little more to the point of inter-dependence—inter-dependence with the Commonwealth and inter-dependence with the countries of Asia that lie on its borders in the south and east.

6.0 p.m.

Mr. Thomas Reid (Swindon)

Unfortunately I was called away during part of the Debate, which is on a subject in which I am deeply interested. However, I heard the opening speech of the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler). Amongst the things he said was that the proposed loan might not be a success. I would not contradict him for a moment, but I would ask him this question. What would be the position if the loan were not given? The position of Burma is desperate. The position of the whole of South-East Asia is fairly bad. This loan seems to be necessary to keep Burma from collapsing completely.

The hon. Member for Hornsey (Mr. Gammans) asked several questions—pertinent questions based on knowledge of Asia and Burma—and I cannot answer them. He pointed out several difficulties that lie ahead. I cannot tell him the solutions. However, I would point out that at the Colombo Conference recently the people who met there had complete and intimate knowledge of what was taking place in that part of the world, Burma included, and that our own Foreign Secretary who is certainly a very practical man and a very able man was there. We had there people who knew the problem and knew the dangers ahead, and they decided that this Commonwealth loan was necessary for Burma.

I am perfectly certain they knew all the difficulties mentioned by the hon. Member for Hornsey and probably many more he has not mentioned, and yet they, in their wisdom, in full conference, decided that this loan should be made to Burma. I would ask hon. Members in all parts of the House not to go beyond that, but to trust not only our own Foreign Secretary but also the people from the several Governments of the Commonwealth who met at Colombo, and I would suggest that there is no use in our trying to undermine their work. All we can do is to agree with the wisdom of their conclusions.

The right hon. Member for Saffron Walden also suggested that something should be done in the way of sending out a commissioner to supervise the expenditure of the loan. He did not use the word "commissioner," but another hon. Member did. Again, I have no doubt whatever that the Colombo Conference considered that. Everyone who knows how administration is carried on in various parts of the world knows that it is necessary to have administrators who enjoy the trust of all those in the territories with which they are concerned. In the case of Burma there is a civil war raging, and theoretically it may be advisable to have an impartial commissioner from outside. I have no doubt that that was considered at the Colombo Conference, but it was not commended, apparently—although I have no inside information. In any case, how could one administrator, one man, supervise the expenditure of £3,750,000 in a country like Burma seething with unrest and civil war? I think we have to entrust the matter to the Burmese themselves. That is what they want, and we have to risk it.

There has been a great deal of talk about the Karens. The other tribes were not mentioned—merely the Karens. I have tried to follow the history of Burma since she became independent. I am not going to enter into the rights and wrongs of the dispute between the Karens and the Burmese. It is a pitiful story. U Aung Song promised me that he would give his word to offer to the tribes the maximum amount of independence. As far as I can see, he did, but there was mutual distrust between the tribes and the Burmese, and this unfortunate civil war broke out. The only suggestion I can make is that, as they do not trust each other, possibly they would accept an impartial arbitrator to go in from outside, and possibly they would agree beforehand to accept his recommendations; or, if not one man, possibly two or three friends of Burma. All the right is not on the side of the Karens nor all the wrong, and we had better leave that internal matter for settlement by the Burmese themselves.

I should like to point out, even to the Burmese, that it was British troops who drove out the Japanese. It is true that the Burmese did not want to be dragged into the war, but they were dragged in because Japan was about to invade their country, and did invade their country, and it was British arms that saved the country. At the end of the war, when the Japanese had been expelled, the Burmese asked us to quit, and we quitted The Japanese would not have quitted, and Japanese rule would have been very different from that which we had in Burma before we quitted the country. So, the British Government quitted because the Burmese did not want us to stay, and since then, instead of bearing any malice towards the people of Burma the British Government have poured out enormous sums of money to help Burma to stand on her own feet.

The right hon. Member for Saffron Walden quoted figures—I have no doubt they are approximately correct, if not completely correct—£70 million in loans and gifts. I would suggest to the Burmese as a friend—I know they regard me as a friend of Burma—that there are very few countries in the world that would have behaved as magnanimously as Britain has behaved after the Burmese told us to quit. It was, incidentally, the biggest mistake the Burmese made to ask us to quit, as they now realise—to quit the greatest Commonwealth of free nations in the world, the British Commonwealth. I have many Burmese friends who will acknowledge that it was a frightful mistake. Despite that, the British Government have behaved with great generosity and magnanimity in the interests of the Burmese, whom the British have always liked as a people, and also in the interests of the British themselves, whose interests in that part of the world are great, not merely commercially but also strategically. In fact, we have an agreement and a Treaty with Burma which I do not think has been referred to in this Debate.

So I would suggest to my Burmese friends, if my words may carry across the sea to them, that we are in this thing together, and that we are both faced with the greatest menace the world has ever been threatened with, and that is the menace of Communism. I would suggest to them that the Burmese cannot stand alone, and that they depend on us and also on our other allies, America, Australia, and the rest, I would suggest to them that they are in dire peril today, and that they should give up this narrow, nationalistic line of thought and parochial or "parish pump" way of thinking that as they own Burma they have all the rights as owners of Burma and no obligations. Every country in the world has obligations to every other country, and the Burmese have obligations. Even if they had not they would still be in dire peril, and would still need the help of the rest of the world.

So I would suggest to my Burmese friends that this loan is another gift from Britain, and I suggest that they should come into line with the other countries engaged in the defence of South-East Asia. I would suggest to them that the friendship of Britain is essential. As regards the loan itself I would suggest to hon. Members in all parts of the House that there is no question but that we should unanimously agree to the giving of the loan.

6.10 p.m.

Mr. Ashton (Essex, Chelmsford)

I should like to associate myself with the last words of the hon. Member for Swindon (Mr. T. Reid). Hon. Members on both sides of the House have referred to the fact that Burma has had a difficult time. I think this was put very nicely in a letter I received from a Burmese clerk whom I know well but have not seen for many years. It was a letter which he wrote me shortly after the end of the war, in which he said: I am longing and looking forward for you to come back to war-torn Burma where I have spent tough days. Certainly they have been tough days—tough both for Asiatics and for Europeans, and I am afraid perhaps even tougher since the days of Burmese independence. Well, I did go back to Burma two months after their independence, and I remember arriving and hearing from my friends of the Irrawaddy Flotilla Company that there had been some intimation by telephone that they were to be nationalised. The hon. Member for Aston (Mr. Wyatt) said that this firm was receiving half of an agreed payment of £300,000 for their expropriation. Well, I have not heard that there was any agreed settlement. My information is that the claim of the Irrawaddy Flotilla Company, made as low as it possibly could be, was between £1 million and £1¼ million.

I should like to stress the British commercial interests. The Minister said today that he has had deep concern about the attitude of the Burma Government towards British interests. I went up to the oilfields in March, 1948, and saw the great activity: the fields were being rehabilitated, topping plant was in operation and petrol was being despatched. Unfortunately, it is the case—and I speak as a very great friend of Burma, both Burmans and Karens—that as a result of conditions in that country those activities had to be stopped in October, 1948. Thereafter there were negotiations between the Union Government of Burma and the Burmah Oil Comany so that there might be some joint venture. That did not get very far owing to the fact that the Union Government of Burma at that time were unable to put up the money. Thereafter—as we discussed here on 23rd March—the Government of the United Kingdom came forward and guaranteed up to a certain considerable sum the further expenditure by the Burmah Oil Company on the rehabilitation of their very important oilfields.

I heard then, and again this afternoon, that conditions in Burma are definitely improving; things are better everywhere, and that communications are opening up. I hope that is so, but despite that the decision was reached on 23rd December last that no further guarantee by the Government could be given to the Burmah Oil Company or the other oil companies there for the continuation of re habilitating their oil fields. There is just one other point on the subject of the British commercial interests. It is the case, as my right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler) has said, that the forests have been taken over and are being used by the Burma Government at the present time; while a certain sum of money is being paid to those British interests, it is relatively very little.

I do, with all sincerity, wonder against all that background whether the Treaty of Burma and the exchange of letters that went with it have been lived up to. I hope that I may join with my right hon. Friend in asking the Prime Minister to assure us that in future these things will be more closely observed. If each of us were today considering this sum of £3¼ million as if it were our own, would we be prepared to risk it in the manner that we are doing?

I believe nevertheless that we are right to do this. I am certain in my own mind that the good intentions of both sides of the House towards Burma since the end of the war are beyond doubt. But I do wonder—and the evidence is before me to see with my own eyes and in what I read, and what I hear from people who have come back from that country quite recently—whether some of those good intentions have not fallen upon slightly stony ground. Well, the ground is the Burmans'; the ball, so to speak, is in their court; and as a very sincere well-wisher of that country I hope that, with this further opportunity which is provided, they will grasp this nettle and that they will, as has been suggested—I hope it is correct—restore law and order. I hope that things are getting better, because I am certain that it is in the interests of all concerned, for our own country and Burma, that we should get back to the happy conditions which existed there before the war, and to the happy relations between our country and theirs.

6.15 p.m.

Mr. Paton (Norwich, North)

At this stage in the Debate I do not propose to occupy the House for any length of time. Moreover, a large number of the points I wanted to make have already been made by my hon. Friends, and I do not want to weary the House. Nor do I wish to pursue the commercial matters which were the subject of the speech of the hon. Member for Chelmsford (Mr. Ashton), important as they are. I want for a moment or two to turn to the rather wider considerations.

I am wholeheartedly in favour of this loan, and I am very glad that the House is going to agree to grant it without a Division, although perhaps with somewhat different feelings on the two sides of the House. I welcome this loan, not because of the amount involved, which is only £3¼ million so far as this country is concerned, but because it is a loan which represents for the first time, a joint cooperative act by the countries of the British Commonwealth in order to sustain and to build up the economy of a country in South-East Asia. Not the least important part of that co-operative effort by the countries of the British Commonwealth is that it is being taken part in by two Asiatic Dominions—the countries of India and Pakistan.

It therefore seems to me that the great value of this loan is not merely in the amount of money that is being put at the disposal of the Burma Government, but in the great moral support that she will feel as an Asiatic country in this practical expression of the sympathy and support, not only of the white peoples of the British Commonwealth but also of her Asiatic colleagues and friends nearby. That seems to me to be one of the most important aspects of the loan.

Of course, it has been obvious in this Debate, as it is obvious in many Debates in this House, that in this matter the Opposition speak with two very distinct and jarring voices. We had a quite magnificent maiden speech from the hon. Member for Derbyshire, West (Mr. Wakefield); a speech which was sympathetic and understanding, which showed great insight and was founded, I think, on direct knowledge, and which deeply impressed the House. It was, I thought, a most statesmanlike utterance. It was the speech perhaps of what we might call the beneficent Dr. Jekyll of the Tory Party.

But then we had the jarring note from the hon. Member for Hornsey (Mr. Gammans), whose speech I thought, in every word that he uttered, was a extraordinary disservice to the common bonds and ideas which bind the British Commonwealth together. It was a most dangerous speech in the situation with which we are confronted today. That is to some extent, I think, true of the speech of the right hon. Member for Saffron Walden (Mr. R. A. Butler), who told us that although the Opposition were not going to oppose the loan they were only very tepidly going to support it, and that they desired to dissociate themselves from any possible consequences that may follow from the act.

Now if that is the sort of attitude and mind of the Opposition towards a very critical situation, involving the continued existence of a settled state in this critical point of South-East Asia——

Mr. Brendan Bracken (Bournemouth, East, and Christchurch)

Settled?

Mr. Paton

I said, which involved the possibility of the continuance of a settled state in South-East Asia. If the right hon. Gentleman were less ready to interrupt but would listen a little more carefully perhaps he would find it unnecessary to make some of the interruptions he does make. I was pointing out that in this matter the Opposition are faced with a situation of extreme crisis affecting a point of great importance in what might be called the South-Eastern defences of the nations against the onward march of Communism. All we have got from the Opposition was this grudging, niggling assent to something which they did not dare to oppose, but which, at the same time, they could only in a luke-warm and sickly way venture to support. I say that this is an attitude completely unworthy of the Opposition in the British House of Commons in the world situation with which we are faced today.

I think that there was also too little said in the criticism offered, implied and expressed, about the nature of the Burma Government during the last few years. Far too little was said about the quite extraordinary difficulties which that Government have had to face—difficulties not of their own making. With a Government coming into power for the first time from a subject people who for many generations had been denied the opportunity of acquiring any skill in governmental administration; a subject people who for generations had been under our rule, thrown into this position at the end of the war in a country ravaged by war—in the use of the word "ravaged" I do not expect there will be any difference of opinion—facing quite incredible difficulties, it is not surprising to me that in the few years in which they have had that immense responsibility they may have given evidence, here and there, of weakness and indecision in endeavouring to solve problems which would probably have tested any Government in the world.

Before we get too hypercritical about the failure of the Burma Government to restore order in Burma in the last few years, do not let us forget our own position in Malaya. We are in a similar tropical country and we have had, as we now know, to struggle for years against a handful of trained terrorists who are able to engage and keep engaged a great British Army with all its modern equipment because of the nature of the country and of the support which it gets from great sections of its own people. It is precisely that kind of situation that has been facing the Burma Government, except that in their case their real difficulty has been, of course, the insurrection by the Karen people against the Government of the centre—an insurrection of people of very great military quality and war-like character who would have given the greatest trouble to any Government to bring into subjection.

When tributes are paid to the past records of the Karens in this House, we are all prepared to share in them, but we must not forget that in this matter the Karen people are in insurrection and armed rebellion against the established and elected Government of their country. It ought not to be forgotten, either, that a good part of that trouble has been created, as, I think, was mentioned earlier in the Debate, by some of the ill-chosen advice given them by people of our own country, and I think that the revolt has been sustained by some of the expressions made use of in this House from time to time in Debates on their behalf.

I do not want to pursue that matter because I should have been glad if the Karens had not come into this Debate quite so prominently. I understand that there are now approaches between the Burma Government and the leaders of the Karens which promise a settlement which may get rid of the difficulty altogether, and it would obviously be a great disservice if any word uttered on either side of the House today caused that attempt at agreement to break down. All of us, I am sure, whatever our differences may be, want to see the insurrection in Burma settled and the Burmese people once again united in a great effort to settle their economic problems.

I want to say a few words about the attitude of the Opposition. I think that the Opposition has to make up its mind how it will deal with a case like that confronting the Burma Government. They dislike the Burma Government not because it is a Burma Government but because it is a Burma Socialist Government. They dislike it because, as they have shown on many occasions in this House, it has been endeavouring to carry out a Socialist policy. I suggest to them that they must make up their minds. They take a certain view about the dangers of Communist advances all over South-East Asia. They are very anxious to stop that advance. Some of them, I think, hope that it can be stopped by force of arms, but there is, I know, the view held that it may be stopped by giving timely assistance in stabilising the economy of many of these South-East Asia countries and by raising the standard of life of their people.

I think that what they have forgotten is that we cannot succeed in stemming Communism in Burma or anywhere else by merely raising the standard of life, unless we can match the dynamics of the Communist Party with similar dynamics on our side. It is only when a Government like that of Thakin Nu attempts in Burma to apply the principles of great land reform and to bring under the control of the Burmese people themselves the essential economic resources of the country that we have the possibility of meeting the Communists on their own ground and beating them.

We cannot check Communism or contain it merely by pouring in dollars or pounds to sustain ancient tyrannies which the people of South-East Asia have made up their minds must go. We can only do it if we accept the new ideas of Thakin Nu and the Burma Government and make up our mind that here is a test case for us. If we want to contain Communism hon. Members opposite must not allow their hatred of Socialism to be the enemy of progress in Burma. I ask the Opposition, therefore, to try to think clearly on these matters and to come to some clear line of policy with regard to them.

6.29 p.m.

Mr. Enroll (Altrincham and Sale)

The hon. Member for Norwich, North (Mr. Paton), seemed to imply, in the concluding passages of his speech, that there had been tyranny in Burma before the war, whereas, of course, that was very far from being the case. An increasingly large measure of responsible self-government was conferred on the Burmese as fast as they could take it.

Mr. Paton

I never used any such word as "tyranny." I suggested that the Burmese people had been a subject people for generations.

Mr. Erroll

The Debate has revealed that on the benches opposite there is a considerable difference of opinion. Rarely have I seen a motion introduced with so little enthusiasm as that introduced today by the Minister of State. He almost seemed to apologise for the Motion he was bringing before the House, and perhaps that accounts for the excessive exuberance of hon. Members opposite during the Debate, as when the hon. Member for Leek (Mr. Harold Davies) suggested that the Burmans had done a much better job in Burma than we and the United States had done in Europe. Obviously, the hon. Member for Leek has not studied present day affairs in Burma very closely, where not a single mine or large commercial plant is in operation, and where less than one-seventeenth of the territory is under the control of the officially-constituted Government. Then we had the hon. Member for Blackley (Mr. Diamond), who has the smallest parliamentary majority among Members opposite, saying that the loan is a token of appreciation for what the Burmese have done. What have they done? Such exaggerations do their cause no good at all.

There has been much discussion about whether the loan should be granted on conditions, and the Minister of State made no reference at all to whether or not there should be conditions attaching.

Mr. Youngerindicated dissent.

Mr. Erroll

Perhaps the Minister would care to say what the conditions are.

Mr. Younger

I said that there were no detailed conditions, and I explained why.

Mr. Erroll

It is obvious, of course, that there should be no political conditions attaching, but surely there must be some economic conditions of a normal character attaching, such as the interest the loan has to bear and the date of redemption? These are certainly conditions we should expect to be applied.

In present circumstances, it is undesirable that there should be anything in the nature of detailed formal conditions to be worked out in connection with this loan, because that would only delay the matter much more and might result in a loan never reaching the Burma Government. However, we are entitled to say on either side that we intend to pursue our proper and legitimate objectives with the Burma Government, and that our granting of this loan, while it is proof of our good intentions, is equally proof of our intention to pursue what we believe to be the right objectives towards this young country, with whom we are in a very special relationship.

It is only fair to remind the House of the great amount we have already done for Burma since the war. Members opposite frequently speak as if the Burmese took over in 1945 and have had the sole responsibility for trying to restore commerce, communications and peace in the country. By 1947, under the aegis of the British authorities, communications had been largely restored, and there was law and order throughout the country. It was only when the Burmese themselves took over that the country slipped back into conditions approaching anarchy. No one is more glad than I to learn that there has been some small measure of improvement in the last few weeks.

We should make it quite plain that we have objectives that we believe should be pursued. We should make it plain that the restoration of law and order throughout the country must be the Government's first and main objective. I understand from what the Minister of State said that the money will be used in part in payment of police forces and military personnel.

Mr. Younger

I must make it clear that I gave that as an illustration. I was very careful to say that apart from that it should be used for internal purposes. The actual details are in the discretion of the Burma Government.

Mr. Erroll

That, of course, follows if there is to be no detailed administration of the uses to which the loan is to be put.

A course of action which has been suggested by several Members on this side, which I think has much to commend itself, is that we should appoint an administrator. Further, if we are to see this money partly expended on military payments, we ought to remind the Burma Government of the presence of the British Military Mission in Rangoon. The hon. Member for Aston (Mr. Wyatt) indicated that considerable use is being made of this Mission, but I can assure him that the exact reverse is the case. Since the Mission is there, it ought to be used to ensure that the limited military resources at the disposal of the Burma Government are used in the most effective and most useful manner possible. Why are the resources so limited? Alas, it is because it has been impossible, so far, for any settlement to be reached with the Karens, who, before the war, provided the backbone of Burma's military forces.

We ought to make plain once more to the Burma Government the great importance we attach to an early settlement of the Karen dispute, so that it will be possible to recruit the forces necessary to bring law and order to those parts of the country inhabited, not by the Karens, but by Communists, bands of outlaws, and ne'er-do-wells. We should insist on the proper protection of British assets, we should be protected, in particular, from the day-to-day looting that is continually taking place. The continual running down and depredation of these assets is a very serious drain on the capital wealth of Burma, capital which is almost entirely in British hands and represents the greatest hope for Burma in exploiting the considerable economic possibilities she possesses and to which other Members have referred.

We must also point out that it is no good Burma asking for foreign capital to enter the country if, at the same time, she pursues a policy of discrimination against foreign companies, particularly in regard to labour relations There are some particularly discriminatory proceedings taking place at present in Rangoon against the Burmah Oil Company, and very unfair decisions have been made against other British companies operating in Burma, conditions so onerous that they make it questionable whether these companies can continue to operate in Burma at all. That is not the way to develop the resources of Burma for the benefit of the Burmese, or to encourage fresh drafts of foreign capital to enter the country.

There is no doubt that without this loan Burma can fall apart and become a centre of disintegration and anarchy, that she can become a centre of Communist infection throughout South-East Asia. It is, of course, in our interests to grant this loan, but it is still more in our interests to continue to pursue, by all the legitimate means of a friendly and fatherly Power, those objectives which we believe to be essential for the future strength and prosperity of Burma and which, I hope, will not be too far distant.

6.38 p.m.

The Secretary of State for Commonwealth Relations (Mr. Gordon-Walker)

I should like to begin by referring to the very remarkable maiden speech we have heard during the course of this Debate from the hon. Member for Derbyshire, West (Mr. E. Wakefield). The speech he made represents entirely the views of the Government and of my hon. Friends on this side of the House. We echo everything which he said in an extremely statesmanlike and responsible speech.

This is an appropriate occasion for this Debate, partly because of the arrival in this country of the Prime Minister of Burma, to whom I should like to add my welcome, and partly because it coincides with the eve of the Sydney Conference. Both that Conference, which we regard of the very greatest importance, and this loan, which is an operation on a far smaller scale, are in consonance with our general policy in regard to South-East Asia. I think it is a travesty of my right hon. Friend's speech to say that he was being apologetic in presenting this loan to the House.

Our policy, and I do not think there is any disagreement on the two sides on this, is first of all to encourage independent States in South and South-East Asia, which involves taking all the measures we can to resist the spread of Communism, because Soviet imperialism is a denial of the national independence of these states, and to create the stability and prosperity of the peoples in that part of the world. The Burmese could play an immense role in restoring stability and prosperity to that part of the world. If we could get the country's rice production anywhere near what it was before the war, a great many of the problems of that part of the world would be solved. This loan is a modest contribution towards achieving that end, and it seemed to me that when the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) quoted Mr. Dean Acheson's test—"You should make one test of a loan, if it is appropriate to the particular situation in question"—it seemed to justify this loan. It is intended as a temporary first-aid measure to strengthen the internal administration of Burma.

I might here try to deal with a point, and if I can make it clear, raised by the hon. Member for Blackpool, North (Mr. Low). The sterling will be made available to the Currency Board in London, and the Board will make rupees of the equivalent value available to the Burma Government. The Burma Government have agreed that they will spend these rupees on the internal needs of the country, such as the defence forces, roads and the other things mentioned by my hon. Friend the Minister of State, although there are no precise conditions laid down.

Mr. W. Fletcher

How is it possible for that money to be spent on roads and bridges, which call for the import of steel, if the Government are debarred from the purchase of these goods outside Burma?

Mr. Gordon-Walker

They are not debarred from the purchase of these goods, but in so far as they need them, they would use convertible currency which is at their disposal. This loan will be repayable in two years. The whole system of money will be reversed, with the rupees turned back into sterling. It has been made quite clear that the Burma Government have complete discretion on what they should spend it. No conditions have been attached, but interest and repayments have been covered in the agreement. There are no political conditions beyond those which will be made in any such agreement as this.

Certain hon. Members suggested that we were wrong in not trying to attach conditions of a political nature to this loan. I am sure that that would be a very great mistake and inappropriate. Several hon. Members, including my hon. Friend the Member for Aston (Mr. Wyatt) and the hon. Member for Derbyshire, West, pointed out that the nationalism of these new nations is a very sensitive plant and they can be easily affronted. The attachment of conditions of the sort suggested to this kind of loan would defeat the purpose of the loan. I would emphasise the point, which has not been mentioned much in this Debate, that this is a Commonwealth loan, and it would be very inappropriate to attach purely United Kingdom conditions to a co-operative Commonwealth effort in this field.

I should like to make it clear that this loan is a sign that we regard the Burma Government as a friendly Government and we are watching and hoping for a steady increase in the strength of the present Burma Government. That is implied in our loan. On both sides of the House, the question of British interests has been mentioned. We rest on the exchange of letters between our Prime Minister and the Prime Minister of Burma in 1947 which are printed in the appendix to the Treaty. It is our hope and desire that the agreement implied in those letters shall be carried out in the full spirit. As my hon. Friend the Minister of State said, there have been certain disturbing failures to carry out that agreement in its entirety. On the other hand, it cannot be forgotten that there have been extremely disturbing conditions in Burma which were not foreseen when that agreement was made. The reduction of the assets of British property there has been apparently due to the civil war which has been raging. It has destroyed some of them, and others have been cut off.

We have been glad to see that some progress has been made in paying compensation to the various British companies whose property has been expropriated. We have no objection to expropriation of British interests in Burma so long as proper compensation is paid. If the Burma Government under their own sovereignty decide to expropriate British interests, our interest then is to see that appropriate compensation is paid, not to prevent the nationalisation of a particular undertaking. We have noted that the first instalment has been paid to the Irrawaddy Flotilla Company. There has been great delay in paying that compensation and the amount so far paid has caused us considerable concern. We are watching the matter with concern.

Mr. Erroll

Is the right hon. Gentleman satisfied with the actual amount or dissatisfied with it?

Mr. Gordon-Walker

I said His Majesty's Government viewed both the amount and the delay with some concern.

We are glad to see recent official statements made by the Burma Government, realising the importance of attracting capital to that country, and, as my hon. Friend the Member for Blackley (Mr. Diamond) said, the best way to attract capital to a country is to treat the existing capital on reasonable conditions. [HON. MEMBERS: "Hear, hear."] After that applause I should like to quote from a Conservative speaker during this Debate. He said it should be remembered that the effluxion of time is also very important in these matters, and it would be extremely foolhardy and shortsighted to try to rush things faster than is proper.

The right hon. Member for Saffron Walden gave certain figures of previous help given to Burma. His figures were absolutely accurate, as one would expect from him, but when he came to develop his argument he got himself into a certain contradiction. He first of all gave great support to the Spender plan; then in a different part of his speech he said that this loan was of doubtful value in that it would fall upon the poor British taxpayer, and it was extremely dangerous to spend money on anything other than British territory. If the line is taken that no burden must be put on the British taxpayer which involves expenditure outside British territory, the whole basis of the Spender plan is destroyed.

Mr. R. A. Butler

If the right hon. Gentleman is going to quote my speech at all, he should quote it accurately. I never said anything of the sort. I said the British taxpayer had many calls on his purse, and I allied this to what has been spent in helping Burma, and I said that we should be satisfied that this extra help was justified.

Mr. Gordon-Walker

I am very glad to hear that. I thought that there was an unwonted echo of the "Daily Express" in the right hon. Gentleman's speech, but I was obviously wrong.

The question of the Karens has been raised on all sides of the House. I must first make it clear that this question is an internal one for Burma, and it is not right for us to interfere by speech and even more so by action in the internal affairs of another country. On the other hand, we all have a traditional and deep-seated respect and friendship for the Karen people. We are glad to see that the present Government of Burma has accepted the principle that there should be a Karen autonomous state, and that quite recently the regional autonomy commission, which will be charged with dealing with the problem, has met. It ought to be pointed out that the Karens are not the only minority in Burma, and all the other minorities are supporting the Government in these difficult times. That ought to be said as well as what has been said about the Karen people.

I do not think that there has been enough emphasis in the speeches delivered today on the Commonwealth character of this loan. Part of the Motion before the House recognises and welcomes the combination of this Government with the other Governments of the Commonwealth. The right hon. Member for Saffron Walden said that the responsibility for this loan was that of His Majesty's Government, and of course it is. We recognise it and accept it, but it is also the responsibility of a number of other Commonwealth Governments, and hon. Members like the hon. Member for Hornsey (Mr. Gammans), before they make mischievous speeches such as he made today, should remember that on an occasion like this he is not only attacking this Government, which is a fair field, but also the Governments of other countries which have joined in this loan. Everything that he said was as much directed against those Governments as it was against His Majesty's Government in this country.

Mr. Gammans

I was not attacking the loan itself. I was merely suggesting that there must be certain conditions in Burma before this loan was likely to achieve its object. Certainly I was not attacking any Commonwealth Government.

Mr. Gordon-Walker

I quite agree that the hon. Gentleman did not think he was attacking any other Commonwealth Government, but his mischievous attack on this Government was an attack on every Commonwealth Government which took part in this loan. This loan is a very important example of constructive Commonwealth co-operation in a new field. It was discussed and finally settled at the Colombo Conference, when the Australian Government decided to join with the other Commonwealth Governments who had agreed to make this loan to Burma. We welcome very much that example by the Australians as well as their generous and practical recognition of their interests in this part of the world.

The reason why we have submitted this Motion to the House in this form is that there is a certain need for speed in settling these matters. There have been long negotiations with other Commonwealth countries concerned with this loan, and they are ready to pay their share of the various instalments that the Burmese Government will need. If we waited for the normal process of ratification it would take us beyond Whitsun and cause considerable delay. The money will be provided for in the Estimates of the Foreign Office, but we want authority, in effect, to make advance payments in anticipation of that. The reason why the question is put down in this way is because it will give us such authority.

I hope we can forget one or two unfortunate speeches and agree to this Motion unanimously with good will, remembering that it will bring encouragement to a part of the world where our interests are very deeply concerned and where our reputation stands higher than it ever did before.

Question put, and agreed to.

Resolved: That this House welcomes the intention of His Majesty's Government to combine with other Commonwealth countries in providing a loan for internal expenditure to the Government of the Union of Burma.