HC Deb 31 July 1951 vol 491 cc1345-59

11.50 p.m.

Mr. Driberg (Maldon)

I now venture to turn the attention of the House to another subject in which it seems to me that the honour of the Government is also involved, a subject of comparatively minor importance in itself, yet with, as I shall seek to show, important implications. I refer to the recent seizure and requisitioning by the Government of two tankers which have become known as the Polish tankers. I do not know whether in law they could rightly be so described. They were built in the North of England and recently completed to the order of the Polish mercantile marine. They were paid for by the Poles and were on the point of being delivered to the Poles. A week or so ago, three days before one of them was due to sail, and when the Polish captain and crew were already on board the ship, the Admiralty, acting, one gathers, under instructions, or as the agent, of the Foreign Office, sent a British naval officer with a requisitioning order on board the ship. He ordered the captain and crew to go ashore and took possession of the two tankers on behalf of His Majesty's Government.

The contracts for these two tankers were signed on 14th May, 1948. I emphasise that date particularly because it has an important bearing on what I next have to say. Early in 1949 the AngloPolish Trade Agreement was signed. Article 6 of that Agreement states: The Government of the United Kingdom shall not prohibit the export to Poland of capital equipment produced in fulfilment of orders placed by or on behalf of the Polish Government with United Kingdom firms on or before the date of signature of the present agreement.

Sir John Mellor (Sutton Coldfield)

Is not the Polish Government in breach of that agreement in that they have not paid the first instalment of £400,000 therein undertaken?

Mr. Driberg

If the hon. Baronet is going to help my hon. Friend the Under-Secretary to reply to this debate, no doubt my hon. Friend will be grateful for his assistance. I understood that these tankers had been paid for, and furthermore that the Polish Government had been extremely scrupulous and thorough in honouring other parts of the Agreement relating to the supply of goods, grains and timber all of which came under the Agreement. Unless I misunderstand the situation, I do not think there has been a breach.

Sir J. Mellor

The first instalment of £400,000 was due on 1st April this year, but I understand it has not been paid yet. Therefore, the Polish Government have not honoured the Agreement and it seems there is a breach.

Mr. Driberg

I am sure that if what the hon. Gentleman says is correct, though my information is different, the Under-Secretary will confirm it and will be most grateful to the hon. Gentleman for his support. I cannot say fairer than that.

As I maintain and understand, this action by the Government amounts to a violation of the Anglo-Polish Trade Agreement. When I suggested this at Question time on 23rd July, my right hon. Friend the Prime Minister did not, as he might well have done, say anything on the lines of the remarks of the hon. Baronet who has just intervened: he merely said that the question whether there had been any violation of the Trade Agreement was a matter of interpretation.

I must say that I find it extremely difficult to interpret the plain words in the one sentence of Article 6 in any other way than this—that we have been guilty of the unilateral violation of an international agreement, which is the kind of thing which we object to strongly when other nations do it to us. Further, it seems not only as a matter of principle a wrong thing to have done, but very shortsighted and unwise. It is another illustration of the kind of thing referred to in the debate on the last subject by my hon. Friend the Member for Gravesend (Sir R. Acland), when he said that if you stick to principle it usually turns out to be the best policy in the end also, and that you are in fact serving expediency as well as principle.

Nothing can be worse for the reputation of the British Government for keeping its bargains, and therefore for the export trade we so urgently need, than this kind of thing—unilateral violation of trade agreements. As I understand it—and perhaps my hon. Friend will confirm or deny this—it is the case that we have, as it were, consumed many of the goods—eaten the bacon, used the pit props, and so on—for which these tankers were to be a kind of exchange. Putting it as mildly as possible, this seems to me an extremely foolish way to treat people with whom we are doing extremely useful business.

I hope my hon. Friend will be able to give us some indication of the reasons which lie behind this action. Later on the same day on which the Prime Minister answered these questions, the Civil Lord of the Admiralty said that these tankers were requisitioned under war-time Defence Regulation because they were "required for defence purposes." It is a little difficult to imagine what precise defence purposes, in the narrow sense of the phrase at least, they can be required for. It is difficult to believe that they make a striking contribution to the vast panoply of the North Atlantic Treaty Organisation now being built up. It does not seem worth creating all this ill-will and endangering our future supplies of vital food, and this aspect of our export trade, merely for two tankers.

Two suggestions have been made in various quarters to explain this action of His Majesty's Government. It has been suggested that this action is indirectly related to the Persian oil crisis. If that is so, I should have thought that, if it seemed essential to the Government that these tankers should not pass to Poland in case they should be used for conveying Persian oil, the matter could have been handled somewhat differently, and perhaps somewhat less clumsily, and that perhaps an assurance could have been sought from the Polish Government that they would not use them for that purpose. If that is the explanation, again one is driven back to the Trade Agreement of 1949, which says specifically in Article 5 (b) (i) that "the Government of the United Kingdom shall place no obstacle in the way of the supply to Poland" of substantial quantities of Middle Eastern oil.

However, it is also suggested that there is quite a different reason for this action. It may be that one or other of these explanations is the correct one; it may be that there is a bit of both in it. It is also suggested that this action has been taken under the general pressure that is going on all the time from Washington in the direction of a complete blockade of Eastern Europe and a complete suspension of all Eastern-Western trade. My right hon. Friend the Member for Huyton (Mr. H. Wilson), speaking in this House last Thursday—I think it was—from his recent experience as President of the Board of Trade stated most emphatically that there is constant pressure from the Americans in the direction of a total blockade between East and West.

Mr. Pannell (Leeds, West)

Would my hon. Friend permit me? He mentioned our right hon. Friend the Member for Huyton (Mr. H. Wilson). Our right hon. Friend, of course, when he was President of the Board of Trade, with the Parliamentary Secretary to the Ministry of Supply, led the case here on the breaking of this very Agreement by the banning of the export of machine tools to Poland and Russia. It does seem to me that my hon. Friend is in a weak position, because the lathes that had to be stopped from export, which were of universal use, could be used for war purposes, and surely tankers must be able to be so used. I feel that my hon. Friend's reference to my right hon. Friend's statement is a trifle unfortunate for his case.

Mr. Driberg

I do not think it is unfortunate at all. I referred specifically to my right hon. Friend's testimony as to the general pressure that is going on all the time from Washington. It has been necessary, and it has been thought desirable by the Government, at certain points to give way to that pressure; and at other points, indeed, to take the initiative and so say, "We will not supply actual war materials"—for instance, to the Chinese who are fighting our troops in Korea. But where are we going to draw the line? Oil, after all, is not only a war-time essential. It is also an essential raw material for a vast amount of peace-time industry. Where are we going to draw the line?

Mr. Nabarro (Kidderminster)

Surely, Poland is self-sufficient in oil supplies? Poland draws all her unrefined oil from the fields in the south of the country or from Russia. Surely, the tankers would be used by Poland for the purpose of earning foreign currency.

Mr. Driberg

If she buys them from us, as she has the right to buy them from us under the Agreement, she can put them to any use she chooses. She is a sovereign State, just as we are. 1 would also remind the hon. Gentleman that he was asking some very eloquent supplementary questions today— with which I heartily agreed—about the supplies of softwood, and I think other materials also, coming into this country; and the tenor, at any rate, the apparent purport of his questions was to urge the Ministers concerned to get in as much as possible from Eastern Europe as well as from other sources.

We cannot have it both ways. If we are going to say all the time that we are going to cut down on everything that Poland, Russia, and other Eastern European countries may want from us, we cannot expect to get everything we want from them. Therefore, hon. Members who advocate this kind of constant cutting down at the behest of the Americans, as I believe it very largely is, will also have to explain it to the country if there is a steady diminution in the quantities of coarse grains and timber and other desirable imports available.

Mr. Nabarro

Will the hon. Gentleman permit me to intervene again? If he will read carefully the Questions I put to the Lord Privy Seal today, he will find that they made specific reference to Canadian and Russian timber contracts. They made no reference whatever to contracts with Poland.

Mr. Driberg

I do not think that that intervention was quite up to the standard of smartness that we have come to expect from the hon. Gentleman. I referred to Eastern Europe in general. Precisely the same arguments apply to Poland as to Russia. They are both part of the Soviet sphere of influence, the Soviet bloc, and the pressure from America is equally insistent against sending goods to either. I do not really think, therefore, that that interruption was worth very much.

That brings me to the main point that I want to make in this connection, and that is to refer to the very powerful and serious first leading article in yesterday's "Times" on the Battle Bill. I hope that hon. Members on both sides of the House have read it, because this Bill, which is being introduced into Congress by Representative Battle and looks as if it is going to become law very soon, is commented on by "The Times" in these terms: The export policy of countries which must trade to live will have to he brought into line with that of a country which is far less dependent on overseas trade. Britain, for example, will have to forgo the coarse grains and timber which she gets from Russia unless she can persuade the Soviet to take in exchange commodities which meet the American definition of harmlessness. We all know that the definition of harmlessness under previous arrangements and still more under the Battle Bill and its schedules, will be extraordinarily difficult for us to meet. Again "The Times" comments: Every Government which is now receiving aid from the United States will have to decide in the next few weeks whether such a system is workable. I hope very much that our Government will tell our friends in Washington quite bluntly that such a system as that outlined in the Battle Bill will not be workable in this island, which has to live largely on its exports. Even the Mexican Government has stood up to Washington on this, and has told them they will not comply.

I hope the visit to America in September of my right hon. Friend the Foreign Secretary will be as momentous and as valuable in its way as was that of the Prime Minister last December. I hope he will tell our American friends quite bluntly that we cannot and will not "take" the kind of arrangements that are proposed under the Battle Bill, and I hope, as a token of that resolute resistance—in so far as this particular action which I am raising tonight has been prompted by American pressure—that the Poles will be told that the requisitioning of these tankers is only temporary and that they will be returned to the Polish mercantile marine to whom, in my opinion, they morally belong.

12.8 a.m.

Mr. Frederick Elwyn Jones (West Ham, South)

I hope that my hon. Friend the Under-Secretary of State for Foreign Affairs will give us some explanation of the reasons which have prompted His Majesty's Government to interfere in the completion of the contract between the companies building these tankers and the Polish Government. It is regrettable for me, a supporter of the Government, to find myself in full agreement with the comment of the "Economist" upon this matter when it said that it would indeed be hyprocrisy to pretend that this action was not a breach of contract.

One has merely to look at the terms of Article 6 of the Agreement between Britain and Poland to realise that clearly it is a breach of contract. It is one which seems also to me to be accompanied by aggravating features. First of all, as my hon. Friend the Member for Maldon (Mr. Driberg) has pointed out, it is not the first time that we have broken the AngloPolish Trade Agreement. I found myself a year ago in the unhappy position of having to address some stern words about this matter.

It seems to me that this recent repudiation of ours runs contrary to the whole spirit of the Anglo-Polish Trade Agreements as expressed in the preamble to the Agreement of January, 1949. It says that the two Governments concerned were "prompted by a sincere desire to ensure the development of Anglo-Polish trade to their mutual advantage, and attach particular importance to the development of Anglo-Polish trade on a long-term basis and to a settlement of the financial questions outstanding between the two countries."

Actions of the kind which the Government indulged in about a fortnight ago will not develop Anglo-Polish trade; they will kill it. That cannot be our desire. Whatever profit this repudiation of a contract brings to someone—and I find it hard to know who does profit by it—it will not profit the people of Britain or of Poland, who not so long ago suffered so much in common. What I find particularly offensive about this breach of contract is the humiliating manner in which it has been carried out. This contract was placed in 1948. So far had the work on it advanced that there was a ceremonial launching of the ships. A Polish crew was actually in possession of one of the boats, and the captain was on the ship. No notice had been given of intention to break the contract. There had been no kind of warning.

Will my hon. Friend tell us what happened in mid-July to cause this change of course? What were the new factors which arose. which did not exist in January, and which did not exist earlier last year? Why is it that the Poles have been treated in this grossly humiliating way at this last moment? This is not the way in which this country has built up its trade, and built up the reputation that an Englishman's word is as good as his bond. This is not the way things have been done in the past, and they must not be done in this way in the future if we are to survive as a trading nation.

We are one of the countries which must trade to live. At the moment our foreign trade position is serious. I should like very much to hear the views of the President of the Board of Trade about this. They would be interesting. We know that in the first six months of this year the cost of our imports exceeded the value of our exports by more than £500 million. My hon. Friend the Member for Maldon has referred to the Battle Bill which is now before the American House of Representatives. The prospect held out for us in that Bill, as "The Times" so excellently pointed out yesterday, is a prospect of continuing and aggravating economic difficulty.

I should have thought that by now the traditional pattern of European trade, the granaries of the East providing food for the West in return for finished goods, was a familiar one which was of advantage to Europe as a whole. That trade is mutually beneficial. It is not harmful to anyone. I find myself most unhappy about this matter because, in spite of an observation of the hon. Baronet, the Member for Sutton Coldfield (Sir J. Mellor), upon which I would welcome the observations of my hon. Friend, so far as I know Poland has adhered honourably and strictly to the terms of the agreement.

My understanding is that the matter of compensation is still the subject of negotiation. If that is wrong, let the House be told of the error and of the facts as soon as possible. This trade treaty with Poland has brought us real advantages. We have been supplied with a large quantity of foodstuffs. Amounts which it is contemplated that Poland is to supply are, I believe, 150,000 tons of bacon, 1,200 million eggs, and 260,000 tons of other food. Then there are large supplies of timber; over £3 million worth in 1950. When we think of this in terms of strategy, what is the comparative strategic value of £3 million worth of timber and two oil tankers? Large supplies of foodstuffs come to us. Again what is the strategic value of those, compared with machine tools? It seems to me that there is grave danger in these days of our tending to lose our sense of proportion about these exchanges.

The evidence available to me is that the Poles have kept to their word and have even increased the quota of bacon supplies they were liable to render under the terms of the Agreement. Why have we done this discreditable thing? What is the explanation? I can find no precedent in the whole of our history for the requisitioning of civilian ships of this kind under contract to another country in time of peace. If there is a precedent, where is it?

Mr. Nabarro

There was a precedent in 1914 when, on the outbreak of war, we requisitioned two ships then under construction for Chile.

Mr. Elwyn Jones

I am quite familiar with that; but those ships happen to have been men-of-war—battleships—and furthermore, there was a war going on.

Mr. Arthur Lewis (West Ham, North)

The hon. Member did not know there was a war on.

Mr. Nabarro

We were not at war with Chile.

Mr. Elwyn Jones

If the hon. Gentleman can control his verbosity for a moment, I would just say that the inability to distinguish between two men-of-war and two tankers, and not being able to distinguish between 1914 and 1951, is a mental aberration I will not try to follow.

There is a final point I wish to make. We have to think ahead in this House of our responsibilities for the future. There may be a time when our shipyards want orders. There have been moments since 1945 when, representing, as I do, an area where there is shipbuilding of some importance, I have had to approach the Minister concerned about unemployment in the shipyards. Let us not forget that, once these traditional markets of ours have gone, once the momentum and pattern of trade is broken, it will take a good deal to re-establish our position.

Even if the "cold war" leads us, as apparently it does, to utter cynicism in our treatment of undertakings given to other countries—a cynicism which confronts us with the grave danger of being reminded that our protestations at such conduct in others are a little hollow—there is a further consideration quite apart from the moral and legal aspects. We should consider the over-all strategic aspect of the "cold war." For we can arm to the teeth, but if we are dying of economic rottenness through the collapse of our trade, we shall lose the battle before a shot is fired.


The Under-Secretary of State for Foreign Affairs (Mr. Ernest Davies)

The facts which have just been given to the House at this late hour are correct in so far as the placing of the contracts in 1948 for these tankers is concerned and as to the manner in which the vessels were requisitioned. But those are the only accuracies in the statements which have just been made.

Our justification for the requisitioning of these tankers is one which can be upheld because there has been no violation of the Anglo-Polish Agreement. We do not consider that there has been a violation because there is nothing in Article 6, which has been quoted tonight, which could have been intended to override the sovereign right of any country to requisition for defence purposes.

Mr. Frederick Elwyn Jones


Mr. Davies

My hon. Friend suggests that Persia is a comparable case. The difference between the action which has been taken by us as regards Poland and the action which has been taken by Persia as regards this country is that, in the case of Persia, the motives are entirely different. In the case of Persia there are political and economic reasons for the action which they have taken.

Mr. Elwyn Jones

What are the reasons?

Mr. Davies

Furthermore, the difference is that the Persians formally abrogated their right to alter the terms of the contract which they had entered into with the Anglo-Iranian Oil Company. They abrogated their right to alter that contract by legislation, and consequently they were not in a position to act in the way in which they have acted. Their motives, as I say, were political and economic. In our case our motive has been that of defence.

Mr. Crossman (Coventry, East)

Is my hon. Friend really arguing that when defence requirements come up it is legitimate to break treaties when ordered to by other nations, but that when looking after one's political and economic interests one is not entitled to break treaties? I had always thought the principle was that one should not break treaties, whatever the temptation to do so was.

Mr. Davies

In the first place, there has been no order given' by anyone to break a treaty. In the second place, there has been no breaking of a treaty. As I pointed out, this country has not under this Agreement abrogated its right to act for defence purposes, to use its sovereign right to act for defence purposes, that is, in this case to requisition the tankers.

Mr. Elwyn Jones

Would my hon. Friend not agree that there is no saving clause in this treaty with regard to defence requirements at all? It is quite unconditioned and unconditional.

Mr. Davies

There is no reason whatsoever why there should be a saving clause as regards this matter. It is generally understood that there does not have to be written into any agreement a sovereign right to take action for defence purposes. It is not necessary to put in a saving clause.

Mr. Crossman

Will my hon. Friend allow me to get it quite clear?

Mr. Davies

Excuse me. I should like to get on with my speech.

Mr. Crossman

I only want to get it clear.

Mr. Davies

The hon. Member for Maldon (Mr. Driberg) said that we had eaten the bacon and had made use of the pit-props, but that we had denied the tankers to the Poles. That is a great over-simplification of this matter. Exports under this Agreement must be viewed against the background of the large and comprehensive Agreement which includes financial provisions, and which incidentally has been repeatedly broken by the Poles. The Poles have not scrupulously carried out this Agreement, as was suggested by my hon. Friend. In the first place, the amount of timber which was foreseen when this Agreement was drawn up, and which is listed in its annexes, has not been delivered. Therefore, the pit-props to which he referred have not been received in total, and there is at present a notable shortfall in their delivery; and, as far as we can see, they cannot possibly fulfil their quota this year; they are so far behind.

Mr. S. O. Davies (Merthyr Tydvil)

How much?

Mr. Ernest Davies

It is not only on the question of timber that they have fallen down. There have been two definite financial defaults. In the first place, under Article 17 of the Agreement a sum of £400,000 should have been paid over on 31st March of this year. The Poles defaulted on that payment. We made representations to the Poles and they have not given us any satisfaction in answer thereto. They had an absolute obligation under the Agreement that that net sum would be payable, and they have given no undertaking to pay in reply to our representations.

Secondly, as regards default, on 30th June under Article 17 there was a sum owing to us which is worked out according to that Article at 3¾ per cent. of the sterling proceeds based on certain receipts from sales. That sum, in our calculation, would have amounted to £244,000. Not a penny of that has been paid over by the Poles. So the total default is in the neighbourhood of £650,000. That is the way in which this Agreement has been scrupulously honoured, according to my hon. Friend.

The action which has been taken by us is not in retaliation for this default. I have referred to it to show that the violation has taken place on the Polish side. I further put out to my hon. Friend that Poland is not doing us a favour in selling to us bacon, pitprops, and the other items referred to which come under this Agreement. Poland happens to be short of sterling and needs it. Her sale of goods to us is very useful to her. With the sterling which she obtains she has heretofore been able to buy freely in the sterling area raw materials of which she is in considerable need. She has bought very large quantities of raw materials. I might mention wood as one of these.

My hon. Friend suggested that there must be one of two reasons why we were taking this action: either it was a question of Persian oil or of hindering East-West trade. I have touched on the matter of Persian oil already. But my hon. Friend referred also to Article 5 (1, b) in which it is suggested that no obstacle should be put in the way of the supply to Poland of Middle East oil. As far as I am aware, no obstacles have heretofore been put by His Majesty's Government in the way of Poland obtaining that oil. She has obtained that oil up to the present time and these two tankers were not in service. So she was obtaining it, presumably, without these two tankers, and to withhold them from her now is no reason for assuming that, as a consequence, she will not be able to obtain that oil. I do not think that Article 5 (1, b), which my hon. Friend quoted, is relevant in this case.

With regard to denying these tankers to the Poles with the intention of hindering East-West trade, I can deny absolutely that there has been any pressure on us to deny these tankers to Poland with a view to hindering East-West trade. But it is a fact, of course, that on all defence matters there is close consultation between the N.A.T.O. Powers. We keep in the closest touch with all our Allies and, as we are organising for joint defence, we cannot take any action which would in our view weaken our defence as a whole. It is a fact that the Admiralty concerned that these tankers were required, and one of them is already been used for defence purposes.

Both of my hon. Friends referred to the Battle Bill which is now before Congress, but this Bill is not yet law and I think it would be indiscreet of me to comment upon its terms at this stage. If the Bill goes through, then it will be time enough to consider it.

Finally, on the question of East-West trade, His Majesty's Government view, and continue to view, East-West trade as being to the mutual advantage of those engaged in it, and we hope that it will continue to the maximum extent possible. But we cannot allow East-West trade to be carried on to the point where it endangers our security. It is our security—our defence considerations—which must be the over-riding factor. But we do not intend that this action, which, as I said. is governed by defence, should interfere with the trade which is being carried on between the West and the East. We consider that it can continue to our mutual benefit.

There is a very wide range of products which can be exported from this country to Poland and which Poland can export to us, and we hope that Poland will continue to sell to us what we require and purchase from us, as she is doing, and has been doing, those goods which she requires. The fact that these two tankers have been requisitioned for the purposes which I have given is not, in our view, a matter which should prevent the continuation of that trade.

[NOTE: For further speeches on this subject see cols. 3050–6.]