HC Deb 16 March 1951 vol 485 cc1967-70
The Chancellor of the Exchequer (Mr. Gairskell)

With your permission. Mr. Speaker, and in response to the request of the right hon. Member for Warwick and Leamington (Mr. Eden) yesterday, I should like to make a statement on the financial negotiations with the Government of Egypt.

As the House is aware, we have just reached agreement with the Egyptian Government covering the release of£150 million of Egypt's sterling balances over a period of between 10 and 13½years. This agreement will have to be embodied in a formal document, which may take two or three weeks, but both sides have initialled a note recording our agreement on all the main points at issue.

It has been suggested that, as a condition of releasing to Egypt her blocked sterling balances, His Majesty's Government should have insisted upon Egypt permitting tankers carrying oil to the Haifa refinery to pass through the Suez Canal. His Majesty's Government heartily deplore the refusal of the Egyptian Government to allow tankers bound for Haifa to pass through the Canal, and we have made repeated representations to them on this subject.

I must point out, however, that restrictions on the use of the Suez Canal and Egypt's sterling balances are two of a number of subjects at issue between the two countries at the moment. The question of the Canal is a political one with which a large number of other countries are concerned, including, besides the countries of the Middle East, the principal maritime Powers of the world. It is, moreover, now to come again before the Security Council of the United Nations. It would be quite inappropriate to introduce an international question of this nature into purely bilateral financial discussions.

The right hon. Gentleman appeared to suggest that the agreement on sterling balances represents a unilateral concession on our part. This is by no means the case. The House must realise that Egypt's blocked sterling balances are her own property. They are, in fact, money paid into her account during the war in return either for goods received or for Egyptian currency which His Majesty's Government required to spend in Egypt.

It has been a matter of great concern to us to ensure that these balances should not be drawn upon at a rate that would put an intolerable strain upon our economy. In the agreement which we have now reached we have secured, in our opinion, a thoroughly satisfactory settlement of an issue which has been a cause of recurrent dispute with Egypt over the last four years, and of constant concern to myself and my predecessors.

I should say, incidentally, that an undertaking to allow Egypt to purchase some part of her oil requirements against payment in sterling has been an integral part of our yearly agreements with her hitherto, and that without the retention of this undertaking we could not have hoped to secure such a satisfactory long-term settlement.

I have no doubt that if we had attempted to link together two very dissimilar questions and make a financial settlement dependent upon removal of restrictions on traffic through the Canal there would have been no agreement. This would have meant that there would be no instrument regulating our financial relations with Egypt, and in consequence we should either have had to allow the use of the balances without restriction or unilaterally to refuse to honour a sterling debt. To have followed the latter course would have meant a very serious deterioration in our economic and, indeed, our political relations with Egypt, with the gravest consequences to both countries.

Mr. Eden

I am obliged to the right hon. Gentleman for the full statement he has made to us this morning. I must say, I am a little sorry that we did not have more of it yesterday when it might have made it a little easier to examine the question. I shall content myself this morning, if it is agreeable to the Government, with trying to obtain an assurance on this point. As I see it, there must be some delay before this agreement is embodied, and I should like this morning to ask for an opportunity for the House to discuss this matter before some weeks pass, when this has to be put into formal shape. I think that we should have an opportunity to look at the matter, when the House as a whole could discuss it. That, I think, would be more useful than that I should continue a cross-examination across the Floor of the House this morning. May I just add one thing to correct something I said yesterday when I spoke a great deal about tankers? This morning the right hon. Gentleman, equally rightly, widened the issue. This matter, of course, concerns more than our tankers in the Canal; it concerns world shipping as a whole.

The Secretary of State for the Home Department (Mr. Ede)

I think the suggestion made by the right hon. Gentleman is one that we could accept, but I should like to say this. I do not think we can anticipate that more than three weeks, let us say, would be the time during which discussion will have to take place. I only say that now so that the right hon. Gentleman shall understand that there is a fair amount of urgency in the matter. We shall, however, be very willing to consider any approaches that are made to us through the usual channels.

Mr. Eden

Perhaps we could discuss through the usual channels the most agreeable date when this matter could be debated before the three weeks are over.

Mr. Ede

The right hon. Gentleman will understand that three weeks is not really a very definite date, but I should like to make it clear that there is not very much time.

Mr. Mott-Radclyffe

During the financial negotiations with the Egyptian Government was the question of the illegal blockade of the Suez Canal ever raised at all at any time by His Majesty's Government?

Mr. Gaitskell

No, Sir, not during these negotiations. There were, of course, some political discussions going on at the same time, but that was purely fortuitous.

Professor Savory

Does this "satisfactory settlement" include compensation for the appalling damage done to the Anglican Cathedral and the Bishop's Palace?

Mr. Gaitskell

This particular agreement does not, but if the hon. Gentleman would put down a Question on that to the appropriate Minister, we will try to find out the answer.