§ Mr. Gaitskell
(by Private Notice) asked the Chancellor of the Exchequer whether he has any statement to make on the recent financial negotiations with the Government of Iraq.
§ The Chancellor of the Exchequer (Mr. R. A. Butler)
Following the discussions which have taken place in London during the last month, I have this morning signed an exchange of letters with Iraq. These letters state that Iraq's financial relationship with this country will continue to be on the basis of common membership of the sterling area.
The present Financial Agreement concluded in 1947, under which arrangements were made for the release from time to time of sterling from Iraq's blocked balances, expires on 14th July. Her Majesty's Government have now felt able to agree to the release of the remaining blocked sterling—some £23 million—which, they have been assured, it is the present intention of the Government of Iraq to continue to hold as part of the cover for Iraq's currency. In view of Iraq's prospects of earning additional sterling under the recently concluded Oil Agreement it is most unlikely that the sterling in question will be drawn upon in the foreseeable future.
At the same time, agreement has been reached in principle for the setting up of suitable machinery for the regular exchange of views and information on financial and economic questions, and for the informal discussion of such problems as may arise from time to time. The House will, I am sure, be glad to hear of the friendly manner in which these 1524 negotiations were conducted, and will be well satisfied to note this agreement.
§ Mr. Gaitskell
May I ask the Chancellor whether he expects, as a result of this agreement and of Iraq continuing as a member of the sterling area, that Iraq is likely to make any call on the sterling-dollar pool, and, if so, how many dollars are likely to be involved?
§ Mr. Butler
I cannot give an actual calculation of such a sum, but I am assured, in regard to these balances, that they are not likely to be drawn upon for the reasons I have given. I am also assured, from contact with the statesmen who have represented Iraq in these discussions, that they are likely to be not only a valuable but a co-operating member of the sterling area.