SUEZ CANAL (Hansard, 13 May 1957)

§ The Prime Minister
Mr. Speaker, I will, with permission, make a statement on the Suez Canal.
The House will recall that a few weeks ago Her Majesty's Government, together with the Governments of the United States, France and Norway, made certain proposals designed to lead to an interim agreement for the use of the Canal, which would, at the same time, safeguard the interests of users for the future. Shortly afterwards, the Egyptian Government put forward counter-proposals. These were made informally to certain Governments. including that of the United States.
Since it seemed that these proposals were not in a final form, the Government of the United States undertook a detailed negotiation in an effort to secure improvements before the proposals were formally communicated to all the Governments of the user countries. As a result, certain modifications were secured, particularly with regard to arbitration procedures. On 24th April, the Egyptian Government published, as a unilateral declaration, the terms on which it proposed that the Suez Canal would be open to shipping.
This position was reported to the Security Council, which was, of course, as it still is, seized of this whole problem. Although the improvements were acknowleged, objection was still strongly taken to the unilateral character of the Egyptian declaration.
The next step was to ascertain the views of the member Governments of the Suez Canal Users' Association. The Council of the Association met on 30th April and has since held a series of discussions which ended in the issue of a statement last Thursday. It was the virtually unanimous view of the Suez Canal Users' Association that the unilateral Egyptian declaration was insufficient and fell short of the six requirements for a settlement of the question which were embodied in the Resolution of the Security Council of 13th October, 1956. The member States have reserved all their rights with respect to the operation of the Canal and do not accept the Egyptian declaration as a permanent and satisfactory settlement of the question. We share this view to the full.
36 Meanwhile, the House will wish to know the latest position with regard to the actual use of the Canal by the shipping of the user countries.
The great majority of the foreign lines in the shipping conferences serving the principal trades east of Suez have indicated that they will henceforth route their ships through the Canal as many of them have already done. The shipowners' associations in West Germany and the Scandinavian countries have officially informed their members that the Suez Canal Users' Association statement should be interpreted as meaning that every country and every shipowner is now free to use the Canal at their own discretion.
In these circumstances, and with the reservation of their rights which, as I have already said, has been stated on behalf of the member countries of the Suez Canal Users' Association, Her Majesty's Government can no longer advise British shipowners to refrain from using the Canal. Payments made in connection with the Canal—for Canal dues and other purposes, such as port dues, or water—will be made in sterling.
The House will wish me to give an outline of the financial arrangements. A new Transferable Account, to be known as the No. I (Special) Account, has been opened by the Bank of England in the name of the National Bank of Egypt.
So far as payments by residents of the United Kingdom are concerned, this account can at present be used only for Canal dues and other shipping disbursements. Since, of course, non-resident holders of transferable sterling will be able to make payments to the account in the normal way for current transactions, Her Majesty's Government will examine the possibility of extending its use to British residents also for such transactions.
Her Majesty's Government will not interfere with the free disposal of the No. 1 (Special) Account. The existing No. 1 Account, of course, remains blocked. Removal or modification of the existing restrictions must naturally depend upon satisfactory arrangements covering all financial claims against Egypt. Discussions will be held on this basis in a neutral centre.
37 In addition, it will be possible to consider favourably allowing payments to be made by Egyptian traders from the existing No. 1 Account in respect of certain contracts entered into before 28th July, 1956. One result of this would be to enable British exporters who had entered into these contracts in good faith and have been prevented by our own restrictions from receiving payment to recover their debts.
The necessary Statutory Instrument to enable the new Account to he opened has been made, and will be laid before both Houses immediately.

§ Mr. Gaitskell
The House has heard with regret, but without surprise, the announcement of the Prime Minister to British shipowners that they are now free to use the Canal. Is he aware that any attempt on our part to "go it alone" in boycotting the Canal would be as useless as "going it alone" in other ways? Is he further aware that the terms which we must now accept are substantially worse than those obtaining before 30th October and also worse than those which were being then negotiated between the United Nations Secretary-General and the Egyptian Foreign Minister?
Finally, will the Government give time this week for a debate on the whole of the statement and the Canal position?

§ The Prime Minister
Perhaps I may answer the last part of the question first. Of course, it is the Government's wish to meet the Opposition and the wishes of the House. I think it is quite proper that there should be a debate in the course of the week. Perhaps the right hon. Gentleman would arrange through the usual channels for the precise arrangements to be made about the most convenient time and day to hold the debate.
In regard to the second part of the right hon. Gentleman's question, I do not accept that there is any reason to believe that negotiations on the basis of the Secretary-General's letter of 24th October would have led to a more satisfactory result, or to any multilateral agreed statement. I am fortified in this when I refer to the actual words used by the Foreign Minister of Egypt in replying to that letter, when he said: …your letter is sufficiently wide to make further exploration for a possible basis for negotiations on the lines indicated in it worth trying.

§ Mr. Gaitskell
Is it not the case, nevertheless, that those negotiations envisaged close co-operation between the users of the Canal and the Egyptian Government, that they were a negotiated settlement and not an imposed settlement, and that they were in other respects far more satisfactory from the point of view of the users? On the question of the debate, will the Prime Minister give an undertaking that the Government will provide the time for the debate?

§ The Prime Minister
The question of whose day it is—I think that that is what is meant—is a rather technical matter which I should like to be discussed through the usual channels. I very much agree with the right hon. Gentleman that all these questions will be much better discussed in debate and I am quite sure that it will be possible to arrange the debate in the course of this week.

§ Mr. Gaitskell
Are we to understand that if the Opposition refuse to find time for it, the Government will not find the time and that there will be no debate?

§ The Prime Minister
I was hoping that the Opposition would be a little more forthcoming.

§ Sir P. Agnew
I want to ask the Prime Minister not about the political aspects of his statement, because, clearly, there has been no political settlement with the Government of Egypt, but more about the details of the financial side. Is the House to understand that, broadly speaking, the freedom for money to operate between here and Egypt will be confined to this new No. 1 (Special) Account and that the whole of the No. 1 Account will still be kept blocked for the time being and that, therefore, the apprehensions of those who feared that that Account might be freed can be set at rest?

§ The Prime Minister
Yes. Broadly, what my hon. Friend has said is right. There is just this slight exception. As I stated, it may be to our advantage—it requires consideration and negotiation—to allow pre-crisis contracts—that is, those commercial contracts entered into in good faith before July—to be met, because at present our traders have not received payment for goods which they may have shipped. With that slight exception, what my hon. Friend says is correct.

§ Mr. H. Morrison
Is the Prime Minister aware that his statement is rather seriously deficient in relation to the future action of Her Majesty's Government, through the United Nations, to resolve a number of outstanding questions? There are the six points, which have not been settled; there is the question of Israeli shipping; there is the matter—I do not know whether it is for the United Nations or not—of compensation for the old Suez Canal Company, and there is the possibility of an appeal to the International Court or other legal action. Surely it is not the position that the Government are going to leave in the air all these matters which were quite properly before the United Nations, and not pursue them before that world authority.

§ The Prime Minister
Yes, Sir. I am very grateful to the right hon. Gentleman for putting that supplementary question, and for the spirit in which I know he has put it. These are very important issues in the future. But I thought that the House and the country would like to have a short, factual and objective account of the arrangements which we are to make in the interim, so that the necessary commercial arrangements can be made and people can know where they are. All these great issues are of vital importance and could, perhaps, best be expounded in the course of debate.

§ Sir V. Raikes
In view of the gravity of the Prime Minister's statement and the anxieties and apprehensions which it is bound to cause, will he consider favourably the idea of a two-day debate upon this vital question, which can be only inadequately discussed in one day and will then be almost entirely monopolised by a small group of Privy Councillors?

§ Mr. Lewis
And Suez rebels.

§ Sir V. Raikes
Can the House be given an opportunity for a debate of sufficient length and of a character to enable the views of all sections of the House to be heard?

§ The Prime Minister
I am very much moved by that appeal. The real trouble is that it is not a small group but a large group of Privy Councillors which obstruct private Members. I will put the question to the Leader of the House. Perhaps it might best be discussed, so 40 that the general wish of the House could be met in connection with an important question of this kind.

§ Mr. Gaitskell
Perhaps I can help the hon. Member and the House by saying that if the Government were willing to provide one day we should be willing to provide the other.

§ The Prime Minister
That seems to be getting very near to a bilateral settlement.

§ Mr. A. Henderson
Is it not a fact that in October of last year the Security Council unanimously approved the six principles, to which the Prime Minister has referred, as a basis for a settlement of the Suez problem? The Prime Minister is now telling us that he prefers a unilateral solution. Is it not a fact that the declaration of the Egyptian Government has by-passed the Security Council? Will the Prime Minister not be more explicit and tell us that Her Majesty's Government propose to take the matter back to the Security Council?

§ The Prime Minister
Yes, Sir. It was raised only a few days or weeks ago. This is not a settlement. This is not an agreement.

§ Mr. Healey
It is a capitulation.

§ The Prime Minister
No. That is why it is unsatisfactory, and we propose to continue our efforts to reach a satisfactory settlement. What we have to face is the practical question of what we are to do in the situation. That we will debate. As the basis of a debate, I thought that it was the proper thing to do—and I also thought that the House would wish me to do it—to make an objective statement of the decisions taken and the actual situation which we have thought it right to meet. On that basis, all these matters will be discussed.

§ Mr. Patrick Maitland
Will my right hon. Friend consider the plea for a long debate, bearing in mind that there will be much surprise and widespread disappointment in the country at this statement? On a previous occasion there was a three-day debate, after which the Prime Minister and his two predecessors who had been Prime Ministers abstained. I allude to the debate on Munich.

§ The Prime Minister
As I said, arrangements for the debate are for the 41 Leader of the House and the Leader of the Opposition. I am quite sure that it is the wish of the leading Members on both sides of the House to reach arrangements which meet the general wish of the House.

§ Mr. Shinwell
Is the right hon. Gentleman aware that while it is obvious that he has no alternative but to adopt this short-term view—which is, of course, not a permanent solution; in the opinion of a majority of hon. Members there can be no permanent solution until the Suez Canal is made free for all shipping, including that of the State of Israel—will he understand that Israel must not be regarded as expendable, even to reach sonic kind of understanding with the Egyptian Government?

§ The Prime Minister
I think that what the right hon. Gentleman says on this matter commands general support, and certainly great sympathy from me.

§ Sir T. Moore
I may be asking for a repetitive statement, but can we be assured that the £110 million which we owe to the Egyptian Government for defending her in the last war will not be released until the claims of those British subjects who have been driven from Egypt are fully and suitably satisfied?

§ The Prime Minister
Yes, Sir, but I must be clear whether my hon. Friend is referring both to the No. 2 Account and the No. I Account.

§ Sir T. Moore
Yes.

§ The Prime Minister
The No. 2 Account is under different arrangements, because that is blocked except for yearly releases. I have made it clear that we shall certainly regard the No. 1 Account as something against which has to be bargained all the outstanding claims which have to be made against it. All I am saying is that, naturally, the Special Account has to be free, because if payment is to be made of the various outgoings obviously it cannot be blocked. This special arrangement is made to put money into an account which is free in order to run the ordinary transactions. and then discussions and negotiations will have to take place before any releases are made on the No. 1 Account.

§ Mr. Grimond
Do we understand that if a settlement could now be reached in accordance with the six principles of 42 October, it would be acceptable to the Government? Are we to understand that negotiations are continuing with a view to reaching such a settlement?

§ The Prime Minister
It has been the effort of the United Nations, the Security Council and its various bodies to try to reach a genuine, multilateral and agreed settlement, broadly, upon the six principles. That has not been successful. All I have to tell the House is what we, as a country, are to do in that situation. I have tried to say so honestly. In regard to the broad principles which should govern a future agreement, in our view it is upon the basis of the six principles that negotiations should proceed.

§ Mr. Doughty
Can the Prime Minister tell us whether the Canal Users' Association will be kept in being to protect the interests of those using the Canal, to see whether it is properly run, and with a view to reaching a final settlement different from the present one?

§ The Prime Minister
Yes, Sir. I think that that will be a valuable instrument which, I think, the user countries intend to keep alive.

§ Mr. Emrys Hughes
Is not the Prime Minister trying to gloss over the fact that this is the greatest and most spectacular retreat from Egypt since the time of Moses? Can he arrange to include in a White Paper the actual or approximate cost to the country of this disastrous policy, both directly and indirectly, so that the British taxpayer will know what he has to pay for the folly of the Government?

§ The Prime Minister
No, Sir. I think that the hon. Gentleman, as he often does, is taking a much too short-viewed judgment of a matter of which I think a much longer view will decide the rights and wrongs. This is not by any means the end of the story; this is a stage in the story.

§ Mr. Langford-Holt
Can my right hon. Friend say what form the proposed debate will take, what sort of Motion will be moved? Will it be a Motion for the Adjournment of the House, and if so, will the debate be wide enough to include what seems to me to be inextricably connected with the Suez problem, that is, the whole question of Arab-Israel relations?

§ The Prime Minister
The form of the debate is not a matter for me, but I am sure that what my hon. Friend has said will be taken into account. The object will be to arrange a debate in the way most satisfactory to the House and upon the widest basis. Of course, it does not rest entirely with us what Motion—if it is a Motion—or what procedure the Opposition will wish to take.

§ Mr. J. Hynd
The Prime Minister has, I think, explained fairly clearly the No. 1 Account and the line decided in regard to transactions which took place before July, and in which British exporters are involved. May I ask what is the position with regard to contracts entered into before July in relation to imports from Egypt which have been held up entirely because of this blocked account arrangement. Will there be any retrospective treatment there? The right hon. Gentleman may know, the President of the Board of Trade does know, that many firms in our constituencies are in great difficulty in this situation.

§ The Prime Minister
I am sorry if I did not make myself quite clear. This Special Account, so far as British residents are concerned, will be only for payments in or out for the purpose of the use of the Canal—disbursements, Canal dues, paying for water, and the like. But since this Special Account is open, of course any non-resident owners of trans- 44 ferable sterling are able, under ordinary rules, to use that Account. Therefore, we shall consider whether it would be to our advantage to extend the use of the Account to current transactions. which may be freely used by external owners of transferable sterling—whether it may he thought an advantage to extend it to residents.
With regard to the "pre-crisis contracts", if I may use that phrase—[HON. MEMBERS: "Pre-war."]—pre-July contracts. where blocking took place in July, long before there was any question of military action, there will be discussions as to whether it is to our mutual advantage that there should be some unblocking of the No. 1 Account—not the new Account—to deal with the contracts entered into in good faith, so that British traders may obtain payment for their commodities.

§ Mr. Speaker
Order. The Prime Minister. Business of the House.