HC Deb 15 November 1961 vol 649 cc627-38

Motion made, and Question proposed, That this House do now adjourn.—[Sir H. Harrison.]

5.11 a.m.

Mr. Patrick Wall (Haltemprice)

Historians will argue the rights and wrongs of the Suez incident for many years to come but it is clear that one of the objects of that expedition was to protect the lives and property of British subjects. One of the results was, unfortunately, that British nationals were expelled from Egypt and their property seized. Among the large number of people so affected there were at least two relations of mine, as well as a number of friends, and, therefore, I have a personal interest in this matter.

The lives of all these people were considerably disrupted by the action of the Egyptian Government, but they took heart from the fact that they were likely to get their property restored because this country held about £108 million in blocked balances belonging to the Egyptian Government. They were fortified in this belief by the remarks of the Foreign Secretary in the House on 16th May, 1957, when he said: The blocked accounts are our security for the claims of British subjects against the Egyptian Government. We have no intention of whittling away that position. The House can be sure of that."—[OFFICIAL REPORT, 16th May, 1957; Vol. 570, c. 584.] I now want to refer to a memorandum prepared by Sir Edward Peel, whose recent death we all lament. He was one of the leaders of the British community in Egypt. The memorandum was prepared in June, 1958, and I think that the House would agree that, unfortunately, it turned out to be prophetic. Sir Edward Peel said: If Her Majesty's Government agrees to release sterling, a condition of vital importance to claimants is that Egypt should allocate adequate amounts from it to compensate the losses of British subjects. … The sterling balances … should be conserved as a bargaining asset and released only against effective and adequate guarantees by Egypt for settlement of claims. … The desequestration of private property would not benefit owners unable to return to Egypt unless rights to sell and remit proceeds to the United Kingdom are assured. Remittance rights are an essential condition. The terms of the pre-Suez Monetary Agreement covering remittances to the United Kingdom should be re-affirmed or more favourable terms sought for those unable to return to Egypt. The restitution by Egypt of private businesses, now mostly ruined, would be valueless as compensation. … Less than a year later a Financial Agreement between the British Government and the Egyptian Government was signed—in March, 1959—without full regard to these conditions. Under this Agreement British property was dealt with under two heads. First, there was the property that was Egyptianised, or taken over by the Egyptian Government. It was admitted at the time to be worth £45 million and compensation was to be paid to the owners out of a fund of about £27½ million paid by the Egyptian Government to this country. The compensation was to be assessed and claims adjudicated by the Foreign Compensation Commission.

The second category of property was that which had been sequestrated by the Egyptian Government at the time of Suez. It was estimated to be worth about £130 million. It was to be de-sequestrated, or returned to the owners. The owners were given an assurance in the agreement that they would be permitted to remit at least £E5,000 to the United Kingdom, and that favourable consideration would be given to transfer in sterling in excess of that sum. Article V (1) of the Treaty covers that point. It was also laid down that claims for loss or damage to property during the period of sequestration could be made against the fund of £27½ million.

I should like to describe the results of dealing with the problem under those two heads. I will deal, first with Egyptianised property. The immediate query that occurred to claimants was whether the fund of £27½ million was sufficient to cover property estimated at the time to be worth £45 million; we are now told that claims up to a value of £65½ million have been put in to the Foreign Compensation Commission.

Reference was made to this matter by the Prime Minister on 16th March, 1959, when he told the House: … I can say now that the Government will watch how this works out and will play their part in reaching a settlement which will be reasonable and fair, and we do not exclude a further contribution from public funds."—[OFFICIAL REPORT, 16th March, 1959; Vol. 602, c. 150.] I would add that interim payments were made by the Foreign Compensation Commission of 70 per cent. of the claims up to £5,000, over 50 per cent. on claims up to £50,000, and on a sliding scale above that. Therefore, I think that, broadly speaking, it can be said that those persons who had their properties Egyptianised have not been unfairly or badly treated.

In contrast, I will now describe the position in regard to those who had their property sequestrated and then returned or desequestrated. There was a slow start in this process. Even now, about two and a half years after the signing of the Agreement, only about 75 per cent. of the property has been desequestrated.

That is not my main objection. The main difficulty is that when property had been returned or desequestrated it was allowed to be sold. The assets were put in a temporary resident blocked account. The account was given tax clearance and was then made non-resident, but it was still blocked, and claimants could not get the account unblocked until they got permission from the Egyptian Ministry of the Interior and the Egyptian Ministry of Finance. Very few people indeed have been able to get this clearance. Therefore, very few accounts have been unblocked and only then would transfers be allowed to the United Kingdom.

The reason for this is due not to any ill-will on the part of the Egyptian Government, but largely to their lack of sterling in the United Kingdom. Indeed, this was tacitly admitted by the Lord Privy Seal, in an Answer to a Question on 27th March, 1961, when he said that as an immediate measure the Egyptian Government would allow claimants immediately to repatriate £E1,000 per head, but as far as I have been able to find out in only 100 or 150 cases has that payment actually been effected. That is out of a total of well over 3,000 cases of individuals who had their property sequestrated.

Another manner in which the Anglo-Egyptian Agreement is not working well is that under Article V (1, c) jewellery, personal and household effects are allowed to be brought over to the United Kingdom, but difficulties are being raised about the transference of property. Again, loss or damage of property under sequestration can be a claim against the fund of £27½ million But it is extremely difficult for claimants to formulate these claims as the Egyptian Government are not releasing the information or the documents required, as they were bound to do under Article V of the Agreement. Also, the sequestration accounts, when received, are incomprehensible. I have seen some of them and they are quite unintelligible. Furthermore, I understand that the banks have been ordered by the Egyptian Government not to release papers covering the period of sequestration.

I will now sum up the difficulties under these two headings—those whose property was Egyptianised, and those whose property was sequestrated—by quoting examples. In the first instance, take somebody who had invested £50,000 in the National Bank of Egypt, which was Egyptianised. His assets were taken over on Stock Exchange values on 30th June, 1956. The claimant would by now have recovered an interim payment of £26,000, including a good expectation of getting the balance.

The second case might be that of a person who had £50,000 invested in an Egyptian Company, say, Port Said Salt. This was sequestrated for four years. When it was released the shares were sold at great loss, the assets being paid into a blocked account. This claimant is lucky to get £E1,000 in this country, which, after exchange control charges, works out at only £842. In one case, the man receives £26,000 and expects to obtain the rest, and the other man receives only £842, which illustrates the unfair way in which the system has worked.

What action can the Government take? On 26th July, 1960, the then Minister of State at the Foreign Office said: It can be argued that the Agreement is not being quickly enough honoured, or is not being implemented quickly enough, but I assure the House that everything possible is being done to get things moving as fast as possible."—[OFFICIAL REPORT, 26th July, 1960; Vol. 627, c. 1468.] That was eighteen months ago. The position is little better today. The difficulty is not due to the ill-will of the Egyptian Government, but to their lack of sterling. Efforts should be made to provide sterling in future barter deals with Egypt. Dues for passage through the Suez Canal might be used, and expenses such as those the Government have to incur in Egypt through, for example, the maintenance of the Embassy, might be made available to cover transfers. Perhaps a more workable suggestion might be that as claimants' assets are now held in banks in Egypt in frozen accounts, Her Majesty's Government might consider making advances in this country on the security of those accounts.

I have said that to date it appears that the difficulties are not due to ill-will by the Egyptian Government, but there is now a new situation. In July, by decree, the Egyptian Government socialised financial, insurance, commercial and industrial enterprises, including individual holdings of shares in companies. In other words, they depressed the value of those shares, took them over at a depressed value, and issued Egyptian bonds in return, which could be negotiated through the Stock Exchange, which was then immediately closed.

In one case a factory was sequestrated, desequestrated under the terms of the Agreement and later resequestrated. Compensation, if any, will be practically valueless. This is not the way in which Egypt will attract Western investment which is said to be what it desires and needs. But the position is getting even worse. In October, personal property of a number of British subjects was seized. What are the Government doing about that? Is this to be considered another form of sequestration or is it to be confiscation? Is it a temporary measure to tide over a temporary emergency in Egypt, or is it permanent and is compensation to be paid?

I maintain that Her Majesty's Government have a responsibility for the original seizure of British property, for the Agreement and for allowing Egyptian balances to be run down in this country. The Government have a responsibility for seeing that the Agreement is kept and now, two and a half years afterwards, it is clear that the Agreement is not working satisfactorily. They surely have a responsibility to protect British interest against recent acts which I can only describe as piracy.

I ask three specific questions. Will my hon. Friend say what Her Majesty's Government intend to do to redress the disparity in treatment between those who have had their property sequestrated and those who have had their property Egyptianised? Secondly, will they see that the terms of the Agreement are kept, particularly with regard to the £5,000 transfers and permission of jewellery and personal effects and furniture sent to this country, and also the provision of the money documentation? Finally, will my hon. Friend say what redress for British subjects who have had their property resequestrated is being obtained by Her Majesty's Government?

5.25 a.m.

The Joint Under-Secretary of State for Foreign Affairs (Mr. Peter Thomas)

I am grateful to my hon. Friend the Member for Haltemprice (Mr. Wall) for the opportunity which this Adjournment debate gives me of trying to clarify the present situation in connection with the Anglo-United Arab Republic Financial Agreement. I should like to thank him for his courtesy in giving me in advance an indication of the points he intended to make. It must, I fear, be recognised that the situation is in many respects still unsatisfactory, and I well appreciate the concern which has been expressed by my hon. Friend.

As my hon. Friend mentioned, the property dealt with in the Agreement falls into two categories, first, property which has been described as "Egyptianised" property, that is to say, property sold by the Egyptian Government to Egyptian concerns between certain dates and, secondly, property which was sequestrated. The Agreement provided that for Egyptianised property the Government of the U.A.R. would pay compensation to Her Majesty's Government. This amounted to £27½ million, which was duly paid and which is now being distributed to claimants by the Foreign Compensation Commission.

Sequestrated property, on the other hand, was to be released from sequestration and returned to its owners, loss or damage on it ranking for compensation against the £27½ million fund paid by the U.A.R. Out of such released property, each owner was to be authorised to transfer out of Egypt up to £E5,000, as well as jewellery and household and personal effects. The U.A.R. Government undertook to give favourable consideration to applications for further transfers above that amount.

My hon. Friend has quoted certain figures about claims against the Fund. In anticipation of that, I have obtained the most recent figures available from the Foreign Compensation Commission. Up to 31st October, the Commission had received 2,319 formulated claims, of which 1,260 had been assessed and another 98 had been either dismissed or withdrawn. The amount at which these claims were assessed was £36,175,607, and the actual interim payments made in respect of these claims under the present scale of payments were, up to 31st October, £7,970,071.

We are considering the possibility of increasing some of the interim rates of payment. The total value of the formulated claims still oustanding is estimated by the claimants at £28,663,479, so it will be seen that the total amount of all formulated claims, assessed and unassessed, may well amount to nearly £65 million.

In addition, the Commission has received a large number of unformulated claims—more than 2,000—in which the claimants have no definite idea yet as to the extent of their losses. I think that we can also expect a large number of claims in respect of sequestration losses which hitherto have not been presented, probably due to lack of information. All these categories of claims will, of course, increase the total amount claimed. My hon. Friend referred to what my right hon. Friend the Prime Minister said on 16th March, 1959, when he said: … we do not exclude a further contribution from public funds."—[OFFICIAL REPORT, 16th March, 1959; Vol. 602, c. 150.] He will understand that we cannot yet begin to estimate how much is involved here.

When the Agreement was concluded, it seemed that the provisions for the release and return of sequestrated property would prove satisfactory. Up to date, it appears that about two-thirds of these properties have now been released. I cannot give my hon. Friend an estimate of how long it will take to release the remaining properties. This is a matter which mainly depends on the rate of action of the Egyptian authorities concerned. I can, however, tell him that releases have been proceeding steadily, if slowly, and that some indeed have taken place since the announcement of the recent sequestration measures.

My hon. Friend has quite properly emphasised the fact that those whose property has been released, but who cannot go back to Egypt are, in effect, in a much less favourable position than those whose property was Egyptianised. That is true. Let me say at once that Her Majesty's Government are fully alive to the disadvantages which are being suffered by the owners of released property who cannot get it out of Egypt, and we are actively examining all possible means of helping them. My hon. Friend made one or two suggestions, and we will of course, consider what he said most carefully. I can assure him that the U.A.R. Government are being left in no doubt about the great importance which we attach to remedying the various problems involved, and this includes the question of the disclosure of records for released property, to which my hon. Friend referred.

When property has been released and returned to its owners, the Agreement, as my hon. Friend explained, provides for desequestrated funds up to at least £E5,000 to be transferred into sterling. It is true that very few transfers of this sum are believed to have been authorised, and when this was taken up in Cairo with Egyptian Ministers they explained that the U.A.R. was faced with an acute shortage of foreign exchange which prevented them from giving full and immediate effect to their obligations under the Financial Agreement to authorise transfers into sterling. My hon. Friend said that he did not think that the difficulties with which the Egyptian Government are faced are due to any on their part. I think that there is no doubt that they have genuinely been short of foreign exchange.

It was for this reason that we acquiesced last March in an arrangement by which the Egyptian authorities agreed to allow, on account, the transfer out of Egypt of the first £E1,000 of each application. We felt that this was a better alternative to allowing the unfortunate owners simply to wait in the queue until enough exchange was available to meet their applications in full. So far, 234 applications for transfers into sterling are known to us to have been fully completed, and we have been notified by the U.A.R. authorities that 205 of these have been granted. This seems to be an improvement on the figure quoted by my hon. Friend. A large number of other applications must be in the pipeline—we know of about 800—but as applicants are under no obliga- tion to inform Her Majesty's Government of the action which they have taken, it has been extremely difficult to obtain any reliable information on this subject.

Where particular cases of delay on the part of the U.A.R. authorities are brought to our notice, Her Majesty's Embassy in Cairo invariably take them up vigorously with the Egyptian authorities. Furthermore, we shall continue to press the U.A.R. Government to make the necessary foreign exchange available to allow remittances up to £E5,000 to be made as soon as possible.

My hon. Friend mentioned what the then Foreign Secretary said on 16th May, 1957, when he referred to blocked accounts and said that they were security for claims of British subjects against the Egyptian Government, and he properly reminded the House that under Article II of the Agreement the Egyptian sterling balances held in this country were released. When the Agreement came to be negotiated, it became clear that if there were to be any agreement at all, and if relations with the U.A.R. were to be restored on a normal basis, these balances had to be released. This situation was, of course, fully explained to the House when it approved the Agreement as presented to it by the then Chancellor of the Exchequer in March, 1959.

It is true, as my hon. Friend has pointed out, that the U.A.R. obtains a considerable amount of sterling each year in respect of transit dues for the Suez Canal. But this is largely offset by the fact that the U.A.R. buys very much more from the United Kingdom than we buy from them. Moreover, during recent years the U.A.R. has been running an overall deficit on her balance of payments, and this has resulted in a substantial running down of her total foreign exchange reserves.

My hon. Friend mentioned the question of jewellery and household effects. Under Article V (1, c) of the Agreement, the U.A.R. authorities are, of course, obliged to allow the export of de-sequestrated jewellery and personal and household effects. Up to March, 1961, the Egyptian authorities were insisting that the value of such effects should be deducted from the £E5,000 which each person was entitled to take out. In March, 1961, this matter was taken up by Sir George Rendel, in Cairo, with the result that the Egyptians agreed that they should allow the export of jewellery and personal effects independently of other assets. They have adhered to this and we know of no cases in which the export of jewellery or effects has been refused after the required formalities have been completed. But if my hon. Friend has any cases of such refusal, and will bring them to our attention, we will certainly take them up through the Embassy with the U.A.R. authorities concerned.

My hon. Friend has asked what we intend to do about the recent resequestration measures taken by the U.A.R. Government. These measures, the latest of which was announced on 8th November, have affected about 600 people of whom 31 are known to be British subjects. I think that it is clear, therefore, that no discrimination against British subjects was intended, but these 31 are, of course, suffering because their property has been sequestrated again. I think that it is clear that these sequestration measures and the nationalisation decrees, passed in July, are primarily measures of U.A.R. domestic policy and are not directed against British property as such.

As regards the nationalisation decrees, we have told the U.A.R. Government that we assume that the assessment of compensation and the manner in which it is to be made available will conform to the generally accepted principles of international law, and that we reserve the right to revert to this matter should we consider it necessary in the interests of British shareholders. My hon. Friend referred to the case of a factory. If he would like to send details of this to me, I will be glad to look into the matter.

Obviously, we have every sympathy with the British subjects affected by the new sequestration decrees, but I regret that at the moment we still have insufficient details of what is precisely involved. When we have sufficient information to go on we will, of course, consider urgently what steps can be taken to protect their interests. In the meantime we are doing our best to get the necessary facts. As my right hon. Friend the Lord Privy Seal told my hon. friend on 6th November, Her Majesty's Ambassador in Cairo has asked the Government of the U.A.R. for information of the legal basis for these measures. He raised the matter again with the Egyptian Foreign Minister two days ago and left with him an aide-memoire setting out more fully the information we seek, and we are now awaiting a reply.

The full text of the sequestration decree has not yet been published and there are various important points to which we need to know the answers. We do not know, for example, how long the sequestration is intended to last, whether any compensation will be paid, whether all those involved will be treated alike or whether each case will be treated on its merits. We are doing our best to get the answers to these questions as soon as possible.

Meanwhile, I am informed that arrangements are being made by the U.A.R. Government for the payment of monthly allowances to the owners affected by the decrees, but we do not yet know whether this will apply to all the owners nor how much the payments will amount to.

I am grateful to my hon. Friend for raising this matter, which is of great concern not only to Her Majesty's Government but to all of us. By doing so he has performed a service to those whose interests are involved, and I should like him to know that we are doing our best to resolve their many difficulties. I repeat that we shall continue to leave the Government of the U.A.R. in no doubt of the importance we attach to these matters.

Mr. Wall

I am grateful to my hon. Friend for that reply. Can he say, whether, if there is not a satisfactory answer about resequestrated property, it could form a claim to the International Court?

Mr. Thomas

I cannot answer that without finding out more about the legal aspects of the recent sequestration measures.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes to Six o'clock a.m.