HC Deb 17 December 1963 vol 686 cc1059-62
The Minister of State for Foreign Affairs (Mr. Peter Thomas)

With your permission, Mr. Speaker, and that of the House, I wish to make a statement.

As the House may be aware, two British companies separately entered into contracts with the Republic of Indonesia in 1959. One was for the supply and services for the installation of a radar system in Indonesia by the Decca Radar Company, and the other for the supply and subsequent servicing of Gannet naval aircraft by the Fairey Aviation Company, now part of the Westland Aircraft Company. These contracts had the approval of Her Majesty's Government.

However, the Indonesian Government are now pursuing a policy of hostility towards Malaysia and this has obliged the Government of Malaysia to request British assistance under the Anglo-Malaysian Defence Agreement in the defence of Malaysian territory. Under these circumstances, Her Majesty's Government have felt obliged to request both the British companies to suspend work on their present contracts with the Republic of Indonesia. Arrangements are accordingly being made by the companies for the withdrawal of the British technicians in Indonesia engaged on these contracts.

The reasons why this step has been taken have already been explained to the Indonesian Government, who have again been reminded that Her Majesty's Government remain ready to respond to any sincere Indonesian initiative for the resumption of friendly relations.

Her Majesty's Government have given undertakings to both the companies to indemnify them against losses arising from the termination of these contracts. Parliamentary authority for any payments which prove necessary to meet those undertakings will be sought in due course.

Mr. Gordon Walker

Is the Minister aware that, in view of Malaysia's request to us for assistance, this decision of the Government will be welcomed and supported on both sides of the House? Can he assure us that, before it is necessary to come to Parliament for authority to pay the compensation, he will tell us at the earliest opportunity what will have to be paid in compensation to these companies?

Mr. Thomas

The answer to the second part of the right hon. Gentleman's question is "Yes" and I very much welcome the first part.

Mr. Grimond

May I ask the Minister three questions? First, are these the only contracts likely to be affected? Secondly, has there been a deterioration in the situation which means that this must be done now? If not, why was it not done before? Thirdly, what is the position of the technicians? Have they been withdrawn? If they have not been withdrawn, are steps being taken to see that they are safe and whether they can be safely withdrawn, because surely their situation could be most uncomfortable?

Mr. Thomas

They have not been withdrawn, but steps are being taken at this moment to see that arrangements are made for them to leave the country.

In answer to the right hon. Gentleman's question on delay, both these contracts were reviewed in mid-September, but no statutory powers existed to cancel them. Therefore, we have had to request the companies to do so. This was a serious matter, the possible repercussions of which needed careful consideration.

With regard to the right hon. Gentleman's question about other contracts, as far as Her Majesty's Government are aware, no other commercial firms in the United Kingdom now have contracts with the Indonesian armed forces.

Miss Vickers

While appreciating, and regretting, the need for my hon. Friend to make this statement, may I ask him whether thought has been given to getting reconciliation between these two countries through a third Power? Also, is any meeting being held between the Indonesian Government and the British firms in Indonesia to get the position regarding these firms finally cleared up? It has been proposed, I believe, that there should be a committee to discuss this matter.

Mr. Thomas

Her Majesty's Ambassador in Djakarta is continually having interviews with the Indonesia Government about the position of British firms in Indonesia.

If the Indonesian Government would stop their confrontation policy, we should be only too happy to resume the friendliest relations with them. That, indeed, is what we would wish.

Mr. Lee

Could the hon. Gentleman tell us what could be the effect of this policy upon employment? He may remember that my right hon. Friend the Member for Huyton (Mr. H. Wilson) and myself made it clear, in the case of South Africa, that if we were in power we would keep up the contracts so that there should be no unemployment. Is he aware that we see a lining up between the position here and that applying in South Africa's case? Could the hon. Gentleman say whether the Government will take action to ensure that there is no unemployment as a result of this policy?

Mr. Thomas

I made inquiries about this matter this morning. As I said, Her Majesty's Government have agreed to indemnify the company against losses arising from the termination of the Decca technicians' contract with the company, and I am informed by the Decca Company that, for its part, it fully intends to deal sympathetically with any problem which may arise from the termination of their contracts by reason of the termination of its contract with Indonesia.

With regard to the Westland Aircraft Company, there are only two technicians involved. I am told that no unemployment problem will exist in its factory and that the company can easily assimilate into its staff the two technicians returning from Indonesia.

Mr. H. Wilson

Could the Minister be a little more explicit on what I thought I heard him say about the lack of statutory powers in this matter? Since the Government use powers to control exports to Eastern Europe, for example, and claim that they are now, at any rate, exercising some sort of control, whatever it is, on shipments to South Africa, would the hon. Gentleman say whether they have statutory powers to enforce a total or partial embargo when difficulties of this kind arise? If the powers are limited, is thought being given to the possibility of introducing the necessary legislation?

Mr. Thomas

Apparently, the remaining equipment that was needed to link up the equipment already in Indonesia was not subject to export licensing or any other form of statutory control. The people who were dealing with this Decca equipment were technicians who were installing a lot of equipment which is already there.