Baltic Gold (Hansard, 8 May 1990)

§ Sir Jim Spicer (Dorset, South)

Today might be considered an appropriate day on which briefly to discuss the disposal of gold that was owned and stored in London for safe keeping by the three Baltic states in the early 1920s. It is appropriate, first, because it is the day on which we have seen the arrival in London of the Prime Minister of Lithuania. I am sure that my right hon. Friend the Minister of State, Foreign and Commonwealth Office and other hon. Members will give her a warm welcome. Secondly, today follows upon a weekend which has seen all the Baltic states announce their independence from the Soviet Union. Finally, it is the anniversary of VE day in 1945 which brought freedom and happiness to many but brutal subjugation for the people of the Baltic states under the Soviet yoke.

I shall briefly outline the background to the Baltic states and what happened to them during their brief period of independence between 1919 and 1939. In 1919 the Baltic states were beset on all sides by foes—the White Russians, the Red Russians, the Poles and briefly the Germans. However, they fought through and bravely declared their independence. But they were still under threat, so in the early 1920s they decided to transfer their gold reserves to the United States, London and Paris for safe keeping. I emphasise that the reserves were transferred for safe keeping. Not merely gold bullion was transferred. The people of Latvia, Lithuania and Estonia also gave to their new Government their rings and heirlooms as a mark of their determination to help their country through the difficult period that they knew must lie ahead.

I have heard various figures put on the value of the gold deposited here. It was about £500,000 plus at that time. Between 1919 and 1939 those three small but independent states watched with some horror—they were close enough to see what sort of state was operating alongside—what was happening and the evil doings in the Soviet Union, its big neighbour next door.

Then came August 1939, the date of the infamous accord between the Soviet Union and Hitler which gave the three small states to the Soviets under the hidden protocol. The occupation of Latvia, Estonia and Lithuania took place in 1940. From 1941 to 1944 they suffered German occupation. In 1944, just when the rest of us were looking forward to peace and freedom, the Baltic states saw the return of Stalinist forces to their countries. That was followed by massive deportations, killings and torture plus an inward movement of Russians arid Ukrainians in an attempt to break down the national coherence of the Baltic states.

For all those years until 1989, the Baltic states suffered under the Soviet yoke. As hon. Members will probably remember, last year, on the anniversary of that infamous pact between Molotov and Ribbentrop, 1 million people in the Baltic states joined hands in a silent, peaceful demonstration of their determination to regain their independence. In 1990 the Baltic states, led by Lithuania, declared their independence from the Soviet Union.

Throughout the past 50 years three small countries have suffered annexation and oppression while the world looked on and took no action. In fairness, what could the 171 world have done? None of us liked to see Latvia, Estonia and Lithuania swallowed up by the Soviet Union in 1945, but in the times in which we lived, there was no other way, and we could not even protest because of the position we faced. The most important point was that, although we gave de facto recognition to the Soviet annexation of the three Baltic states in the post-war world, we have always withheld de jure recognition of Russian sovereignty.

Against that general background, I turn to the unbelievable action in 1968 of the then socialist Government of this country, who handed over to the Soviets the value of the Baltic gold that had been deposited in this country for safe keeping. At that time, the value of the Baltic gold had risen to between £4 million and £5 million. That happened when Brezhnev ruled in the Soviet Union, the invasion of Czechoslovakia had just taken place, and when, as we all know, the gulags were still operational and hundreds of thousands of Soviet citizens were being detained in the gulag camps.

The Foreign Compensation Bill authorising the transfer received its Second Reading on 7 November 1968. I am proud that all Conservative speakers in the debate, particularly my old friend, the late Lord Chelwood, then Tufton Beamish, strongly attacked the disreputable deal, which handed over to the Soviet Union gold bullion that did not belong to it or to us. It was a betrayal of trust, made worse because the United States and France made no similar deal with the Soviets and, to this day, retain the funds lodged with them by the Baltic states. Her Majesty's Opposition voted against the Bill on Third Reading in 1968, and I am delighted that my right hon. Friend the Prime Minister joined her colleagues in the No Lobby, and the present Speaker of the House was a teller for the Noes.

That the British Government, in 1968, acted in a despicable way cannot be in dispute. They had no legal right to pass to a third party—the Soviet Union—funds that should have remained blocked until recognised Governments were reinstated in all three Baltic states. It would be totally unrealistic to ask the present Government immediately to right that wrong by making full restitution. However, I can ask my right hon. Friend the Minister to undertake an examination of all the papers relating to the unlawful transaction in the hope that, thereafter, a Conservative Government will give some commitment to the Baltic states that, as and when they achieve full independence, they will receive direct support and help from the United Kingdom.

My right hon. Friend has taken a major part in the setting up of the know-how fund, initially for Poland, then Hungary and now eastern Europe. It would be only right and proper for the Government to consider setting up a special know-how fund for the Baltic states that could be given to them to help them in the difficult days that will inevitably follow the transfer of full independence back to them. That is the very least that we, as an honourable Government, can do to help those people who have suffered so much and so grievously during the past 60 years.

§ The Minister of State, Foreign and Commonwealth Office (Mr. William Waldegrave)

I am grateful to my hon. Friend the Member for Dorset, South (Sir J. Spicer) for 172 giving me the opportunity to respond to the subject of the debate which, as he rightly says, is potentially one that is coming out of the history books and back into reality.

The origin of the gold and its deposit in London was accurately described by my hon. Friend. On the essence of the action taken by the Government in 1967 and 1968 I would only say that it is no part of my job to defend a previous Labour Government, but, just as it must have seemed inconceivable at that time under Brezhnev that there was any hope of freedom for the Lithuanian, Estonian and Latvian republics, it must also have seemed more immediately pressing that there were British citizens and others with claims which had not been met. It must have seemed at least pragmatic sense to write off the claims for the original loans, which had been lost, and which had been taken out by the Lithuanians in London, against the gold which was then available and which was doing nobody any good. So a pragmatic view, which it is not my job to defend, was taken for the benefit of those British citizens.

Mr. Whitlock, who was the junior Minister responsible for the legislation, repeated in column 608 of the Official Report for 22 January 1969 what he had said in Committee: nothing contained in or done under the Bill would preclude any independent Baltic republic at some time in the future from submitting a claim to the British Government of the day in respect of the property in question if it considered that it had such a claim"—[Official Report, Standing Committee A,19th November 1968, c. 23.] Therein lies the heart of the matter.

My hon. Friend correctly said that we had never recognised de jure the incorporation of the states into the Soviet Union. We believe that independence now can be achieved only by a process of negotiation. Doubtless that is the course of action which my right hon. Friend the Prime Minister will discuss with the elected Prime Minister of Lithuania at their meeting tomorrow. Doubtless she will wish to urge and explore the possibility of a route to successful negotiation.

If such negotiations were successful, if independent statehood was achieved and if recognition could be accorded, there would be nothing to preclude that state, or any of the other Baltic states, bringing action if they believed they had a claim and could prove title in succession to the original Governments. They would then have to accept that if they were in a position to make claims they would also be in a position to accept their obligations. That would be a matter for the courts at the time.

My hon. Friend referred to the know-how funds for eastern European countries. If the happy outcome which I have described were to be achieved, we and, I am sure, other western countries would not be backward in bringing help and know-how to independent Baltic states. Sadly, we are some way from that, although Baltic independence is now a real possibility which would have seemed inconceivable in 1968.

If there is a happy outcome, and if the Baltic states win back their legal right to independence, the matters may come before the courts again. Nothing in the action of the Government in 1968 could prevent that from happening. The outcome would be a matter for the legal jurisdiction at that time.

That is about all that I can say to my hon. Friend. He has recorded our party's opposition to the Bill at that time and reminds us of our country's opposition to the 173 incorporation of the Baltic states. That opposition has remained clear and unwavering, although the practicalities of how to achieve a solution are more difficult to see clearly.