§ LORD NEWTON rose to ask if any other Power besides Yugoslavia has applied to us for compensation in consequence of anti-Italian sanctions, and whether any such application would be considered by Ills Majesty's Government. Time noble Lord said: My Lords, the subject of this Question has already been dealt with in another place, and I observe that there appears to be a certain amount of agitation as to whether the Government have behaved in an unconstitutional manner or not in regard to this matter. I do not propose to deal with the constitutional aspect of the question. I am prepared to leave that to the noble Lord, Lord Mottistone, who is going to speak on the subject next week, and I understand—on his own authority—that he is an authority on International Law. All that I desire is to offer a few remarks upon the actual proceeding.
§ As anybody knows, we have agreed to compensate the Yugoslav Government for losses sustained in connection with the imposition of sanctions against Italy. I presume that this action is determined by Article 16 of the Covenant, which deals with the question of mutual assistance. But there is no mutual assistance in this case at all, so far as I observe. We undertake to indemnify, practically, the Yugoslavians for any loss that they may incur, but they do not undertake to do anything with regard to our own losses. Why, I ask, should we be the only Power to come to the rescue of Yugoslavia? So far as I know, no other Power is proposing to do anything for them at all, and I 799 am quite sure that it never occurs to any other Power to do anything for us or to compensate us in any shape or form, however much we lose. It seems to me quite evident that this is an infraction of the sacred principle of collective action. After all, the League is a collection of nations who all entered it upon the same terms and who ought to undertake the same responsibilities. But if Yugoslavia is allowed to shuffle its responsibilities off upon us, that seems to me a great temptation to other nations to do the same. It appears to afford a splendid opportunity for sanctions on the cheap at our expense with regard to Italy, and I should not be surprised if His Majesty's Government had received other applications of the same nature. I will ask my noble friend, when he replies, to tell me who those nations are—because I am quite convinced that there are some—and to tell me exactly what reply has been given, or will be given, to these applications.
§ You may call this action upon our part by whatever name you may like, but it really amounts to this: that it is a kind of subsidising of a foreign nation for the purpose of economic aggression upon Italy. It is an imitation in a small and simple way of what used to characterise our policy in the eighteenth century, when Walpole, Chatham, Pitt and others advanced money to European countries for the purpose of fighting France. In a small way, that is exactly what we are doing at this moment, and I cannot imagine any action which would more encourage the Italian obsession—if it is an obsession—that they are not really fighting the League but are fighting us. We are doing and have done everything that we can to create that impression, and the Italians, when they realise that we are practically financing other nations for the purpose of attacking them, will naturally become all the more embittered.
§ The old policy of subsidising foreign Powers for the purpose of making war upon the French had, at all events, this advantage, that we were spending the money for our own benefit and in our own interest. But in this case we are going to spend money in order to maintain the prestige of the League and the inviolability of the Covenant. This process of converting Italy into an enemy, from being a friend, by means of sanc- 800 tions is an extremely expensive one. Our trade with Italy, as I gather, has already vanished altogether for the time being. We are doing no business with Italy at all. How much have we spent in naval and military preparations and movements as a result of the attitude of the Italians towards us? Now, on top of it, we are prepared—I do not say we are spending much money upon it, but we are prepared to a certain extent—to finance other countries in order to induce them to come into the scheme. I should have thought that if there was any question of compensating anybody for the loss due to sanctions against Italy, it ought to be those of our own traders who have suffered in consequence. This policy of attacking Italy through sanctions is not only an extremely expensive one but also an exceedingly dangerous one. I must confess that it would be a great relief, not only to me but also to a large section of the population, if Ministers would talk rather less about the beauties of the League, the inviolability of the Covenant, and collective action—which, by the way, is shown to be a complete fraud—and rather more about the interests of this country, and in my opinion the interests of this country consist of doing our best to bring about a peace on reasonable terms as soon as that is possible.
§ THE UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (EARL STANHOPE)
My Lords, I am afraid my noble friend Lord Newton is not a very great upholder of the League or the Covenant. Therefore I am afraid that I shall not find myself entirely in agreement with him in what I have to say.
§ EARL STANHOPE
I am afraid he attaches a great deal more importance to this Order in Council than in fact it deserves. The total trade of Yugoslavia runs into I think, in regard to exports, 50,000,000 dinars a year. In 1934 Yugoslavia's trade with Italy was 25 per cent. of the total, and last year it was something over 20 per cent. Therefore when sanctions were applied Yugoslavia was in a very special position in that a quarter to one-fifth of her trade was with Italy. She was in an entirely different position 801 from that of anybody else, and different from that of this country, because although we had a considerable trade with Italy the proportion, compared with the whole of our trade, was a small one. There was no question of attempting to buy support for sanctions in this case, because, as I would remind my noble friend, sanctions were imposed at Geneva, or rather came into effect as a result of the Geneva decision, on November 18, whereas this assistance to Yugoslavia did not begin until December 24, more than a month later. The reason we attempted to assist Yugoslavia is that, of course, it is a poor country and the loss of a quarter or one-fifth of its total export trade was obviously going to be a disaster to her. Therefore, when she applied to us and to other nations for assistance, His Majesty's Government felt it right to assist, and I believe I am correct in saying that the French Government also assisted, although not to the extent that we have.
A good deal has been said in another place, and in the country, with regard to the damage being done to our home agriculture. May I say that the National Farmers' Union say that the effect upon the home producers is entirely negligible, and that is borne out by the figures with regard to this trade. We have, as my noble friend knows, reduced the duties on eggs and poultry, but there is a quota attached to these articles which Yugoslavia cannot exceed. When my noble friend says there is no mutual support in these arrangements I may tell him that one-half of this increase in exports in the case of bacon falls upon us, and the other half upon other exporters to this country's markets, and therefore all the other nations are assisting Yugoslavia by reducing their quotas. Actually the effect upon the quota in England is that the proportion that the eggs of Yugoslavia bear to the total number is one-quarter of 1 per cent., of chicken 1 per cent., and of bacon 1, or one-tenth of 1 per cent. Therefore my noble friend will see that the effect upon the producer in this country must, as the National Farmers' Union recognise, be very small indeed.
He asked me whether other nations had applied in a similar way. Yes, three 802 other nations have applied for compensation in consequence of losses which they claim to have incurred as a result of sanctions. None of them are at all in the same position as Yugoslavia. One country—not one which has applied—has a trade altogether of 10 per cent., but all the others are well below 10 per cent. in regard to their trade with Italy. Therefore the Government feel that Yugoslavia is exceptional in her position, in so far as her trade with Italy amounts to so large a figure. Although at the present moment I cannot say more with regard to the other three countries than that matters are still under consideration, I think the noble Lord will realise that their position is entirely different, and it by no means follows that they will get the same terms as were meted out to Yugoslavia. I have nothing further to say on the matter, because I think I have answered the Question, but although my reply is not, perhaps, as satisfactory as the noble Lord would wish, I hope he will realise that the action of the Government in this case is not against the interests of the United Kingdom, although it may be in the interest of the League.
§ LORD NEWTON
My Lords, I am not complaining of the amount but of the principle. No doubt the figures which the noble Earl gave are accurate and trifling, but obviously they are an inducement to other people to make similar claims, and I would not be surprised if we ended by giving way. It is an extremely pernicious precedent, and nothing is more calculated to embitter the Italians than the fact that we are pursuing this course.