HL Deb 21 December 1965 vol 271 cc947-66

2.55 p.m.


My Lords, I beg to move that the first Order standing in my name be approved; and, if it is to the convenience of your Lordships' House, I would speak also to the second Order standing in my name, and suggest that they be discussed together.

The effect of the Reserve Bank of Rhodesia Order is to suspend the governor and other members of the board of directors of the Reserve Bank of Rhodesia; to provide for the appointment of a board by the Secretary of State; and to provide that the Secretary of State may give directions to the board relating to the policy of the Bank for the conduct of its business. The Order transfers control of the Reserve Bank from the previous board to a new board appointed by the United Kingdom Government. It does not—I repeat, does not —transfer to the United Kingdom Government the assets of the Bank. The new board at present will operate in London, but the Order permits it to function in Rhodesia or elsewhere.

It is the intention that the internal affairs of the Bank should continue to be conducted from Salisbury, as now. Although inevitably the internal affairs of the Bank in Salisbury will be affected to some extent by this new arrangement, the chief cashier and other officers of the Bank continue in office in Salisbury and will be responsible for day-to-day operations in Rhodesia. As the House will know, a new board has been appointed, under the chairmanship of Sir Sidney Caine, and composed of men of outstanding experience and unchallengable integrity.

The first objective of the Bank under this new dispensation will be to ensure that the assets of the Reserve Bank held abroad are safeguarded in the interests of the people of Rhodesia as a whole, and to help achieve Her Majesty's Government's aim to bring about a return to constitutional government in Rhodesia. I must emphasise that Her Majesty's Government have not confiscated these assets; nor do they intend to do so. References by Mr. Smith and others to "confiscation" are totally unfounded. The assets remain, as they have always been, the property of the Bank and its customers. While under the control of the new board, the accounts of the Reserve Bank will be administered in a way proper to the administration of a Central Bank, subject to any directions which the Government may give. The new board has already been recognised by the Bank of England and by the Central Banks of certain other countries. No Central Bank has refused recognition.

In his speech commenting on this Order concerning the Reserve Bank of Rhodesia, Mr. Smith complained that he had been let down by the Bank of England and that the whole of the international financing mechanism had been brought into disrepute. This complaint is entirely without justification. In recognising the new board, the Bank of England has done no more than recognise the law of the land, and no responsible banking institution could have done otherwise.

The connection between the Reserve Bank Order and the Southern Rhodesia (Bank Assets) Order is manifest. The Exchange Control powers which were introduced on November 11 brought all Rhodesian sterling accounts under Treasury control, and the Treasury was enabled to obtain information about transference in or out of those accounts. These measures—the measures relating to the exchange control—did not, however, enable the Treasury to obtain information about net balances held by the banks in the United Kingdom on behalf of Rhodesian banks, and this first Order will enable complete information to be obtained. Although one purpose of the Order is to enable the Treasury to obtain information about the assets of the Reserve Bank of Rhodesia, it has been deliberately drafted in such a way as to cover the assets held in the United Kingdom on behalf of any Rhodesia bank. The Order safeguards the legal position of banks which, at the request of the Treasury, supply the Treasury with information about these assets, for otherwise the banks might be liable for damages. Any information received by the Treasury under the Order will be treated with the strictest secrecy and will be used to the minimum possible extent.

The Order does not apply to assets held in United Kingdom offices of banks on behalf of any Rhodesian resident other than banks; for example, it does not apply to the assets of Rhodesian companies or individuals. It does apply to all United Kingdom offices of banks, whether they be United Kingdom banks or otherwise.

In the belief that your Lordships are more concerned with the general effects and purposes of these Orders, I have not dealt with their technical details. Of course, if there are questions on detail which any noble Lord would wish to put, then those questions will be answered, and my noble friend Lord Shepherd will be glad to deal with them in winding up this debate. However, I do urge those noble Lords who want to probe the details and consequences of these Orders to make it clear that they are concerned primarily about their effectiveness to achieve an objective which we all have in common—namely, to create conditions in Rhodesia under which a return to constitutional government becomes inevitable.

That we all regret the necessity for these Orders cannot be disguised, but the necessity arises wholly and solely because of the selfish and intolerable behaviour of Mr. Smith and his supporters in breaking off negotiations and assuming illegal power. The sooner this power is given up, the more hope can we have for averting a threatened catastrophe. It is in the belief that these Orders will play their part in bringing about constitutional government in Rhodesia that I ask the House to support these two Motions. My Lords, I beg to move,

Moved, That the Southern Rhodesia (Bank Assets) Order 1965, be approved. —(Lord Beswick.)

3.0 p.m.


My Lords, I am sure it will be for the convenience of the House that we should consider these two Orders together. I do not think that this is an occasion for any kind of general debate, or indeed discussion, of the conduct of Mr. Smith and his supporters. Their conduct should not, I think, affect our consideration of these important measures on which we have the advantage of having reports from the Special Orders Committee. In relation to the first Order, the Reserve Bank of Rhodesia Order, that Committee have reported that "the Order raises an important question of policy and principle—namely, whether it is necessary or expedient for the Secretary of State to gain control of the Reserve Bank of Rhodesia"; and they say that in their opinion the Order cannot be passed without special attention. I am sure that the Special Orders Committee were right—


My Lords, will the noble and learned Viscount allow me to intervene to point out that the first Order is the Bank Assets Order. That is the one which is technically before the House at the present time.


My Lords, I am grateful to the noble and learned Lord the Lord Chancellor. I did, in fact, mention that both were being discussed together and I mentioned the Order to which I was referring, the Reserve Bank of Rhodesia Order.

As I was saying, I am sure that the Special Orders Committee were right and that we should give this Order very close attention, because this Order, I think, covers an important point. Not only has the board of directors been replaced by a board consisting of very eminent gentlemen whom the noble Lord, Lord Beswick, described as of outstanding ability and unchallengeable integrity; but, also, the Secretary of State is given very wide power to give them directions as to what they may or may not do in the conduct of the Bank. The result is that the British Government have now taken over control of the Bank. The assets held by the Bank for its customers have not been confiscated; and I agree with the noble Lord that it is quite ridiculous for anyone to say that they have. But the Secretary of State now has power to direct the board not to give effect to the instructions of its customers even though giving effect to them does not involve any breach of the law. I do not myself know whether cheques are drawn on this Bank; but, supposing they were, it clearly would be within the power of the Secretary of State to direct the Bank not to honour a particular customer's cheque even though it held assets with which to meet it.

This is a very far-reaching power. The Order contains no provision for making known to Parliament what directions the Secretary of State gives, and Parliament has no power to control the Secretary of State's exercise of the power to give directions. If there were any danger of the former board allowing Mr. Smith and his colleagues to make use of the funds held by the Bank for the Government of Southern Rhodesia, then clearly it is right that that board should have been suspended from office. But was there any such danger? Mr. Smith and his colleagues are no longer Ministers. They have now no lawful claim to constitute the Government of Southern Rhodesia. In these circumstances, I should be surprised to hear that any bank was prepared to let them operate accounts in the name of the Government of that country. I am glad that we have Lord Beswick's assurance that the noble Lord, Lord Shepherd, will be glad to answer all questions raised in this debate.

So I put the question: Was there any real risk that this Bank, with its original board, would give effect to instructions given by Mr. Smith or his ex-Ministers in relation to assets held for the Government of Southern Rhodesia? I think we ought to be told about that. Was the original board asked to give an undertaking not to allow Mr. Smith and his colleagues to operate these acounts, and did they refuse to give one? Again, I think the House should be told, because it seems to me that only if they were asked to give, and refused to give, such an undertaking, and only if there was a real risk of their allowing the funds held by them for the Southern Rhodesian Government to be used by the illegal régime, can it be argued that this part of the Order is justified. So, when the noble Lord, Lord Shepherd, comes to reply, I hope he will deal fully with this. I am not saying that justification for this Order does not exist; but that we ought to know what it is. For the justification of this part of the Order must, it seems to me, depend on the very real risk that the illegal regime (who are no longer Ministers of any lawful Government) would have been able to exercise control over assets held by the Bank in the name of the Government. That is the first matter that I want to ask the noble Lord about.

But I would ask him this further question. Why is it necessary for the Secretary of State to be given absolute, unlimited and unfettered power to give directions to the new board consisting of these men of outstanding ability and unchallenged integrity'? Can they not be relied upon to see that the funds held by the Rhodesian Government are not made use of by the illegal regime? I should have thought that the British Government could have relied upon them completely. Therefore I find it difficult to understand why it was thought necessary to give the Secretary of State power to give any directions he thinks fit as to the conduct of the Bank's business. The noble Lord, in introducing theseMotions—and I am sure that the House was grateful for his explanation of them—did not really put forward any reasons for giving the Secretary of State such powers. Has the Secretary of State given any directions? If so, what are they? I think we should be told. I think we should also be told of any future exercise of this power.

My Lords, the other Order is the Southern Rhodesia (Bank Assets) Order; and that, in the opinion of the Special Orders Committee, also raises: an important question of policy and principle, namely, whether it is necessary or exdicnt to require banks"— in this country— to disclose to the Treasury confidential information about their customers: The noble Lord said, rightly, that the disclosure is limited to the disclosure of the assets held by any bank in this country on behalf of any Southern Rhodesian Office of any bank. The only reason given by the Chief Secretary in moving this Motion in another place was (and I quote) that: This information, too, may he relevant to the formulation of our policy."—[OFFICIAL REPORT, Commons, Vol. 722, No. 26, col. 1154; 14/12/65.] That was all he said about the reason why this information was wanted and the noble Lord, Lord Beswick, said that the information, when obtained, would be treated with the strictest secrecy and would be used to the least possible extent.

My Lords, how is this information to be used? I hope that the noble Lord, Lord Shepherd, will be able to tell us a little more than that in justification of this Order, which clearly breaches the confidentiality which exists between customer and bank. It may be very nice to know what assets are held in this country on behalf of any Southern Rhodesian bank, but what use is it intended to make of this knowledge? Is it thought that the steps already taken to stop payments being made to Rhodesia are inadequate? Is it thought that the funds held here on behalf of any bank in Rhodesia are likely to be applied to the use of the illegal régime? If so, mere knowledge of the assets will not suffice. Is it intended by another Order to give the Secretary of State power to direct how such assets ought to be used? My Lords, I think we should ask for answers to all these questions, because upon those answers depends the justification for these Orders.

I want to turn now to what I feel is a very important question. I am sorry to ask so many questions, but I think they require to be answered, and I hope that the noble Lord will be able to deal with them fully and satisfactorily. By the Reserve Bank Order, as I have said, the British Government now have complete control over the assets held by the Bank. If he wished, clearly the Secretary of State could direct that those assets should be applied in the payment of interest on the Rhodesian public debt. I am sure that the noble Lord will not dispute that the Secretary of State could do this, and that, if he did, no one could say that his action was either illegal or ultra vires.

If I understand the position correctly, Mr. Smith and the other ex-Ministers have no power to direct the Reserve Bank, or anyone else, to pay such interest. Power to do so resides in the Government of Southern Rhodesia, and paragraph 42 of the 1961 Constitution provides, inter alia, that the executive authority of Southern Rhodesia is vested in Her Majesty and may he exercised on Her Majesty's behalf by the Governor. Therefore, it is possible to direct the payment of interest under the Southern Rhodesia Constitution Order 1965, made under the Southern Rhodesia Act 1965. The executive authority of Southern Rhodesia may be exercised on Her Majesty's behalf by the Secretary of State.

My Lords, I have dealt with this matter in some detail for the Chief Secretary to the Treasury, in another place was, I am sorry to say, singularly evasive with regard to it. If the position is as I think it is, that the Secretary of State can direct the payment of interest on the Rhodesian public debt out of the assets held by the Reserve Bank, why has that not been done?


My Lords, may I deal with this point, since the noble and learned Viscount is putting emphasis on its importance?—and of course it is important. This Order has no effect, so far as the transference of any power is concerned, save from one board to another. Of itself, the board has no power and cannot decide to pay out interest. Nor does this Order give any power to the Secretary of State to direct that the board shall pay out any interest. Therefore, the argument of the noble and learned Viscount on this point is going outside the actual scope of the Order which we are discussing.


My Lords, I do not think that is so. Certainly, in another place it was not considered so outside, and I should not think that it is outside the argument in your Lordships' place.


It is outside the Order.


My Lords, I do not know whether that is so, because one has to consider this Order. In a sense the noble Lord is right, but I did not say that the power would be exercised by the Secretary of State under this Order. I pointed out that under this Order there is no limit to the directions which the Secretary of State can give, and that if he were to give directions, under this Order, that the interest shall be paid, no one could say that he was acting illegally or ultra vires. That is to say—and perhaps the noble Lord will be good enough to look at the Order—there is no limit on the power of the Secretary of State to give directions.

I was pointing out, when the noble Lord interrupted me (I am grateful for his interruption), that under the Constitution Order passed and approved by this House, and by Parliament under the Southern Rhodesia Act 1965, there is express and clear powers for the Secretary of State to do things as part of the Government of Rhodesia, and that he could, under that same power, give directions for the payment of interest. I think that is clearly so, and I shall be very surprised to find that the noble Lord, Lord Shepherd, contradicts it.

I am asking—and I think it is relevant —if power exists, as in my view it clearly does, to authorise the Reserve Bank to pay out interest out of the assets held by the Government of Rhodesia on Rhodesian public debt, why this has not been done. Surely it is unprecedented that there should be default in the payment of interest on Colonial stock, and if enough assets are there, why have the British Government not directed that the interest should be paid? Perhaps, in view of the interest taken by the noble Earl the Leader of the House in these matters, I should make it clear that I have no interest of any kind to declare. I hold no such stock.

My Lords, I can see that there are good reasons for withholding the payment of such interest to persons in Southern Rhodesia, but it is quite a different thing to withhold the payment of interest to people outside that country. The noble Lord, Lord Beswick, said that when considering these Orders we should be concerned primarily with their effectiveness in bringing about a return to constitutional government. I cannot feel that the withholding of the payment of interest to people outside Rhodesia on Rhodesian public debt can possibly have any effect on events within Rhodesia. If, as I think is the case, it is within the power of the British Government, under the Constitution Order and under the Reserve Bank Order, to make provision for the payment of interest out of assets held by the Bank for the Government of Rhodesia, I hope we shall be told why that has not been done.

My Lords, I should perhaps make clear that we do not intend to vote against these Orders, but I have asked a number of questions which I hope will be answered to my satisfaction, and will not be brushed aside in any cavalier fashion. In this House—and not only in this House—the Government have, I fear, on some occasions shown a somewhat unfortunate tendency not to answer questions very specifically. If these questions are not answered to-day (and I would point out that much the same questions were asked in another place, and were not answered there) one can only conclude—I trust that the country will conclude—that the Government are not able to justify the action they have taken in withholding the payment of interest.

3.20 p.m.


My Lords, once again, in deference to the request of the noble Earl the Leader of the House, I must say that I have business interests in Rhodesia. I want to say at the outset that, in my view not only was the Government's action in setting up this board right, but, looking back and being wise after the event, it was an action which was long overdue. It should have been included in the original sanctions.

I would also say that informed opinion in business circles with which I come into contact is strongly in support of any such action as this, which will be effective and will result in helping to restore constitutional government in Southern Rhodesia. Therefore, I welcome it, and I should like to take this opportunity of congratulating the members of the new board, under Sir Sidney Caine, whose immediate comprehension of the real issues at stake here has been extremely welcome and very much in contrast to the speeches made in other quarters, which tend to try to undermine the national policy and give indirect and unwitting support to the illegal regime in Rhodesia. I am glad that the Government took the opportunity of getting such people to sit on this board.

But, having said this, I would follow the noble and learned Viscount, Lord Dilhorne, and say that in my view we ought to have a clearer statement as to how the board propose to carry out their function. The speech on this matter by the First Secretary in another place was, if I may say so, a masterpiece in camouflage. I think that this is a mistake. The Government are more likely to get public opinion behind a common policy if they expound the policy of the board in some detail, rather than try to hide it, as appeared to be the case, even if it was not done deliberately, in another place.

Am I right in thinking that the overriding consideration of the new board will be to discover, first of all, all the foreign assets of the Rhodesian Reserve Bank, and secondly, to assert title to them so that they can be preserved in the interests of the people of Rhodesia as a whole and denied to the illegal Smith régime. I should like to know, if this is so, what Rhodesia is going to use to pay for its essential imports? I ask this because I want to know how effective this action is going to be—because I want it to be effective. I want to know from the Government if they can tell us whether this has had any effect since it started on December 7. I should also like to know what was meant by the noble Lord, Lord Beswick, when he said that the internal affairs of the Bank are operating normally in Salisbury. This I cannot understand. Could we have some clarification of this point, because it looks to me as if these sanctions are not so effective as many of us would like to see them be.

Am I also right in thinking that the funds now in the possession of the new board, held in the name of Rhodesia, can he used for some commercial purposes, provided that they do not help the illegal régime? It is important to know this. Would it not be worth while considering whether certain transactions might be undertaken—for instance, the payment of interest on Rhodesian stocks, which are in the category of trustee stocks? I would suggest, as the noble and learned Viscount, Lord Dilhorne, did, that if this payment were made to non-residents of Rhodesia, nothing would be done to help the illegal Smith regime. Of course I can see the objection to paying out to residents in Rhodesia, because that would help the illegal régime.

Could we not earmark the interest which would be due to residents in Rhodesia so as to show that it is there for them when constitutional government is restored in Rhodesia? It might possibly be worth while paying interest on the interest while it is in the bank, as a token gesture of good will. If there is some reason against this, something which would weaken the effectiveness of a sanction of this sort, then I withdraw the suggestion; but, if not, it seems to me that it might be worth while considering. I think that I am right in saying that there are about three of these trustee stocks which are due in December, and that practically nothing more is due until about July of next year. So it might be worth while looking into it.


My Lords, may I make it clear that, whatever may be the justice in what the noble Lord is now saying about the general interest in these stocks in the Bank, in these Orders no power is given to the Secretary of State to direct that interest shall be paid.


My Lords, in that case, may I ask how interest came to be paid before U.D.I.? Was it not, in fact, a power invested in the old Federal Reserve Bank? I gather that it was not. Perhaps we could have an answer on that point later. Somebody must be responsible and authorised to pay this interest, if it is so decided by the Government. Whether this is a technicality or not, I think that the position might be cleared up.

I should like to see it made clear that the United Kingdom Government are really acting as the generous custodian of the interests of individuals in Rhodesia, who are being prevented from enjoying their full rights only by the illegality of the unileral declaration of independence by Mr. Smith. I believe that it is vital, in making sanctions effective, that the British Government should make it clear that only the illegal régime stands in the way of the complete restoration of the status quo and that, in the meantime, the British Government must be seen to be preserving in full measure the proper entitlement of Rhodesian residents in respect of contracts which were properly entered into before U.D.I. It is important that, on reaching the stage in which sanctions begin to bite. the Rhodesian people as a whole should come to realise that their real grievance lies with Smith for proclaiming U.D.I. and not with the British Government for resisting an illegal act.

Furthermore, I would say that if sanctions are to be effective—and I hope they will be—we have the responsibility to start indicating to the Rhodesian people in a positive fashion exactly how they can return to constitutional government under different leaders on a basis which will offer genuine political stability and protection of minority interests, whether they be European, African or Asian. I believe that this is a great task. It is all related to Orders of this type. I hope that we shall not accept the doctrine of unconditional surrender. I hope that we shall make it clear that there is an alternative. But during the period in between, let us make it crystal clear that we will protect and safeguard the interests of the Rhodesian people in the proper way, as the Government have done. I hope that when the noble Lord, Lord Shepherd, comes to reply, he will be able to tell us that everything will be done to make action such as this effective, so that the time between now and the restoration of constitutional government is the shortest possible.

3.28 p.m.


` My Lords, before addressing myself to these Orders, I should like, with the permission of the House, to make some brief remarks of a rather more general character. Watching the course of the Government's actions on sanctions against Rhodesia over the past few weeks, I have been struck by two points. I am not now referring to oil sanctions, which I understand we shall have an opportunity of discussing to-morrow, but to such matters as the ban on the payment of pensions, the ban on the payment of insurance benefits, and now this attempt to grab the assets of the Rhodesian Reserve Bank.

It seems to me that these actions are calculated to do the maximum damage, first of all, to individuals in Rhodesia, as opposed to Mr. Smith's Government, and secondly, to Britain. In the case of individual Rhodesians, the damage is of such a cruel and petty character that one really cannot imagine that any British Government could set their hand to it. It has in fact become a form of persecution, far removed from the measures that the Prime Minister outlined in his speeches in another place on October 11 and 12.

As regards the damage to ourselves, it seems to me that the Government have embarked upon a most dangerous path, which can have repercussions of the widest character, which we cannot even visualise at the present time. It seems to me that they strike at our position as one of the great central reserve bankers of the world, as the greatest centre of insurance of the world and as a people who, for all our shortcomings in other respects, have always regarded the fulfilment of our financial obligations as a matter of honour from which we could not in any circumstances depart. I do not want to exaggerate these matters, but there can, I fear, be no doubt, whatever may be said to the contrary, that our position has been altered by these events, and our reputation damaged.

I turn now to the Orders. As noble Lords who have followed these debates are well aware—and again, in deference to the noble Earl the Leader of the House, I must mention—that I am a director of a company with a small proportion of its interests in Rhodesia. So far as I can gather, these interests will not be affected in any way by these Orders, but I nevertheless declare them. Both these Orders, it seems to me, illustrate in the highest degree what I mean when I speak of the damage done to our reputation as the central bankers of the sterling area. This is a serious matter. For the first time, except of course during time of war, a British Government have laid their hands (whether you put it like that or not) on funds deposited in all good faith in London. Such funds were not interfered with when Colonel Nasser violated the Suez Canal Convention of 1889, and subsequently sequestrated the property of thousands of British subjects in Egypt. I have been told I do not know whether it is right or wrong—that similar funds belonging to the Boer Republics were not interfered with in any way during the South African War. And I believe that it is also a fact that even during the American revolutionary war General George Washington's personal bank account in London was never touched.

No doubt this is all, strictly speaking, absolutely legal, having regard to the powers which the Government have been given by Parliament. But my point is that, whether it is legal or not, it is unethical, immoral and unjust; and I fear it will be remembered years after this problem of Rhodesia has been settled, for better or worse, one way or another. I am bound to say that I regard it as sheer humbug on the part of the Chief Secretary to talk as he did in another place last week about safeguarding the interests of the people of Rhodesia. These funds belong to the people of Rhodesia. These balances are their accumulated savings, the results of their overseas trade, the produce of taxation, and they were mainly earned by the very people who are now wholeheartedly supporting the illegal régime in Rhodesia.

The Government's action is not limited to laying their hands on balances in this country; they are also seeking to get control of the Rhodesian balances held elsewhere in the world. However legal their action may be under the domestic or municipal law of this country, there still seems to be a great deal of doubt about its legality outside this country. The Chief Secretary said last Tuesday that in certain countries the need to consult legal opinion had led to the funds of the Rhodesian Reserve Bank being frozen. Then he went on to say, I thought rather smacking his lips, as he did so, that this was: an equally satisfactory way of denying the use of these funds to the illegal régime".[OFFICIAL REPORT, Commons, Vol. 722 (No. 676), col. 1152, 14/12/65.] What grounds were there for dismissing the governor and the directors of the Rhodesian Reserve Bank, who were nonpolitical appointees, and to substitute for them the group of no doubt very eminent and distinguished gentlemen in this country? It was simply, I take it, that the members of the board in Rhodesia could be relied upon to carry out certain orders of Mr. Smith's Government. But that applies equally to thousands of civil servants, soldiers and airmen and many others. If my information is correct—and if it is not, I will withdraw it immediately—the greatest pressure had to be brought to bear on these eminent gentlemen to serve on this board. I feel that it must be most uncongenial for them, and I am extremely sorry for them.


My Lords, I am afraid my attention was somewhat distracted. Did I hear the noble Lord say that the greatest pressure had to be brought to bear on them?




Could the noble Lord disclose the nature of this pressure?


I will not go into details, but I have heard it said that great pressure had to be brought to bear on these gentlemen. I leave it at that. The Chief Secretary, in winding up the debate in another place, said that this board in London would have all the powers conferred upon it by the 1964 Rhodesia Act. What action has it taken to carry out these powers in regard to the day-to-day running of the Bank where, as the Chief Secretary and the Minister this afternoon said, the chief cashier and other officers of the Bank had not had their tenure of office affected by Her Majesty's Government's action? The Chief Secretary talked a great deal about the Bank having to obey the orders of its customers. Who are those customers? Is it Mr. Smith's Government? Or is it the British Government? He said: No Bank proceeds to dispose of the money which it holds without the request of its customers."—[Col. 1203.] If so, and if it is not the British Government or the Secretary of State for Commonwealth Relations, who are the customers of the Bank? And why is the new board attempting to take control of Rhodesian balances here and elsewhere?

This brings me to the crucial point mentioned by my noble and learned friend Lord Dilhorne. Mr. Smith, very naturally after this latest move on the part of Her Majesty's Government, has said that the Rhodesian Government cannot fulfil its obligations to pay the interest on its external loans, apart from those that may be held in Rhodesia. This is a most serious matter. This is the first time in history that there has ever been a default on a Commonwealth loan, and, of course, on obligations which are trustee security stocks. As I say, it is a serious matter, and again not calculated to enhance our financial reputation in the world. It would not have been so bad if the British Government, having taken this action, had stepped in and said that they would themselves service these external loans. I believe that the interest amounts to well over £1 million a year. But the Chief Secretary said, and the Minister has repeated it this afternoon, that the British Government have categorically refused to accept any responsibility for servicing these loans.

Many of your Lordships will recollect that the question of the servicing of these loans was the subject of great pressure on the then Government by many of us in this House and elsewhere when the breakup of the Federation was being discussed at the end of 1963. We felt that, having regard to the way in which these Federal loans had been divided up in three tranches between the three territories, there was a duty on the part of the British Government to guarantee these loans or, at any rate, to underpin them in some way. The Government at that time refused to accept our plea. Now we are seeing the tragic results of their not doing so. What it means, in fact, is that thousands of small investors in this country. in addition to the banks and corporations, insurance companies and their policy holders, are now to be deprived of their rightful dividends.

The Chief Secretary said last week: It is absolutely inaccurate … that we, the British Government own the assets or the funds of the Reserve Bank of Rhodesia." [Col. 1207.] Who then does own those assets? It surely must be the legal Government of Rhodesia. Who is the legal Government? Is it Her Majesty's Government, or is it not? I thought that we were told on November 24 that the legal Government of Rhodesia was now vested in the Secretary of State, acting either directly or through the Governor or other officials


My Lords, I feel that I should correct the noble Lord and say to him that it is clear that the Government are not the Government of Southern Rhodesia. It is perfectly clear, if one looks at the Statute and the various statements that have been made by Ministers.


Then who is the Government of Rhodesia? Perhaps the noble Lord will be able to inform us about that when he comes to reply. I certainly was under the impression that the Government of Rhodesia was now vested in the Secretary of State. I was quite clear in my own mind.


My Lords, if my noble friend will forgive me for interrupting, may I say that the provision of the Constitution Order in terms says that the executive powers of the Southern Rhodesian Government can be exercised by the Secretary of State. It is not saying that the Secretary of State is himself the Rhodesian Government or that he can do under that Order what that Government could do. It is not quite the same.


My Lords, I thank my noble friend for that informative intervention. I should like to say this. I read the debate in another place with great care, and the Chief Secretary was again and again pressed to say to whom the Reserve Bank did belong. As a matter of fact, he was finally saved from having to answer by the Question being put from the Chair at the end of the debate. Can we have a clear answer to this Question to-day? The Chief Secretary stated categorically that the Reserve Bank was an agent of its customers. But who are those customers? Again, I presume it is the Government of Rhodesia. But, surely, if we are the Government of Rhodesia, as I understood it, or if we act for the Government of Rhodesia, it becomes our responsibility to service these loans. I do not see how the Government can have it both ways.

As most of your Lordships know, I have always been opposed to sanctions against Rhodesia, except for those which were consequential on the illegal declaration of independence. I have never concealed my views in these matters. But from the Government's point of view, however, the actions to which I have referred, damaging as they are to our credit and our reputation and, it seems to me, cruel and vindictive towards individuals, could only conceivably be justified if it could be shown that there is any likelihood of their helping to achieve the aim which the Government have set themselves; that is to say, to bring about the return of law and order in Rhodesia (whatever that may mean) and, more important, to secure the restoration of the constitutional relationship between Rhodesia and the Crown and, we hope, her return to the Commonwealth.

All these measures—and this, of course, applies perhaps even more so to oil sanctions—are merely calculated to drive Mr. Smith and the Rhodesian people including (and this is my information from Rhodesia) a great many moderate Africans, and the whole of the coloured community, along the path which, rightly or wrongly, their Government chose for them. We must not forget the fact that most of the people whom Her Majesty's Government are seeking to coerce into what I can only describe as unconditional surrender are men and women of British stock. The few who are not are of Dutch and Afrikaner stock, and if there is one person who is more obstinate than the British when it comes to being pushed around it is the Dutchman or the Afrikaner. These people feel to-day exactly as we did in 1940. They feel that they are right, and although the whole of the world may turn against them they will not surrender. It is perfectly clear from all the information which one receives from Rhodesia, and particularly from circles who were violently anti-Smith and opposed to U.D.I., that day by day they are becoming more and more determined not to give way. Measures such as these which are taken against them can serve only to enhance their determination.

What is worse is that these measures are giving rise to a new bitterness which, when the time comes to negotiate, as it surely will, will make the task increasingly difficult. I do not believe that at present that bitterness is directed against the British people, thank God, but it is directed against Her Majesty's Government and, I fear, particularly against the Prime Minister. I think that the people of this country—I have tried to find out what people think about these things, talking to them in the streets, shops and trains—are bewildered by all this. I think their sympathy is basically with Mr. Smith. They cannot understand what they regard as petty and vindictive acts being taken against him, and it is driving them in the same sort of direction as it is driving the people of Rhodesia.

Having regard to all these factors, I urge the Government. I beg them, to turn to the path of conciliation and negotiation, and to turn to it rapidly, before we drift into some sort of situation from which there is no retreat. I fear the worst as I read the news every day, and I beg the Government to turn their minds to the course of conciliation and negotiation; and, in doing so, I urge them—I do not expect them to agree with me—to drop this measure which is so very dangerous from the point of view of the people of Rhodesia, those people whom we are trying to bring back into the paths of constitutional life.