Egypt (Sterling Balances Agreement)

Part of the debate – in the House of Commons at 12:00 am on 20th March 1951.

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Photo of Mr Richard Crossman Mr Richard Crossman , Coventry East 12:00 am, 20th March 1951

I am grateful to the right hon. Gentleman, because what he says merely confirms the need for an assurance being given to the House that the release of these balances will be accompanied by a change of policy under the new Foreign Secretary in regard to export licences. This is what the House is more concerned with than the technicalities of financial agreements. We are really concerned about whether arms will go to Egypt again.

May I make one other point on that? Let us take two countries in the Middle East, Israel and Egypt. The Israeli Government is now in the middle of a disastrous economic crisis. It is desperately short of sterling. If it had sterling it could buy the food necessary to prevent starvation. The Chancellor must remember that sterling is being released to the Egyptians in very large quantities. It will certainly not go to the poor fellaheen. At the same time. we are refusing credits to Israel and Jordan—they have been given relatively generous sterling settlements because they have very small balances—which would enable them to develop their strength.

It is the discrepancy between the amount of goods which Egypt will be able to acquire under this settlement, and the desperate failure to provide the means by which Israel and Jordon could get an adequate supply of goods which is the political issue to which we call the attention of the Chancellor. [Interruption.]I realise that under no sterling credit agreement could he possibly give Israel or Jordan more generous treatment. All I say is that we should give them more generous commercial agreements.

To turn to the oil clause, the right hon. Member for Warwick and Leamington mentioned the loss to Israel involved in the closing of the Haifa refinery. The loss to this country should not be underestimated. I do not know whether anybody has calculated the amount of dollars we could have earned from the Haifa refinery if it had been in full supply since 15th May, 1948, when it closed. It is a long time since we have been deprived month by month of the dollar earning capacity of the Haifa refinery, and it is ironic to recall that the country which has deprived us of millions of dollars under this agreement, has special privileges to prevent its using dollars to buy oil that really is generosity! I know that turning the other cheek is a noble and ethical principle, but I do not think it is understood in the Middle East. It was not understood when Lord Stansgate went to Egypt in 1946 and granted, straight away, the main thing the Egyptians wanted, the withdrawal of British troops. That was not thought to be generosity; it was thought to be weakness.

The Chancellor of the Exchequer may say that this is a strictly financial agreement. I wish that he and I could have had a tour of the Middle East together to compare notes. In this Chamber he may be able to tell us, "I do this, my right hon. Friend does that; this is my part in the work, that is his part of the work." Out in the Middle East they do not make those distinctions. They do not say, "This right hon. Gentleman is doing this and, therefore, it is a financial agreement; that right hon. Gentleman is doing that, therefore it is political." They see it all as British policy, and every Middle Eastern country will be judging this agreement fairly or unfairly, especially the oil clause, and saying, "Some more Danegeld by the British to the Egyptians."

Now, my right hon. Friend knows as well as I do that the Egyptians are not the only recipients of Danegeld. The Iraqi cut off the pipeline to Haifa three years ago. Each year the Chancellor has arranged that they shall be provided from this country with just sufficient sterling to make up for any losses they might have incurred on the oil royalities from the pipeline—the pipeline they closed in order to prevent us earning dollars. This year the agreement with Iraq was made again. It may be a noble and a generous thing to do, but in the Middle East it is thought to be Danegeld; it is thought that the Iraqi and Egyptians are so hostile that we have to treat them gently. And our friends in the Middle East—they are not many, Israel, Jordan and Turkey—do not appreciate the fact that their friendship and loyalty are repaid by being given less because their price for friendship is not so high.

I agreed with the hon. and learned Member for Northampton (Mr. Paget) when he said that our problem in Persia is not unrelated to our treatment of Iraq and Egypt. If we pay a man more the more hostile he is to us, and if we pay our friends less because they are loyal friends, there comes a time when somebody in Persia says, "If I want to squeeze some more out of the Anglo-Iranian Company, I must be really hostile to the British, then I will get a couple of million more." This is not an unrelated fact.

Time after time in the last five years, from this side of the House, we have consistently complained that we have always rewarded our enemies and adjudicated against our friends. It is a disheartening situation, which I must describe as the last dying kick of a policy which has utterly failed. We here below the Gangway are left in some difficulty. In any normal circumstances, one would find it very difficult indeed to support the Government on the agreement.