My hon. Friend the Member for Brighouse and Spenborough (Mr. Colin Jackson) and I recently returned from Indonesia, where we had the opportunity to meet most of the leaders, including Dr. Sukarno, General Subarto, the Sultan of Jogjakarta, Mr. Malik and the Governor of the Bank of Indonesia. If my hon. Friend catches your eye, Mr. Speaker, he will deal with political matters. I shall raise economic matters.
This debate is fortunately timed in that it gives the Government an opportunity to enlarge on the communiqué issued at the end of the Umarjadi talks. First, however', I regret the emphasis that some newspapers laid on the discussion of British claims against Indonesia aspect of thetalks, particularly headlines such as "Indonesia agrees to damages". My first question to my hon. Friend the Minister of State is whether she would confirm that the main purpose of the talks was to discuss the re-scheduling of medium and long-term debts.
I welcome the reference in the final communiqué to Her Majesty's Government's readiness to take a constructive part in the forthcoming multilateral discussions between creditor nations and the Indonesian Government designed to find a solution to the problem, and I also welcome the announcement in today's Press that the Government are taking part in the 9-nation discussions on the settlement of debts. I would state a preference that these should take place in Tokyo rather than in Paris, London or Rome. There is a certain advantage in having them take place in Asia.
One constructive and practical proposal is for the E.C.G.D. to provide cover for tin dredging equipment. The Governor of the Bank of Indonesia attaches special importance to this, as tin-dredging is a short-term hard currency-earning activity. I went to see the Minister of State, Board of Trade, and officials of the E.C.G.D. to urge them that the normal and understandable deparmental criteria should be waived in this case.
Would my hon. Friend care to comment on the discussion which has taken place between her Department and the Board of Trade on this matter?
The second question I wish to raise concerns the rebuilding of the British Embassy in Jakarta. What will the total cost be and how much will the Indonesians contribute? It would seem that, on Socialist criteria—and I do not forget that my hon. Friend the Minister of State is a member of the National Executive of the Labour Party—there are much more important things to do than to erect a brand new edifice in the centre of Jakarta, opposite the Hotel Indonesia. If I were an Indonesian at this time I would be dismayed to see such a building being erected. As a Member of the British Parliament, having heard the announcement of my right hon. Friend the Prime Minister today, I suggest that this project in Jakarta should be among the cuts to be made.
If there is money available, the priorities should be—and I ask my hon. Friend to comment on these suggestions —first, that consideration should be given to reconstituting the British Council, which would now have to be done by special grant—that is, if anything is to happen before 1968—and, secondly, that we should consider the provision of text books in elementary science and of basic equipment for laboratories in Indonesia. My hon. Friend knows that I have discussed this matter with the Ministry of Overseas Development. Under this heading, we should consider the provision of places for Indonesian students in British colleges of technology and regional technical colleges, and facilities for students to gain experience in the British engineering industry. Equally important is the provision of places in teacher training colleges. I have given my hon. Friend notice of my discussions with the Ministry of Overseas Development, and I hope that she is in a position to comment on this issue.
My hon. Friend the Member for Brighouse and Spenborough and I were guests of the Roman Catholic University in Jakarta. The people there have to work in a building which is used during the morning as a secondary school. It is thoroughly wrong to give priority to the reconstruction of an embassy over needs such as these.
Britain has a role to play in the Far East, provided we remember that in 1966 the Good Samaritan is not a soldier dressed in a military uniform. He is an engineer, doctor, teacher or merchant who trades in fair prices. Our technical and financial abilities constitute the prestige which in 1966 we have in the world, not military forces or embassy buildings.
I am grateful to my hon. Friend the Member for West Lothian (Mr. Dalyell) for raising this subject, and I agree with him about the reconstruction of the British Embassy in Jakarta. The Indonesian Government have acknowledged that the damage done to the Embassy was wrong. They have admitted liability and it will be rebuilt. However, this is not the time to rebuild it.
Further to the statement today by my right hon. Friend the Prime Minister, there is not only in the United Kingdom a limitation of the construction of large buildings, for reasons of financial stringency, but we should not forget that the Indonesian Government have placed a total ban on new building. To erect a splendid edifice in Jakarta now, when the Government there have stopped new building, even half-completed Government buildings, might have an adverse psychological effect.
The principle of repayment for the embassy having been agreed, and the sum, less than £150,000, not being large, I agree that that money could, particularly at this time, be used more effectively to help in the educational sphere, particularly in the provision of text books. There is a crying need in Indonesia for text books for the study of English and science and a contribution along these lines on our part could be significant for AngloIndonesian relations.
Having been to that country on two previous occasions, in 1953 and 1955, I gained the impression that for a time Indonesia was turning its back on the friendly Western countries and had become obsessed with ideas, particularly during the later period of rule of President Sukarno, which were not related to promoting intelligent international understanding. However, when I visited Indonesia this year I felt that they were coming back into the mainstream of sensible friendship with the countries of both East and West. My feeling is that the United Kingdom is entirely right to take up again a position of positive friendship. One way we can do this is to match the Indonesia good intent on the Sabah and Sarawak frontiers with reciprocal actions on our side. I agree that Her Majesty's Government must await the formal signature between Malaysia and Indonesia, when confrontation is finished, but one would hope that this actual signature will not be long withheld. This stage having been reached, I think we should not be too disturbed by isolated incidents on the frontiers of Sabah and Sarawak.
It is difficult for the Jakarta Government to control units which have lived through a violent period and may be controlled by local commanders who, for a variety of reasons, do not want a return to friendship with Britain. There are undoubtedly small elements of Communist forces on the frontier who have no interest in peace between the two countries, and I hope the United Kingdom Government will not be over-anxious in demanding the total cessation over a long period before we make open indications that we ourselves are withdrawing units. I know the Malaysian Government are anxious for us to withdraw, and I hope we shall be careful that we do not delay too long in case relations once again turn sour.
I was glad to hear the Foreign Secretary comment in his remarks following his visit to Indonesia that he was favourably inclined to Indonesia's support for an Asian States association. I think this is a very encouraging development from the negative anti-foreign bitter attitude of President Sukarno, to move on to Mr. Malik's desire not just for an Asian States association, comprising Indonesia, Malaysia and Singapore, but to look to bringing in Thailand as well and to creating a large neutral prosperous bloc inside East Asia. This would be of enormous benefit to Australia. It would certainly help the Indian sub-continent in feeling that they have a positive, stable partner in the South-East, and I hope that we shall consider leaving S.E.A.T.O., or S.E.A.T.O.'s becoming irrelevant, and an Asian States organisation taking its place with Britain having as a backstop military presence in Australia, and the overall safety of the area being guaranteed by the United Nations.
In a world which has many depressing stories in international relations, this short Adjournment debate registering a positive achievement is one for which the House should have pleasure in allowing time, and I think in future years we shall look back on this occasion as one of the major turning points in development in South-East Asia.
I am sure the House welcomes this brief debate because, as my hon. Friend the Member for Brighouse and Spenborough (Mr. Colin Jackson) has just said, this is one of the more encouraging and constructive turns of affairs in recent months, and in a World which is in many places gloomy and fraught with problems I think we are very glad indeed that things seem to have taken this definite turn for the better. We are also glad that our two colleagues have been to Indonesia and have taken this Parliamentary opportunity of touching upon some of the problems. Her Majesty's Government are much encouraged by the new Indonesian Government's desire to turn from a policy of confrontation to one of restoring international relationships, which have been broken, and restoring the Indonesian economy, which had been run down to a very dangerous degree.
We welcomed the Bangkok agreement and we hope that this will soon be ratified. The ending of confrontation would be a major step towards the restoration of peace in this troubled area. As the House knows, my right hon. Friend the Foreign Secretary had the opportunity earlier this month to discuss the problem of Anglo-Indonesian relations with the Indonesian Foreign Minister, Mr. Malik. As he reported to the House on 4th July he found a great deal of common ground with Mr. Malik on these problems and world problems generally.
My hon. Friend has mentioned an association of Asian states wider than Maphilindo. This is certainly something which we would welcome and which would add to stability in that part of the world. It is not something in which we could take any kind of initiative but we would be happy to see the States concerned bringing themselves together in this way. At the same time we should make it clear, as my right hon. Friend made it clear to Parliament, that it is difficult for us to get our relations with Indonesia on a really satisfactory footing unless there is a cessation of hostilities towards Malaysia.
I take the point of my hon. Friend and I am sure that he will recognise that, although we know that there are difficulties, nevertheless for completely satisfactory restoration of relations and the complete withdrawal of British troops, we would expect that hostile acts should cease. I do not have time to develop these wider issues and I turn to the other talks held last week in London, which my noble Friend the Parliamentary Under-Secretary had with the Indonesian Mission, led by Mr. Umarjadi.
These talks were friendly and provided an opportunity for a wide-ranging discussion of the new Indonesian plans for restoring their country. My hon. Friends referred to the communique issued after the talks, giving a resume of the conclusions reached. It is very clear from the information which we already had and further detailed information provided by the Mission, that the economic position of Indonesia is very serious. We should like to do what we can to help, but our resources are limited. If this was not clear before, the statement by my right hon. Friend the Prime Minister earlier ought to have underlined that.
As the House knows we made an immediate gesture of £1 million in aid. Plans for spending this are under way. The commodities likely to be purchased include spare parts for machines, chemicals including pharmaceuticals, pesticides and fertilisers and possibly some purchase of textiles. All of these are very useful and will be welcome. I hope that arrangements to conclude these purchases will be made before long. The communiqué indicated that we were not able to do anything further in the way of direct financial aid to Asia but that we hoped to do more under the Colombo Plan arrangements by way of technical assistance. My hon. Friends have mentioned the need for this. Books have been mentioned. Indonesia is with in the scope of the low-price book scheme and there are the special arrangements for technical books run by the Ministry of Overseas Development. There is the other very important question of providing training in this country for teachers, especially, as my hon. Friend mentioned, in technical colleges and in management. I am happy to say that arrangements will be made by my right hon. Friend the Minister of Overseas Development to see that as much as we can possibly do will be done in this direction. Arrangements are being made to find places and I think that this part of the plan for co-operation should go quite smoothly.
As to the British Council, as the statement made earlier today by my right hon. Friend the Prime Minister indicated, certain cuts are having to be made in overseas information expenditure. I cannot make any firm promise at this stage, before we have had a chance to discuss the whole matter with the British Council, how soon the Council could resume its activities in Indonesia. We fully appreciate that this would be valuable, but I could not make any specific pledge until we have had an opportunity, in the light of the latest economic announcements, to discuss this whole problem with Sir Paul Sinker and his colleagues in the British Council.
Mention has been made by both my hon. Friends of the rebuilding of the British Embassy. I will, of course, make sure that this is considered carefully in the light of their representations tonight. On the other hand, I should emphasise that my information is that to enable our staff there to work adequately, some rehousing is needed. If full relationships are restored as we hope, we may need more staff than is at present in post in Jakarta. Therefore, I quite appreciate the point that we should not embark on lavish building in a country which is itself limiting new building. Equally, however, we want to make sure that the staff have reasonable conditions in which to work. I am glad that my hon. Friends have raised the point and I will, of course, make certain that it is carefully examined.
Now, I should say a word about the other aspects of the talks which are concerned with the indebtedness of Indonesia to the Government and various concerns and organisations in the United Kingdom. The indebtedness falls into three parts. Much the smaller part arises out of the burning and the other incidents in 1963, and towards a total claim of roughly £650,000 a token payment of £120,000 has already been made. This is being divided equally between Government and private claimants. Then there is the commercial indebtedness, which, in the case of United Kingdom claimants, is of the order of £12-E13 million. This is a relatively small amount compared with claims from a number of other countries. We are a relatively minor creditor country.
A preliminary meeting—the nine-country meeting to which my hon. Friend referred—has just concluded in Tokyo and arrangements will be made for a formal multilateral meeting of creditors to be held in September. It was the view of the delegates that co-operation should be sought from the International Monetary Fund to help to restore the Indonesian economy and to assist in the orderly repayment of creditors.
I hope very much that arrangements can be made that Indonesia will reapply for membership of the International Monetary Fund, because this would be invaluable. The expertise that would be made available to the Indonesians by this means would be very valuable and would restore confidence and ensure that this difficult rehabilitation of the economy will be carried out in the best possible way.
At least, it has been encouraging to find that the Indonesian Government is prepared to co-operate in working out a rephasing of debts. One cannot say more about that at the moment, however, because the meeting in Tokyo was a preliminary meeting only and the main discussions will take place in September.
Then, of course, the third category is the problem of the British property which was sequestrated by Presidential decree in November, 1964. We are glad that the Indonesian Government have recognised the existence of claims arising from the Indonesian control of British enterprises, and discussions will be arranged in Jakarta between the Indonesian authorities and the groups of British claimants who represent various interests. I think they probably fall into three main groups, plantations and estates, manufacturing and distributive organisations, and financial and merchanting houses and insurance companies. We hope very much that these claims can be settled by agreements which will help the Indonesian economy. For example, the Shell Company has already made for its very large concern an agreement for payments which will be made out of production over a period of years. I think that this sort of arrangement should be to mutual benefit.
We hope very much that these various claims can be equitably and satisfactorily settled. because it is quite clear that till arrangements have been made under these various headings the resumption of normal trading relationships will not be easy. On the other hand, if one sees real effort is being made not only to put the Indonesian economy into order but also to meet the reasonable needs of international commerce and trade, then we shall be able to get those normal trading relationships. I know there are a number of firms in this country and elsewhere who would like to restore trading relationships with Indonesia.
It is not going to be easy; it will take quite a long time; but we all recognise that a stable Indonesia under the present Government, who have made many very strenuous efforts towards this, will be to the great advantage of that part of the world, and no one will be happier than Her Majesty's Government if the negotiations on all the fronts I have mentioned take place satisfactorily, and if the very great difficulties of the inflation are overcome, and if the real productive enterprises can be restored, not on the old pattern of what some people might consider exploitation from without, but on a partnership which will bring mutual benefit.
I think we are all very glad we have had this chance to mention these things tonight, and I am very grateful to both my hon. Friends for the contributions which they have just made.
Before my hon. Friend sits down, would she just say a word on the question of E.C.G.D. cover for the tin dredge equipment? It is a question of which I gave her prior notice.
I beg my hon. Friend's pardon. I should have mentioned that. As he knows, credit was given for a tin dredge. Payment on that is very much behind, but I think that till we are a little clearer about the arrangements for indebtedness we could not urge the Export Credits Guarantee Department to go into arrangements for a second tin dredge. I do appreciate that this is regarded as of great importance in Indonesia, and, again, I will have further discussions with my right hon. Friends concerned about this, but at the moment I am afraid I cannot give any specific pledge about it.