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Wednesday, 11 November 1936


Senator Sir GEORGE PEARCE (Western Australia) (Minister for External Affairs) [3.4]. - by leave - For the information of honorable senators, I propose to make a survey of some of the main features of the present international situation, confining my remarks to four main aspects of world affairs - the crisis in Spain, the situation arising out of the re-militarization of the Rhineland,. the agreement between the United Kingdom, the United States of America and France with regard to French monetary policy, and recent events in the Near East.

With regard to Spain, the position of the Government steadily deteriorated throughout September and October. In the north, the insurgents aimed at getting access to the seaports on the Bay of Biscay. The town of Irun; almost on the French frontier, was captured and practically destroyed on the 14th September, and the famous City of San Sebastian was abandoned a few days later by the Government supporters, who preferred to let it go rather than that it should suffer the same fate as Irun. The port of Bilbao has been attacked on several occasions, but it still holds out.'

Early in October, the insurgent Committee of National Defence, the Junta, Bitting at Burgos, in the north, under the presidency of the veteran General Cabanellas, decided to appoint General Franco, the leader of the insurgent forces, to the office of " Head of the Spanish State "." It was reported that a decree had been issued by General Franco, immediately after his appointment, establishing a new constitution, involving the creation of a new Technical Council, composed of nine committees, including Finance, Justice, Industry and Commerce, Culture and Education. The president of this Technical Council would decide all questions with the help of technical advisers and submit the findings to the President of the State for approval.

The Spanish Government has been reconstructed several times in recent months. At the outbreak of the rebellion it was republican, with no socialist members. Early in September, Senor Largo Caballero, the socialist leader, took office as Prime Minister, with five of his followers, and he included in his cabinet for the first time two members of the Communist party. It was reported that the Syndicalist and Anarchist groups of the Extreme Left had also been offered seats in the Cabinet, but had decided that they could not abandon their traditional policy of non-co-operation with governmental authority. Last week, however, it was announced that the Government had again been reconstructed, and that this time four members of one of the AnarchoSyndicalist groups, the C.N.T., had been appointed.

On Saturday last the seat of government was transferred from Madrid to the south-east. Reports differ, some saying it was at Valencia on the coast others at Albacete, 100 miles inland. A military government was left behind to continue the resistance, and latest reports indicate that the insurgents are in the suburbs, and only kept from the heart of the city by the embankments of the river Manzanares. It would seem that the loss of Madrid by the Government may be announced at any moment, but it must be remembered that the Government still retains control of the eastern provinces of Catalonia, including Barcelona, Valencia and Murcia.

Throughout the struggle the British Government has maintained its attitude of strict non-intervention. The Nonintervention Committee, consisting of representatives of 24 European countries, has sat at frequent intervals in London since the beginning of September, and has investigated many allegations and counter-allegations of breaches of the Non-intervention Agreement. Although there seems to be little doubt that both parties in Spain have been receiving a certain quantity of arms -and aircraft from abroad, the Non-intervention Agreement does, I think, represent a very real step forward in international cooperation, and has probably helped in a large measure to prevent a wholesale competition in the supply of military equipment.

Late last month, the British Government offered to mediate with regard to the exchange of hostages between the rival forces. This principle, however, seems to have met with little practical approval in Spain, except at the Basque port of Bilbao.

Honorable senators will appreciate that the Commonwealth Government has felt it imperative that a policy of strict non-intervention should be observed. In his reply to a question in the House of Representatives on the 28th October in the course of which he dealt with the latest developments in Spain, the Prime Minister (Mr. Lyons) again re-affirmed this attitude. Incidentally, I might mention that the Government has taken steps to ensure the safety and repatriation of several Australian citizens domiciled in Spain, about whom representations had been received, and in all cases the efforts, mainly due to the work of the British consular authorities, have been successful. "Without being in any way partisan, one may express the deepest regret that a dispute of this nature, political in its origin, could not have been settled by peaceful methods. Disastrous civil strife in this country, with which the nations of the British Commonwealth have long been on terms of unbroken friendship, and which has played a great role in the development of our modern civilization, can only result in incalculable harm and have far-reaching consequences, the end of which we cannot foresee.

Turning to the European situation, arising out of the Locarno treaties and the re-occupation by Germany in March last of the demilitarized zone of the Rhineland, I do not propose to recapitulate the earlier aspects which I reviewed on the 11th 'September last. At that time I hoped , and believed that a conference of the five powers interested would be held in October. That, unfortunately, did not eventuate. During the month of September, the British Government communicated a further note to the Belgian, French, German and Italian governments with regard to the preparations for the conference, and directed attention to a number s,f points which might be discussed in advance of the meeting through diplomatic channels. In due course, replies were received from the other four Powers, and these revealed important divergencies which, although not incapable of reconciliation, demanded the closest examination. Hopes of an early meeting were soon damped. Furthermore, the situation was for a time influenced by a statement on foreign policy and Belgian neutrality made on the 14th October by the King of the Belgians, which was the cause of the widest comment and considerable uneasiness, particularly in France. Following on that declaration, however, came assurances from Belgium that that country would stand by its existing obligations. Speaking in the House of Commons on Thursday last, Mr. Eden emphasized that the British Government would do everything in its power to bring about the success of the five-power negotiations; but no advice has been received as to when the conference is to take place.

A third aspect of the international situation which I should like to mention is the agreement reached on the 25th September between the United Kingdom, the United States of America, and France with regard to French monetary policy. There was no written agreement between them, no signatures were attached to any documents; the agreement was in the nature of a " gentlemen's understanding ". Their joint aim, expressed in declarations issued simultaneously by the three governments, was to maintain the greatest possible equilibrium in the system of international exchanges. As a result of this agreement, the French Government decided to propose to its Parliament the adjustment of the French currency in the light of world prices. Parliament was hastily convened in extraordinary session, and it approved a bill providing for the devaluation of the franc. The gold, content of the franc was fixed at between 43 and 49 milligrammes of gold instead of the previous 63^ milligrammes fixed by Monsieur Poincare in 1928. The new bill also provided for the creation of an exchange stabilization fund of 10.000.000.000 francs. At the same time, the Government of France devised a series of measures to check price increases and protect civil servants, wageearners, and bondholders against any rise of the cost of living. This readjustment of currencies by international agreement between the three great democratic powers was not only one of the most hopeful signs of international co-operation which a disillusioned world had witnessed for a long time; but also already appears to have given a decided stimulus to world economic recovery, and to have effected an immediate improve ment of the position of the gold bloc countries. Similar action in regard to the devaluation of the currency was quickly taken by Switzerland and the Netherlands, and, a little later, by Italy. As a first concession to world trade, M. Blum, on the 2nd October, decreed a reduction by from 25 to 20 per cent, of French tariffs, affecting, among other items, coffee, tea, pepper and petrol. He also suppressed more than 100 import quotas, and made similar reductions of the prices of import licences. An important change, from Australia's point of view, was the withdrawal of the surtax of 15 per cent, on goods originating in. and coming from, Australia, New Zealand, South Africa, India, Egypt and certain South American countries.

Dealing now with the situation in the Near East, I shall refer briefly to recent events in Iraq, Syria, Palestine and Egypt, in that order. The most striking event which has occurred in the Near East in recent months is the coup d' Mat in Iraq by which the Government of General Yasin Pasha was overthrown, and what appears to be a military dictatorship instituted. The administration is under Hikmat Sulaiman, a former Cabinet Minister, but General Bakr Sidqi, who suppressed the Assyrian rising of 1933, is believed to be the virtual ruler. In spite of the appearance of violence, the change of government was effected with the loss of only one life, that of General Jafar Pasha, who was Minister for Defence in Yasin's Cabinet, and had formerly been Iraqian Minister in London. On the 29th October, the Iraqian army delivered an ultimatum to King Ghazi, demanding the dismissal of Yasin Pasha, who had been in office for eighteen months - a long term for Iraqand the appointment of Hikmat Sulaiman. At the same time, four small bombs were dropped in the neighbourhood of the Government offices. This was intended as a warning, and the casualties appear to have been slight.

Nevertheless, later in the day, the Government resigned; but Jafar Pasha, who was sent by the King to meet the army, and endeavour to persuade the military leaders not to enter Bagdad, was murdered, thus bringing to a tragic close a distinguished military and political career. There do not appear to have been any further outrages, and General Yasin Pasha and other prominent politicians have been able to escape unharmed from the country. The situation now appears to be quiet, and there is no indication that the safety of the various minorities in Iraq, such as the Assyrians and the Jews, is at present jeopardized by the new regime. While concern must be felt at the use of force to secure the resignation of a constitutionally elected government in a country with which Great Britain, by reason of its privileged position as former mandatory power, stands in special treaty relations, the new Prime Minister of Iraq has assured His Majesty's Government in the United Kingdom of his intention to employ constitutional methods of government, and also of the desire of Iraq to maintain close and friendly relations with the United Kingdom. Further, General Sidqi has intimated that he does not desire to participate in politics, but prefers to concentrate on building up the army, leaving the work of government to the Cabinet. His Majesty's Ambassador at Bagdad has, however, been instructed to warn the new Prime Minister of the deplorable effect of a repetition of such outrages as the murder of General Jafar Pasha, and to emphasize the importance which is attached to the preservation of the rights of the minorities in the country.

Meanwhile a change of a more pacific kind is now taking place in the Government of Syria. Early in September the proces verbal of a Franco-Syrian agreement modelled on the Anglo-Iraq Treaty of 1931, was signed to replace eventually the French Mandate over Syria. The treaty is for 25 years, and becomes operative in 1939. It allows Syria complete autonomy, subject to a military convention which enables France to maintain armed forces in certain stipulated areas, and to .provide French instructors and equipment for the Syrian army. The ratification of the treaty must await the election of a government and its due installation at Damascus'. The terms of the agreement provide for perpetual friendship between the two countries, for the authority of the mandatory power to be transferred to the Syrian Government, and for France to undertake to support the candidature of Syria for membership of the League of Nations. France is to be consulted in all matters affecting the foreign relations of Syria, and mutual assistance, in the case of any aggression against Syria by a foreign power, is also provided for. The minorities which exist in certain designated regions are to be given a " special form of administration " in conformity with the recommendations of the League of Nations. The future diplomatic relations of France and Syria are to be similar to those between Iraq and the United Kingdom. France is to be represented in Damascus by an ambassador, whilst the Syrian Government will be represented in Paris by a Minister Plenipotentiary.

Honorable senators will remember that the system of mandates was devised to meet the needs of territories which, as a result of the war, had ceased to be under the sovereignty of the States which had formerly governed them, and were inhabited by people "not yet able to stand by themselves under the strenuous conditions of the modern world." It is therefore with pleasure that we observe the progress of two of the mandated territories, first, Iraq and, now, Syria, from the stage of tutelage to that of autonomy.

Turning to the neighbouring British mandated territory of Palestine, the present series of disturbances between the Arabs and the Jews first broke out as long ago as April last, the main centre of disorder being Tel-Aviv, a large Jewish city on the coast close to the port of Jaffa. The rioting was suppressed by the police, and partly as a protest against the alleged severity of police methods, a committee of Arab leaders declared a " peaceful " strike throughout Palestine. These disturbances, however, were symptomatic of a very high degree of Arab- Jew tension which had prevailed since the beginning of the year. It will be recalled that at the end of last year the United Kingdom Government, as mandatory for Palestine, made a proposal for the introduction of a legislative council, with seven seats for tlie Jews and thirteen or fourteen for the Arabs. In view of strong criticism of these proposals in Parliament and the London press, the Arabs feared that the plan might be changed in favour of the Jews. They also strongly resented the Large influx of Jewish migrants, and the increasing amount of agricultural land acquired by. Jews. During. May, a battalion of the Royal Scots Fusiliers was moved from Egypt to reinforce the Palestine garrison. The situation steadily deteriorated in June, and acts of lawlessness and sabotage, with shooting, bombing, and incendiarism were committed all over Palestine. The number of British infantry battalions was raised to eight.

Speaking in the House of Commons on the 18th May, the Colonial Secretary, Mr. Ormsby-Gore, announced that a royal commission would be appointed to inquire into the causes of unrest, but would not commence work until order had been restored. During the first four months of the disturbance it is estimated that 65 Jews were killed, nine soldiers and airmen killed and 71 wounded, eight police killed and 88 wounded, and, perhaps, as many as 900 Arabs killed and wounded.

Considerable interest was aroused in the neighbouring Moslem countries, Iraq, Transjordania, Saudi Arabia and the Yemen, and efforts at conciliation were made. The success of recent treaty negotiations in two other neighbouring countries, Syria and Egypt, may possibly have encouraged the Arabs to strive to obtain concessions. In September, the British Government determined to leave no possible doubt as to its intention to restore order. Accordingly, it despatched an additional division of troops to Palestine, entrusting the supreme military control of the country to Lieutenant-General Dill. An order in council was made empowering the proclamation of martial law. Early in October, it became apparent that the arrival of the additional troops had enabled more active steps to be taken. The United Kingdom Government stated that unless the strike were called off and violence ceased before the 14th October, martial law would be enforced. On the 9 th an appeal was addressed by the Arab rulers of Saudi Arabia, Iraq, Transjordania and the Yemen to the Arab Higher Committee, advising them to avoid further bloodshed. On the 11th, the committee decided to call off the strike. The Arab insurgents dispersed quickly, and the Arabs from neighbouring countries returned to their homes.

The royal commission left London on Thursday last, the 5th November, for Palestine. Honorable senators will recall that the British Government is responsible, under the terms of its mandate, for promoting " the establishment in Palestine of a national home for the Jewish people, it being clearly understood that nothing shall be done which might prejudice the civil and religious rights of existing non-Jewish communities in Palestine or the rights and political status enjoyed by Jews in any other country". A double undertaking is therefore involved, on the one hand to the Jewish people, and on the other to the non-Jewish population of Palestine. In pursuance of its obligations the British Government has decided that it is unable to suspend Jewish immigration during the period of the inquiry. As the result the Arab Higher Committee has taken the regrettable step of stating that it will boycott the royal commission. Latest advices are that the British High Commissioner for Palestine has informed the Arab committee that there is no likelihood that the Government will reverse its policy of continuing Jewish immigration.

I shall now refer to the situation in Egypt. Honorable senators will recall that the long-awaited Treaty of Alliance with Great Britain was signed in London on the 26th August last. The Commonwealth was invited to be represented at that historic ceremony, which took place in the Locarno room of the foreign office, and the official secretary at Australia House, Mr. McFarlane, attended in the absence of the High Commissioner.

The Prime Minister of Egypt, Nahas Pasha, returned to his country on the 13th October, and received an enthusiastic welcome from what was estimated to be the largest crowd ever seen in Alexandria. The Egyptian Parliament, it is believed, will meet for a short session this month for the purpose of ratifying the treaty.

Immediately after ratification, the Government will almost certainly consider the matter pf the capitulations - the exemptions from the jurisdiction of the ordinary local courts of the country, and the privileges of being tried in civil cases before mixed tribunals and in criminal cases before their own consular courts, which are enjoyed by European nationals in Egypt. The first step will probably be the calling of a conference of the fourteen European States concerned, with a view to agreeing on a method of ending the capitulatory regime.

It is gratifying to be able to end with a reference to Egypt where long-standing difficulties and differences have been amicably and satisfactorily solved. The presence of an Australian representative at the signing of the Egyptian treaty was no mere gesture. It bore witness to our vital interest in the security of British Empire communications by way of Egypt, which we have every reason to believe will be fully safeguarded. In this respect I direct attention to the speech on international affairs made by Mr. Eden in the House of Commons last week. Speaking of the situation in thai part of the world, the Foreign Secretary said -

For us the Mediterranean is not a short cut, but a main arterial road. We do not challenge Signor Mussolini's word that, for Italy, the Mediterranean is her very life; but we affirm that the freedom of communication in these waters is also a vital interest in the full sense of the words to the British Commonwealth of Nations.

That statement will, I feel sure, commend itself to every one in Australia.







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