Report of the Special Mission to Egypt under Lord Milner, and related papers [‎11r] (21/473)

[This Document is the Property of His Britannic Majesty’s GovernmentJ
n
Printed for the Cabinet. July 1920.
CONFIDENTIAL.
NOTE BY THE FOREIGN OFFICE ON THE FINANCIAL RELATIONS OF
THE WAR OFFICE WITH THE EGYPTIAN GOVERNMENT.
Memorandum by the Secretary of State for Foreign Affairs.
THLE Secretary of State for War recently (25th June) circulated a paper to the
Cabinet in which the views of the War Office were set forth on the above important
but very delicate subject. In the course of a covering memorandum he remarked that
its discussion and settlement were matters, not for his Department, but for the Cabinet.
Agreeing with this opinion, I circulate a note which states the loreign Office point of
view, and deprecates the raising of this issue with the Egyptian Government at the
present time. ~
F C. of K.
July 13, 1920.
Memorandum on the Financial Relations of the W 7 ar Office with the
Egyptian Government.
1. In his memorandum of the 25th June the Secretary of State for V ar, after
expressing the opinion that the present fixed contribution of 150,0001. per annum from
the Egyptian Government to army funds is out of date and inadequate, goes on to
raise two questions for the Cabinet to decide: firstly, the maximum amount of money
which can be extorted from Egypt; and,(secondly, whether the present is an opportune
time to discuss the subject. . • • i i *
2. From the Foreign Office point of view the question of opportunity is clearly of
greater moment than that of amount, and all that will be urged in support of that
point of view applies with equal force to the revision of the annual fixed contribution.
3. To deal seriatim with the five heads under which the War Office claims are
discussed, there is but little to be added to the statement A with regard to Egypt s
financial contribution to the war. The spontaneous action of the Council of Ministers
in assuming the burden of the suspense account towards the close of the financial
year 1817-18 involved the sacrifice of the whole of the estimated budget surplus. As
this surplus was due, not so much to the excess of income over expenditure as to the
impossibility of spending money on maintenance and renewals, for which fiesh
provision now has to be made, the Council of Ministers were in effect mortgaging
the resources of their Government in order to contribute to. the cost of Impeiial
military operations from which they had definitely been promised immunity. They
did so fully realising the consequences of their policy.
4. But the direct contribution in cash by no means exhausts the list of services
rendered ungrudgingly to the military authorities, for the whole machinery of Govern
ment was to an ever-increasing extent placed at their disposal, and officials, both
British and native, undertook w T ork far removed from their normal administrative
duties in order to assist the maintenance in the field of the British army.
5. The- extract from the Financial Adviser’s report on the Budget 19-0--1 is
scarcely germane to the discussion, for any cash contribution which has been, or may
in the future be, made by Egypt must be drawn from the funds of the Government,
and these are, and must remain, circumscribed by the practical impossibility of
raising additional revenue. This can only be done by the imposition of fresh taxation,
which is, however, not possible so long as the Capitulations are in force and their
abolition contingent on the assent of twelve Capitulatory Powers who will certainly
cling obstinately to their privileges.
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