War on Capitulations

When British Foreign Secretary Anthony Eden signed the Anglo-Egyptian treaty in the magnificent "Locarno Room" of the British Foreign Office (TIME, Sept. 7) he intimated that Britain was no longer Egypt's boss but her "partner." As an earnest of good will the British Government promised to urge at Geneva admission of Egypt to the League of Nations, promised to ask eleven other States, which like Britain have long enjoyed extraterritorial rights ("capitulations") for their citizens in Egypt, to surrender them.

Last week Egypt was still not a member of the League of Nations but, mindful of Britain's promise about "capitulations," gathered together representatives of the twelve capitulatory powers, including the U. S., in the hotel at Montreux, Switzerland where last July the Powers agreed to restore the Dardanelles to Turkey (TIME, July 27). Master of ceremonies was Egypt's ambitious Premier Mustafa El Nahas Pasha.

Capitulations, the sharpest thorn in Egypt's flesh, are partly fiscal, partly juridical. Foreigners in Egypt are not forced to pay taxes to the Egyptian Government; foreigners involved in criminal cases go before their own consular courts, while civil cases go before mixed courts on which foreign representatives sit. Specially oppressive to Egypt are the fiscal capitulations because more than $12,000,000,000 of foreign money is invested in that country, and owing to tax immunities the Egyptian Government is deprived of what it considered a large legitimate income. The U. S. has nearly $15,000,000 invested there, represented by the American University of Cairo, a hospital, mission schools and such companies as General Motors and Socony-Vacuum Oil.

Because delegates from Italy, Portugal and Spain were present when the Conference opened, each eyeing the others with a smoldering eye, Premier Nahas tactfully suggested that the usual exchange of cards should be cut out. The "family atmosphere," created by the hotel, he declared, made formality unnecessary.

Cool and self-confident was Premier Nahas for he knew he had the whip hand. Egypt off her own bat can legally renounce the capitulatory privileges of any power as she did in 1923 in Russia's case. The Premier preferred not to resort to highhandedness, yet it was crystal-clear to the delegates that he had won his battle before he started. The nub of the discussion was whether or not Egypt would be willing to abolish capitulations by slow degrees.

Bluntly Premier Nahas told the delegates what he wanted--immediate abolition of fiscal privileges for foreigners. If the Conference met him on that he would agree to a gradual assumption of Egyptian court control.

Next day U. S. Minister Bert Fish, one of northeastern Florida's wealthiest men, handsomely backed the Egyptians with many a mention of President Roosevelt's "good-neighbor policy." Declared Minister Fish: "The U. S. will pursue no exclusively national interest. . . . We warmly compliment Egypt on beginning her international career by choosing the way of friendly negotiation."

Observing the Conference was ex-King Amanullah of Afghanistan and a Chinese official "privately" picking up tips for the time when China will launch her own campaign against extraterritorial rights.

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