The British Foreign Office has proposed to the Chancellor of the Exchequer, Sir Stafford Cripps, that he seize the whole remaining balance of Israel’s sterling deposits in the United Kingdom, as security for reparations to be paid by Israel to the Palestinian Arab refugees, it was learned today in informed United Nations circles. The total amount involved is stated to be $140,000,000-$160,000,000.
The proposal is now under active consideration. It has already resulted in the holding up by the Bank of England of the current release of sterling which was due Oct. 15. This quarterly allocation of $28,000,000 is now six weeks overdue. It was to have covered Israel’s purchases of essential foodstuffs in the sterling area and in the United States and Argentina.
Inquiries in London revealed that hitherto the allocation has been made with in 48 hours of application. In reply to a request for the current release, it has been indicated that the release was held up on political grounds, connected first with fighting in the Negev, then with sanctions discussions at the U.N. and finally because of the present refugee reparations question.
Israeli banking agents in London have been told that while on previous occasions the decision was made by the Bank of England authorities, the Bank had to refer the current payment to the Treasury for a decision. At the Treasury, it was stated that the whole matter had to be referred to the Foreign Office–and there it rests at the moment. One of the largest and most powerful British firms also met with a blank refusal by the Treasury to have Palestine sterling released for trading purposes.
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