BRITAIN AND ITS DEBT TO AMERICA

29-12-2006

Today is a landmark in the “special relationship” between Britain and the United States, as we finally pay off the loans that helped the Allies win the War - and the Yanks secure victory in the peace that followed.

At the turn of the 1940's, the Americans were still pursuing their traditional policy of isolationism in international affairs, even though first Britain and later Russia were struggling to contain Hitler's imperial ambitions.

Recognising the threat that a tyrannical Germany would pose to global stability and US interests, President Roosevelt signed off the controversial Lend-Lease Act in 1941 which allowed the States to provide funding for arms and other necessities to their allies without committing troops to the cause.

There's little doubt that this aid was crucial in turning the tide of the war before the Americans became directly involved in 1942; and even afterwards it was an essential tool in the Allies success. In 1944, around a quarter of British munitions were provided by the States, effectively as a free gift

Overall, Britain received goods worth more than $31 billion and the Soviet Union £11 billion as part of a total outlay of around $50 billion by the US.

It's what happened next, though, that reveals the true nature of America's foreign policy. Immediately the war ended, Lend Lease was terminated, meaning that goods that were already in Britain and those which were in transit from the States had to be paid for - albeit at a significant discount.

No matter that this country was financially exhausted and had seen off the Nazis - suddenly the “special relationship” was on a business footing. Britain was also forced to negotiate new loans worth more than $3.75 billion and it's these combined debts we've been repaying ever since more tha $4billion at 1945 prices.

Make no mistake; in our time of greatest need, the Americans - along with the Soviet Union - were indispensable allies, without whom Britain would almost certainly have been over-run by Hitler's troops.

But they always acted in a spirit of enlightened self-interest, knowing that if our democracy fell, theirs would be in jeopardy too.

Once the danger was over, they took the chance to maximise their advantage and squeezed concessions in terms of trade and land, as well as making us paythe full costs of reconstruction (unlike the Germans) - a task which might not have been so onerous if they had got involved earlier.

The conclusion to draw from this is not that the USA hasn't been a generous and loyal ally to Britain - it has.

But even in our time of greatest need, they offered assistance onlyin their own time, on their own terms, and in the interests of their own people - a lesson our own Prime Minister would have done well to heed.