Page 78 - The Persian Gulf Historical Summaries (1907-1953) Vol II_Neat

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Kuwait Investment Board, the first members of which were nominated in the
letter, and a general directive to the Board on the manner in which it should
exercise its functions. In reply the Political Agent signed a letter confirming that
the arrangements described were satisfactory to Her"Majesty’s Government, and
promising that the income arising from sterling investments made by the
Investment Board would not be liable to United Kingdom Income Tax and that
death duty in Great Britain would not be charged on funds and investments held
in Great Britain which were the property of Kuwait State (Appendix C (i) to (iv)).
In March the Ruler agreed that £15 million out of the payment due from the
Kuwait Oil Company in April should be regarded as suitable for long-term
investment subject to certain conditions, and in addition a further £12 million was
made available for short-term investment.!38) Proposals have been made from time
to time that Kuwait should contribute to the development of other Arab States
but Her Majesty’s Government have been opposed to this because they do not want
Kuwait drawn too far into the orbit of the Arab League, and because they consider
that it is in the immediate economic interests of the United Kingdom as well as of
Kuwait’s reserve funds should be invested in sterling securities in London rather
than in speculative development projects in the Middle East.!39) They agreed
however that the Political Resident should examine the possibilities of Kuwait’s
contributing on a small scale to development in the Trucial States.
21. The first works to be undertaken when substantial revenues from oil
started to accrue were a hospital, a water distillation plant, and a huge secondary
school. The contract for the distillation plant was given to a British firm and for
the school to a Lebanese one. Hasted on his arrival, immediately embarked on an
ambitious scheme of town planning and development, and the construction of
buildings, including a number of large and expensive schools on lines defined by
the Kuwait Education Department, and of roads was immediately taken in hand.
Contracts for three years were given at his discretion to five British firms who took
a few leading Kuwaiti merchants into partnership on a 15 per cent, above cost-price
basis. In 1952 it was decided by the Ruler that all future projects would be put out
to tender and that these firms would not be allowed to compete, but at the end of
1953 this decision was modified and the firms were told that they would be allowed
to tender for future fixed price contracts, six months before the completion of the
work allotted to them, provided they agreed to give up their rights to a minimum
amount of work in the third year of their contracts. They were not allowed to tender
for the contract for the construction of a port at Kuwait which was under
consideration in 1953 and for which a number of firms including many British and
foreign firms were competing.!40) Congestion of shipping at Kuwait owing to lack
of port facilities after the period of intensive development began caused much
inconvenience and delay in the execution of the works. Dredging of a channel to
allow ships access to a wharf at Shuwaikh started in 1953. At the end of 1953
work on a brick factory was in progress and a scheme for utilising natural gas in
Kuwait was under consideration.
22. Very little potable water is found within the limits of Kuwait State and
there is none which can be made available for Kuwait town. The Kuwait Oil
Company have drilled many wells but have failed to find any and the efforts of a
water diviner who visited Kuwait in 1952 were also unsuccessful. In the past the
practice was to bring water by country craft from the Shatt al Arab. In 1933 the
Political Agent submitted an interesting report on this source of supply and also on
such local sources as were then available.!41) In 1947 a scheme for bringing water by
pipe from the Shatt al Arab was mooted, and early the following year the Ruler
was warned that it was very unlikely that His Majesty’s Government would give
anv guarantee against interference by the Iraq Government with such a pipe.! )
Later in the year a syndicate of five Kuwaiti and five Iraqi merchants was formed
fnr the promotion of this project and the Ruler was advised to instal a distillation
oiLt hefore he allowed the scheme to go ahead so that he would have an
P t,?Ltive source of supply if the Iraqis interfered with the pipe.O The Ruler
ordered a distillation plant in 1949 and Abdullah al Salam in 1950 very shortly
/a,v TV, frnm Kuwait to P.R. 77 of March 20, 1953 (EA 1111/50 of 1953).
:: rci from F o to Baghdad °f ,953)-
rK0 to F O °P Z 0693/34 of January 31. 1934 (E 762/669/91 of 1934)