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Budgetary affairs                    283

        CONFIDENTIAL                         PERSIAN QULF RESIDENCY
                                                    BAHRAIN
        D. 0. No.638-S                     Dated the 23rd March, 1948






                                                                   s- 7°
                 Please refer to your Demi-official letter No#C7277
        dated the 17th March, 1048 about the Bahrain Civil List.
        2.       I fully approve the line you propose to take#
        I suggest that you should lay emphasis on modern democratic
        tendencies and the scandal that will be caused in the world
        at large when the very large proportion of the State revenues
        (including oil royalties) which is devoted to the Al-Khallfah
        becomes known especially as most of then give ne return what­
        ever for the expenditure#
        3.       If the Shaikh mentions Kuwait you can say, with truth,
        that so far as we are aware the Shaikh is reserving the whole
        of the oil royalties for local developments.
        4.       You will no doubt realise that this is not a matter
        in which we can give anything in the nature of an "order” to
        the Shaikh, Your general attitude should be that you are
        offering him advice for his own good and that of his State#
        ?ou can if necessary remind him of what he owes to His Majesty's
        Government'8 protection and refer to the displeasure likely to
        be felt by His Majesty's Government when the matter is reported
        to then#
        6,       With reference to paragraph 2 of your letter we have
        no record of any reference to Galloway. I think it quite
        probable that the Shaikh may have mentioned to him his proposal
        to increase his Civil List dearness allowances in general terms
        but most unlikely that he made specific reference to the transfer
        of liability for a portion of these allowances txom his share of
        the oil royalties to general revenues.












    C.J. Pelly# Esquire,  O.B.E.,
         Political Aloni  >
               BAHRAIN



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