Page 26 - Historical Summaries (Persian Gulf - Vol II) 1907-1953

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(c) the first step before any proposals were put to the Gulf Rulers would be
an approach to India; and
(d) the balance of advantage lay in early action by Her Majesty’s
Government^91)
An informal discussion was held in Delhi in October with Indian representatives
who were not impressed by the case for a new currency, as this step could not
eliminate gold smuggling and might hamper trade between the Gulf and India.(92)
At the end of the year the Political Resident was doubtful whether Her Majesty’s
Government ought to impose a change of currency until difficulties created by the
Reserve Bank of India made the present system unworkable.!93)
39. During the Second World War and until the transfer of power in India,
exchange control in the Persian Gulf was exercised by the Reserve Bank of India
at Bombay which issued instructions to the local banks for releases of foreign
exchange recommended by the political authorities to cover imports within quotas
which had been sanctioned by the Government of India.!94) On August 15, 1947
responsibility for exchange control was transferred to the Political Resident. The
machinery since used for it has been the issue of “ letters of recommendation ”
by the Political Agent concerned or Her Majesty’s Consul at Muscat authorising
the banks to carry out the exchange transactions described in them. The letters
are issued in accordance with general instructions received from time to time
from Her Majesty’s Government, and the Bank of England keeps a careful eye
on the system. At first a letter of recommendation was required for every foreign
exchange transaction and could only be granted for essential imports, but by the
end of 1952 it had been possible to free from these formalities payments for nearly
all imports from countries other than those in the dollar area. Payments in dollars
are very sparingly authorised and only for essential goods and services. The
exchange control applies to transactions affected through the banks (i.e., in
“ official ” exchange) only and in the markets there are no exchange restrictions.
(c) Slavery
40. The extent to which slavery still exists and is recognised in the Gulf
States is described in the ensuing chapters. A general report on the subject,
so far as the Shaikhdoms are concerned, was submitted by the Political Resident
in 1952.(”) Generally speaking the position is that there is now no import of slaves
from other countries except perhaps very occasionally from Persian Baluchistan,
that local abductions take place from time to time on the Trucial Coast and in
Muscat territory, and that domestic slavery is still firmly entrenched on the Trucial
Coast and in Muscat but has been abolished in Qatar and is not officially recognised
in Bahrain and Kuwait. In all the States including Kuwait, with which Her
Majesty’s Government has no agreement for the suppression of the traffic in slaves,
the right of manumission is exercised by the Political Agent or Consul in
accordance with rules prescribed by the Residency (Appendix B). This right is
not specifically recognised in any of the agreements with the Rulers but has not
been called in question by them.
{d) Arms
41. The arms traffic was a major issue during the period covered by the
Historical Summary of Events 1907—1928(9fi) but little has been heard of it since. Its
local aspects are dealt with in the following chapters. The Political Resident
submitted a report on the subject as a whole in 1951 and expressed the opinion
that it was still necessary to control the traffic in arms in order (i) to prevent arms
reaching the tribes of the hinterland especially in Muscat and the Trucial
Shaikhdoms and (ii) to prevent the illicit supply of arms to neighbouring countries
such as Iraq and Persia. His Majesty’s Government agreed with these views but
pointed out that they were not under any international obligation to control the
arms traffic in the Persian Gulf.(97)
C1) (EA 1116/31 of 1953.)
(") Treasury to F.O. U.n. of November 13. 1953 (EA 1116/42 of 1953).
( ) PR. to F.O. 11103/58/53 of December 21. 1953 (EA 1116/44 of 1953).
( ) I.O. to F.O. U.n. of January 5. 1948 (E 278/115/91 of 1948).
( ) P.R. to F.O. Despatch 50 of May 12. 1952 (EA 2181/4 of 1952).
(M) Paras. 1-16 at pp. 151-154. G. 13.
(9') F.O. to P.R. Despatch 180 (EA 1192/6) of November 28. 1951.