Page 76 - Historical Summaries (Persian Gulf - Vol II) 1907-1953

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indignation at the blow to their prospects and those of British interests generally.
Her Majesty’s Government were alarmed by the state of affairs and especially by
the damage which might be caused to sterling by uncontrolled spending at Kuwait
and sent out Sir Thomas Rapp to investigate and report on the situation. The
Prime Minister also saw the Ruler while he was in London for Her Majesty’s
Coronation and urged him not to spend his money too fast, not to spend it outside
the sterling area, to establish a system of financial control and to employ an expert
British Administrator.(2a) Sir Thomas Rapp on his return recommended the
up-grading of the post of Political Agent (paragraph 8 above) and that the
Economic Counsellor proposed for the Persian Gulf should be stationed at Kuwait.
He was satisfied on the whole with the British experts including Crichton and Hasted
but stated that the appointment of a Senior Adviser was “ imperative to exercise
continuous influence over the Ruler.” He considered it premature to conclude i
that the prospects of the British contracting firms had been fatally compromised,
but thought it expedient to bring pressure on the Ruler to revert to the previous !
system under which they were working. He was of the opinion that market
conditions and the question of British commercial representation required further
investigation.^*) Sir Thomas Rapp’s recommendations were accepted by the
Foreign Office and the instructions issued to the new Political Resident in July 1953
(paragraph 9 above) were based on them.
19. The new Political Resident when he saw the Ruler in August 1953 urged
on him not only the importance of appointing a senior administrator but of
co-ordinating his various departments and of introducing proper financial control by
means of a budgetary system, and received a non-committal reply.(ao) A few days
later he wrote to the Ruler repeating his advice about the co-ordination of the
departments and financial controH31) and suggesting also the appointment of a single
authority over the port of Kuwait, technical advice to the public security authorities
on the control of subversive organisations, and the public health control of
immigrants, and received another non-committal reply.f32) Fahad raised strong
objections to this approach and made many other criticisms of British policy.(33)
20. With Kuwait’s rapidly increasing income from oil the question of the
disposal of her surplus revenues became a matter of concern to His Majesty’s
Government. The matter was discussed by the Foreign Office with Kemp, the
Ruler’s representative in London, who at the beginning of 1951 wrote to the Ruler
suggesting the appointment of an Investment Committee in London.(34) There was
a further large increase in oil revenues after the conclusion of the fifty-fifty profit-
sharing agreement at the end of 1951 and it was estimated that in 1953 they would
amount to £60 million. One of the main objects of Sir Roger Makins’ visit to the
Persian Gulf in February 1952 was to persuade the Ruler to appoint an Investment
Committee and he was accompanied for this purpose by a representative of the
Treasury and Mr. Loombe from the Bank of England. The Ruler listened
attentively to all that was said to him but clearly found it difficult to understand
the issues at stake and stated that he wished to consult Kemp before giving a final
reply.(33) The matter was discussed with Kemp in London and he sent Her
Majesty’s Government’s proposals to the Ruler in writing. The Ruler still appeared
unable to understand them but in October stated that he would accept a plan for
dealing with Kuwait’s surplus revenues which had been agreed upon by Kemp,
Crichton and Loombe.(3#) Discussions ensued in London and documents were
prepared embodying Her Majesty's Government’s proposals. These were accepted
by the Ruler in February 195 3.(37) They consisted of a letter which he signed to the
effect that he was instructing his Finance Department to inform him from time to
time how much of his sterling revenues was likely to be required to meet the needs
of the State and that any surplus left over should be made available for investment.
The letter was accompanied by a document providing for the establishment of a
(*•) (EA 1103/89 of 1953.)
(”) B.M.E.O. to F.O. Despatch 20 of June 17. 1953 (EA 1103/96 of 1953).
(J0) P.R. to F.O. Despatch 78 of August 20. 1953 (EA 1103/143 of 1953).
(,l) P.R. to F.O. Despatch 80 of August 21. 1953 (EA 1103/145 of 1953).
(Ja) P.R. to F.O. 11023/23/53 of September 29. 1953 (EA 1103/163 of 1953).
(”) Kuwait to F.O. 189/31/50 of October 4. 1953 (EA 1103/170 of 1953).
(“) Kuwait to F.O. 11/3/91 of January 13. 1951 (EA 1052/10 of 1951).
(”) Sir R. Makins to F.O. Despatch of February 22. 1952 (EA 1112/26 of 1952)
(Jt) Tel. from Kuwait to P.R. 245 of October 21. 1952 (EA 1112/63 of 1952)
(”) (EA 1111/28 of 1953.)
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