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                          Muscat.—Stringent measures of retrenchment and economy resulted in a
                      considerable improvement in the State’s finances and the year ended with a
                      surplus.
                         The prestige of the State was raised by the submission in-March under
                      threat of force of the recalcitrant Bani Bu Ali tribe. Three Sloops of the
                      Persian Gulf Division, three Royal Air Force Flying Boats, a detachment of the
                      Muscat Levies, and the Muscat State gunboat, were concentrated near Sur. Ali
                      bin Abdulla, the Chief of the tribe, was informed that if he would not permit the
                      establishment of a Customs post at Sur, as a sign of the State’s suzerainty, his
                      fort at Aiqa, a suburb of Sur, would be bombarded by Ilis Majesty’s Sloops,
                      and his fort at Ja’alan 50 miles away in the interior, would he bombed bv
                      aircraft. After flights by Royal Air Force Flying Boats had taken place over
                     .Ta’nlan and warning pamphlets had been dropped, Ali bin Abdulla submitted.
                     A satisfactory result was thus brought about without a shot being fired. The
                     importance of the incident lay in the fact that other recalcitrant Chiefs elsewhere
                     in Muscat territory were watching events at Sur, and—if Ali bin Abdulla had
                     not been taken to task—might in their turn have endeavoured to separate
                     themselves from the Muscat Government, when the wholesale disintegration of
                     the State might well have commenced.
                         Trade (both sides of the Gulf).—The trade on the Arab side is dealt with
                     fully in the Trade Reports from the Agencies for the year in question.
                         Trade on the Persian side as far as Bushirc is concerned is dealt with in
                     Section 8 of Chapter I of this Report. As far as South Persia generally is
                     concerned, the Trade Reports for the year from the various Consular posts
                     furnish detailed information.
                         The general economic depression due to extraneous causes was accentuated
                     by the Government restrictions on trade, monopolies and control of exchange,
                     and the famine conditions which prevailed in the South owing to the general
                     failure of the rains during the winter of 1931-32.
                         Persian side of the Gulf.—On the Persian side of the Gulf, the Persian
                     Government continued with some success its work of disarming the tribes,
                     separating them from their hereditary leaders, and increasing its control over
                     them.
                        Security in the South was good in the early months of the year, but the
                     prevalence of famine conditions led to an increase later in brigandage.
                        Persian Naxnj.—The arrival of the Persian Navy in October and the anti­
                     smuggling activities it engaged in did not lead to any incidents during the year,
                    as these activities were confined to the Persian coast.
                        Relations with local Persian Authorities.—Relations with the Governor of
                    Bushire and Persian Gulf Ports—Mirza Ali Ashgar Khan Taliqani—continued
                    to be most cordial throughout the year, and considerable assistance—official and
                    demi-official—was received from him in the solution of various local problems.
                                                          T. C. FOWLE, Li exit.-Col on el}
                                                       Political Resident in the Persian Gulf.
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