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The Political Agent in Bahrain performed consular acts for the resident American
community: he administered the oath of allegiance for people wishing to acquire new US
passports; he attested various documents; he effected formalities required by the US Customs
Department; and he even registered a marriage between two US citizens. ** Furthermore,
there were indications that the US government accepted the legalisation of documents by the
Political Agent. But the latter continued to be haunted by the fear that the American
community would wish to have their own consul on the spot.

These fears were reinforced when, in 1936, the American Consul in Baghdad contacted
the Political Agent in Bahrain. He explained that the Consulate was required to submit an
annual report on the extent of US interests in its district, and he therefore needed import and
export figures for Bahrain.2,1 The Political Agent was startled that Bahrain should have been
included in the Baghdad Consulate’s “district”, but finally decided that it was used as a loose
phrase, particularly since Knabcnshuc was manifestly aware of Britain's position in the Gulf
and had shown no wish to disturb it. After receiving the concurrence of the Political Resident,
the Political Agent began to supply these figures on an annual basis until 1937. It is evident
from the data supplied30 that exports to the USA from Bahrain were on a very small scale —
less than 1 % of the total exports; and that the imports from the USA to Bahrain hovered at
I around 6% or 1% in 1935/36, and then jumped to 22% in 1937 when the refinery was being
built. Clearly, then, the US had no great commcrical stake in Bahrain and, despite British
fears, the US government had no interest at that time in establishing a consulate there, or,
indeed of becoming involved in any other aspect of Arab affairs. World War II was to alter the
situation.

World War II and Renewed Tensions

Once World War II began, the position of the USA began to change regarding its policies

i in the Gulf. Three principal factors governed this change. The first was the gradual weakening

of Britain’s position in the Arab world as a result of the defeats it suffered at the beginning of
war. In 1940, for example, the Mediterranean Sea became closed to British ships; the next
year, Germany controlled Jugoslavia and Greece; and Rommel pushed the British forces back
to El-Alamein. In Iraq, the Rashid Ali movement threatened British control of Iraq and its
important base at Habbaniyya. The possible consequences of the collapse of the British
Empire and its repercussions were not lost on the Department of State.

The second factor was the acute financial crisis in Saudi Arabia which set in immediately
after the war due both to the decrease in the pilgrim traffic and to financial mismanagement. In
1940, it became so acute that the King appealed to both the British government and CASOC
for help. To -the latter, he asked for an advance on oil royalties; and, in 1940, the company
advanced him $ 3 million. In 1941, he asked the company for a $ 30 million advance to be paid
over a period of five years. By now, CASOC had become very nervous about its Saudi
concession. It wanted US government support for what it felt was a rather tenuous hold in
Saudi Arabia: since the concession had been made with the King alone, it could suffer if the
latter were to die. The company thus started to petition the Roosevelt Administration to
provide Saudi Arabia with a subsidy, thus ensuring government backing to the concession. But
the US government was not yet ready to enter the field of Saudi politics.31 Instead, the State
Department asked Britain, which was already providing a subsidy, to increase it. The increase
was made possible by a US loan to Britain.32

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