'File 9/34 Currency in Arab Shaikhdoms' [‎125r] (249/274)

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respect of which fears have "been expressed locally, hoth the
Go ^ r S me P, t ^^ eri United Kingdom Government would he
justifiably subject to very s.trong criticism on account of the delay
m bringing about the change. ' ^
J* # ohbse circumstances we are unable to see our way
to dropping the proposal as suggested in paragraph 12 of the
Ministry s letter# We have taken very careful account of the
anxiety expressed by the Indians but have come' to the considered
opinion that the effect of the new measure on confidence in the
Indian rupee would not be substantial and would not outweigh its
od vious benefits to Aden# °
' J * Taking all the foregoing together, it is hoped that the
cnticism,^contained in paragraph 10 of the Ministry’s letter,
tnat the aide memoire does not put forward sufficient reasons and ‘
elucidation, can be answered; and that the fears expressed in
paragraph 11 can be reduced to more reasonable proportions. With
regard go the reference to possible repercussions in the Gulf,
contained in_paragraph 9, the position here seems to be that so
ar as Aden is concerned, on whose behalf the whole exercise has
been considered, the interests of the Gulf are irrelevant# So
iar as the United Kingdom Government is concerned the question of
G i^ 1 f^ currcnci 2 s ., is one which should be considered on its own merits#
-ther or not there should be any change there cannot in any
circumstances be influenced by any steps taken in respect of Aden#
ikere is practically no geographical or commercial connection between
the two areas and we cannot feel that the interests of Aden should
be prejudiced by reference to the question of the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran.
winch will if necessary be persued separately.
som e importance to -keep in mind-the fact that
bomaliland is also concerned in the proposed operation. The
situation which has‘arisen there since decisions v/ere first made
illustrates further how^undesirable the- present state of indecision
iu#^ n this icrritory it happens that both the rupee and the East
s i lllllI ?g are concurrently'legar'tender. On purely administrative
gn>un s alone it is clearly undesirable to continue concurrently
the legal tender basis of two currencies which in theory are liable
oo move independently of each other. In this case there‘would clearly
be no^ question of removing the legal tender status of the Tiast African
o illing# Moreover, in anticipation of a completion of the operation
conjointly with xden, the authorities have been progressively
withdrawing rupees Indian silver coin also widely used in the Persian Gulf. over the last eighteen months and issuing East
Afncan currency with the object of facilitating the administrative
cnange when it takes place in due course# Such preliminary action
io,^\,e conoidcr, well advised^ in an undeveloped Territory whoso
administrative facilities are, distinctly limited# Because Aden is
the channel through which Somaliland’s external trade passes, and
because the rupees Indian silver coin also widely used in the Persian Gulf. withdrawn from circulation will have to be
repatriated through Aden, it is desirable fof the two territories to
act conjointly#
10# x T ! le outstarid i n g question therefore is when effect should be
given to the change# The Indians desire for further opportunity for
consultation oefore steps to implement the x^roposals are taken is
only likely uo lead to further delay# As the discussion of the matter
has already been prolonged and there is little likelihood of importsint
new arguments against the opporation being produced we think it would
be sufficient to fix a definite date leaving sufficient time for any
incidental arrangements with the Indians to be allowed for* After
explaining the reasons for this decision please inform the Government
of India uhat the porposed currency change for Aden and Somaliland
will take place on or about 1st April 19. r 31« You should add that we
assume India will accept repatriation of rupees Indian silver coin also widely used in the Persian Gulf. withdrawn as a result
of the operation.
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For your own information we should be prepared to consider
/a further