Coll 6/19 'Arabia: (Saudi Arabia) Hejaz-Nejd Annual Report.' [‎6v] (13/540)

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Finance and Su'p'plies. r, i- n f
20. Early in the year His Majesty’s Minister warned the Sa " d '
that the subsidy which His Majesty’s Government had granted £ theJSaud^
Government during the war vears to oftset falling pilgrim 0 ,
multiplied each year until it now bore no relation to pilgrimage revenue^
that, owing to the war situation. His Majesty’s Government would n the future ^
have to restrict the subsidy to the actual requirements of the cou y- g
be difficult in the post-war period, when, judging the future by P ’ ,, ,
of economy would sweep over Great Britain and, indeed, over vthinff
United Nations, for His Majesty’s Government to justify a subsld y ° n ^
like the scale of that accorded in 1943. The Saudi Government were therefor^
advised to take measures for the reorganisation of their finances and economy m
order to avoid anv crisis likely to arise from a drastic reduction or indeed a
cessation of subsidies in the immediate post-war period which might threaten “e
internal stability of the country. They were told that this could best be done by
reducing their expenditure and increasing their revenue by the larger sale ol
goods and the sale of foreign exchange to merchants. They were reminded o,
that His Majesty’s Government had only granted the subsidy to offset falling
pilgrimage revenues, which were now accruing to the Saudi Government on
something approaching the pre-war scale, thanks to the facilities which His
Maiesty’s Government had created for pilgrims to visit the Holy Lana.
21 The Kino- asked His Majesty’s Minister to discuss the whole matter
witlfhim at Riyadh. His Majesty admitted the need for financial reform and
showed his desire for improvement by dismissing Is ejib Salim, his Uruze Direc o
of Mines and Public Works, who had long Exploited his position to line his own
pockets. He replaced him by Izzet Din Shawa, a refugee Palestinian who enjoyed
the King’s confidence and lias proved honest and reliable. The King also asked
for a British Moslem financial adviser. At the same time, however, and while
admitting the need for reform, the King pointed out that this was a long-term
policy and could only be effected gradually, especially m a country like Saudi
Arabia. He stressed the present penury of his realm and the need for immediate
assistance, particularly as the last pilgrimage dues which had been paid abroad
had not yet accrued to the Government. . , , .
22. At the end of March His Majesty’s Government submitted their new
programme of assistance to the King. Its main points were a free gi t o
200 000 sovereigns and the cancellation of the Saudi Government s debt of
20 million riyals to the United Kingdom Commercial Corporation against the
revenue derived from the pilgrimage tariff items. While accepting it m principle
Ibn Saud pressed for the payment to the Government of the pilgrimage dues,
which under the baneful influence of his advisers and the attitude of Mr. Landis,
had now become a very sore point with him. In the meantime a useful bargaining
counter had turned up in the shape of a generous America which offered to make
UP any reduction which His Majesty’s Government were for any reason obliged
to make in their assistance to the Saudi Arabian Government. A group of the
Kind’s advisers and officials, notably Sheikh Yusuf Yasin and Sheikh Abdullah
Suleiman, realised that this was the easy and profitable wav out and played on
the Kind’s natural anxietv for his country in order to get the best deal. Abdullah
Suleiman in particular/was opposed to any reform which would weaken the
position of Minister of Finance, which he had successfully and most profitably
held since 1932. He and many others feared the prospect of a new order m
Arabia and their attitude, though entirely censurable, is understandable and
shared by the majority of their fellows in Government positions m every Arab
country though not by the commercial community or the population m general.
23 The°Kind’s attitude towards His Majesty’s Government s otter subse
quently stiffened aSd it was clear that he felt that he could not manage with the
help they were willing to give him. At this stage the Americans stepped in,
and when the British proposals were discussed with Mr. Landis and other
American Middle East Supply Centre representatives, they criticised them as
too drastic and argued that if the financial and economic stability of the country
were to be maintained on a reasonable basis greater assistance was needed.
Owing to the wide divergence of views the matter was referred to Cairo for
discussion between the British and American Middle Last Supply Centre
authorities and later to Washington and London. From May to late July the
matter was thrashed out on both sides of the Atlantic, but it was obvious that if
the principles of friendly collaboration in Saudi Arabia, as in the whole of the
Middle East, which had been agreed upon as a result of the visit of Wallace
Murray to London, were to mean anything, a satisfactory agreement regarding