File 488/1920 Pt 1 ‘Arabia:- General question of subsidies to Arab Rulers.’ [‎51v] (99/163)

regarded as final. Subsequent enquiries might result in this total
being slightly modified one way or the other.
Mr. Chamberlain said that what he was really considering waa
the question of next 3 'ear’s estimates. The Conference were no
doubt aware of the kind of impatience displayed by the House
Commons when discussing expenditure abroad. The argument that
had to be met was: “Taxation is excessively heavy; many urgent
and important measures at home are postponed for lack of money ;
if the Government would only draw in their horns and refrain from
spending so much in foreign countries, there would be some chance
either .of these home measures being adopted or of taxation being
eased.” He did not see how, in face of this line of argument, he
could well ask Parliament to sanction an expenditure of £100,000 a
year for Arabia. The scale on which Ibn Saud was being subsidised
was, in his opinion, extravagant and unnecessary. He read a
telegram of the 2nd December from Sir Percy Cox at Baghdad, in
which he explained his objections to asking Mesopotamia for a
contribution towards Ibn Saud’s subsidy. Sir Percy Cox deprecated
Mesopotamia embarking upon a policy of subsidies, which was, in
his opinion, a bad policy, but the deduction that he drew was not
that Ibn Sand’s subsidy should accordingly be reduced, but that the
British taxpayer should pay instead.
The Chairman pointed out that his suggestion was that His
Majesty’s Government should provide £50,000, not £ 100 , 000 , subject
to the acceptance by the Government of India of a similar sum.
He thought that Sir Percy Cox’s objection to asking the newly-
formed Arab Council of State in Mesopotamia to accept liabilities
for subsidising Ibn Saud was easily explained. As time went on and
Mesopotamia gradually became financially independent, it might be
possible to invite her to take her share in such subsidies as were
primarily for her benefit, and any consequent relief should be shared
between His Majesty’s Government and the Government of India on
the same basis as the expenditure.
Mr. Chamberlain withdrew his objection to the provisional
figure of £ 100,000 on the understanding that it was not necessarily
to be regarded as a minimum. The acceptance by the Treasury of
a moiety debitable to Imperial revenues of the lump sum eventually
decided upon would obviate the necessity for continual reference to
the Treasury on each specific case. Within the limits finally
sanctioned by the Treasury the Department of His Majesty’s
Government responsible for the Middle East, in consultation where
necessary with the Government of India, would be free to make or
withhold payments in accordance with political requirements. He
deprecated the alternative suggestion that had been made for a loan
or for a guaranteed loan, pointing out that there waa no security
that loans to independent Arab rulers would be repaid with
reasonable promptitude, and that to guarantee a loan would involve
His Majesty s Government in still greater expenditure in view of the
unfavourable terms which would be exacted by the promoters.
The Conference decided —
I hat a Memorandum should be prepared in the Foreign Office
on the lines suggested by the Chairman, giving a reasoned
statement of policy for the future on the basis of—
(a.) Participation in equal shares by His Majesty’s
Government and the Government of India.
(b.) Adherence to Treaty obligations.
(c.) Provisional yearly total of £100,000 to be dis
tributed by agreement between His Majesty’s
Government and the Government of India.
(d.) Participation by other Powers interested in the
pilgrimage in financial support to the Hedjaz.