Coll 30/224 'Currency Arrangements in the Arab Sheikhdoms of the Persian Gulf' [‎37v] (82/157)

/g\ it Is probatl/ true tliat the whole cf the built ap
balance'of iJtMCO with the at tern ,>anK does not iH?present %
oaxance o* f Ak u0 ^ut at the same time it is
ruoee payments of employees to Atu^w*
4 little difficult to see the legitf iate rea. ons for AKA »00 m
accum fated rupees Indian silver coin also widely used in the Persian Gulf. in an area wftere tfielr rupee ex t 5 anditiu-e^ia ^
cno*n to tv’ large. kaAWQ, however, may be able -o explain tr.ia.
TW^were^Kiven^he opportunity of doing eo by the ..anther ox toe
^Ite^ f^k Shotted if Aka ,00 was prepared to euomit oetaxle of
thiir account to the authorities in substantit tion of their claim
for cohere ion. but there hae been no reply to thia suggestion.
(f) hen I was dieouoaing various matter®' with the
accountant of the Bahrein tetrolewu Coa«.any, at referred to uhe
lupe* accounts of the sister Com any of the - a hr tin company,
niutwly AkAMCO, and their request for conversion. oen I
ioltingly said that the --KamGO request for converaion oi thc*r
rupee balance to dollars was ratner a tall order, he replied
that he thought so too and that AiiA..0t> really did not expect
their reauest to be conceded#
(g) In my view there is no case for conversion of the
whole amount asked for- by ARAMCQ but the Company may substantiate
e claim for part of it and I consider they should be aukeu to
do so before conceding any part of their request.
(Y) Beoatriation of Kuoee note s to India and X'akiatan
(a)- From the 1st liovember, 1948# to 3l8t xay# 1949# the
Imperial Bank of Iran, Bahrein#* has repatriated for its own
Bxanch and that of Kuwait iks# 519 lakhs One lakh is equal to one hundred thousand rupees , of which not more than
19 lakhs One lakh is equal to one hundred thousand rupees were Pakistan notes* For approximately the sa^se period#
the siastem Bank# Bahrein# lias repatriated to India ks. 34 Itkhs
and to Pakistan He* 7 Lakhs One lakh is equal to one hundred thousand rupees . Thus in eix months a total of
ks. 560 Lakhs One lakh is equal to one hundred thousand rupees (about £kk million) of notes have been repatriated
from the Gulf states to ndia and Pakistan# rhe banks coxivert
to sterling the greater part of these repatriations.
(b; It cannot be said that these large some reflect
genuine commercial trade of the Gulf with India or Pakistan#
mostly these stun© are the counterpart of jold purchafces by
residents of India and to a lesser extent Pakistan. Gold from
several European countries is drawn to Beirut* ann then to Kuwait
and thence to India and Pakistan. India, and to a lesser extent
Pakistan# are parting with free sterling for the oerefit of all
sorts of people operating through Kuwait for which India and
Pakistan receive no direct economic gain. Individuals in
those countries are of course enriching themselves with physical
gold. But when India complains to H.M.G. of a shortage of free
sterling it might be asked why does it allow free sterling to be
run down to the tune of at least £7 or xB millione a year through
Kuwait alone for no economic benefit to India. Iniia accepts
these large repatriations of notes from toe Gulf knowing full
well that the amounts involved are too large to be the counter
part of genuine trade, tfliy? Tt may be regarded as good
business to export (surreptitiously, of course) paper ( rupees Indian silver coin also widely used in the Persian Gulf. ; and
import gold anc therefore a blind eye is turned to this illicit
truffle. The Manager of the Imperial nank of Tran# Kuwait, is
| ^worried lest the Government of India suddenly wakes up to these
facts and then peremptorily refuse to accept repatriated notes.
/(VI) TuA Hupei Balance