Coll 17/17 'FO Annual Reports, 1932-1938, 1947. Annual review of events 1939-1942. Political Review 1943-1944' [‎136v] (272/483)

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oil supplies for Northern Iran will cease. This will adversely affect transit trade
figures and the traffic on the Rowanduz route, already slight, will almost
completely disappear.
188. The development of a direct pilgrim route from Iraq to Mecca via
Najaf, Hail and Medina does not appear likely to influence trade relations.
General.
189. There was, as has been usual since the war, an apparent adverse
balance in the total of the foreign trade of Iraq, which amounted to
1,320,000 dinars. Amongst other less ascertainable “ invisible ” exports in
1934-35 were the sums received by the Iraq Government on account of rent and
royalties from the oil companies, which alone amounted to 928,000 dinars. In
addition to this, money spent in Iraq by the oil companies in the course of their
operations, by His Majesty’s Government on the British forces garrisoned in the
country, by foreign diplomatic missions, and by pilgrims and tourists, as well as
the profits of Iraqi merchants and transporters from the entrepot trade, must be
credited to the export side of the foreign trade accounts as invisible items which, it
may be assumed, more than cover the remaining adverse balance. It is reasonable
to assume from the fact that there is no evidence over a period of years of any
financial disequilibrium or of any recourse to foreign loans that the apparent
adverse trade balance is, in fact, a favourable one. The general external trade
position of Iraq is certainly satisfactory and the prospects of a steady expansion
of commercial activity are good.
190. The drain of capital from Iraq to Palestine mentioned in last year’s
report undoubtedly slackened during 1935, and it is clear that it is not likely to
harm the development of Iraq. There has been adequate money available for
commercial transactions and a fall in interest rates. Building activity has been
maintained at a high level, but very little surplus capital has found its way into
industrial enterprises. Considerable enthusiasm has been shown for the opening
of cigarette factories, which do not call for very much capital, and their number
rose to nine in Bagdad and two in the provinces, with a daily output capacity of
10 million cigarettes.
191. It might, perhaps, be appropriate to mention here various schemes
which have been suggested or initiated in the past year for the improvement of
certain Iraqi products.
192. An ambitious proposal for the dipping of sheep was sponsored by the
Prime Minister in May and experimental dips for about 100,000 sheep were
established in different parts of the country. A United Kingdom firm is following
closely the development of this scheme in the hope of securing further orders for
the necessary disinfectants. A further proposal was made for the establishment
of stations for washing the clipped wool before export in order to secure better
prices. The Mosul Chamber of Commerce and the leading wool dealers in all
parts of the country strenuously opposed the proposal on the grounds that they
would not recoup the expense involved by a somewhat problematic improvement
in the price offered in Marseilles or Liverpool.
193. In the spring of 1935 the date palms in a large number of gardens
above Basra were attacked by a severe pest which threatened seriously to affect
the prospects of the crop. Combative measures were taken by the Department
of Agriculture and the effects of the pest were circumscribed. There was some
talk of granting a date monopoly, but the Association of Date Growers and
Packers was resolutely against any such plan and the proposal was dropped.
194. Towards the end of the year arrangements were made for a tobacco
expert, lent by the British American Tobacco Company, to visit Iraq in the
following summer. The Iraqi Government hope, as a result of his advice, to
secure an improvement in the quality of tobacco grown in Iraq with a view to its
export in the near future. Local production is already sufficient for the needs of
the country and, unless some export outlet is found, further development will
lead only to lower prices and distress amongst the cultivators.