SUPPLY AND CURRENCY AGITATE GOVERNMENTS

Press, Volume LXXIX, Issue 23974, 15 June 1943, Page 4

SUPPLY AND CURRENCY AGITATE GOVERNMENTS

THE MIDDLE EAST

[By ROBERT POWELL.]

LONDON. . Much could be written about Allied attempts to deal satisfactorily with the problems of supply CU i«a^ir« which have been agitating the leaders of Iraq and Persia. Turkey and Syria, Palestine and Egypt. These problems are only in small measure local problems, peculiar to each nation. They are also linked up with Allied war plans and cannot be safely ignored. For though these countries have known famine ana scarcity for centuries, at the present time these conditions may induce the populations to lend a ready ear to Axis broadcasts, which represent British Empire and its war effort as responsible for all shortages, m spite of the fact that gram imported from Canada has been the sole means of preventing conditions approaching famine in many parts. To-day the hoarder, the profiteer, and the black market racketeer are forcing up prices, .and the consequent increased cost of living is threatening the stability of the currencies of the recently published show that the cost of living has risen throughout the Middle East between 100 and 500 per cent, since the outbreak of war. In Egypt, the rise is estimated at 130 per cent., in Turkey 107 per cent although the actual rate may be much higher here, because of black market operations), in Palestine by 100 per cent, and in Persia, where the crisis is most severe, by nearly 500 per cent., according to some authorities. Figures for currency circulation tell the same story. Since J “ n ®',L 9 3 W ■ currency circulation has become twice as creat in Iraq, four limes as great in Palestine, and three times |=reat in Syria, Turkey, Egypt and PersiaCrisis in Persia Because the Allies have entered most of these countries or have with them, the responsibility for deal ing with these problems rests; prima i"y with.them, and especially with G Up t t ?the present, the British efforts, working through the national governments to check these abuses, have succeeded. This has been largely due to the following factorsi the absence of a united and disciplined population fear of famine, and the lack of a trustworthy and efficient civil service to parry out impartially all the regulations connected with food rationing and currency control. Without these conditions, a complete system of rationing of essential commodities and elaborate mechanisms for checking price increases would not work, despite their excellence on paper. . _ The crisis is at its sharpest m Persia, because of the 1941 bad harvest, and the consequent shortage of food which in certain parts amounted to a famine. Since Persia is vital to the Allied war plan, an attempt must be made to understand the special conditions obtaining here. The Allied occupation of the country had the effect of alarming the peasantry, who started hoarding on a large scale. Then, Persia’s transport system, which was at best inadequate, had been used to the full to transport supplies to Russia. Finally those who worked directly or indirectly for the armies of occupation earned more money than ever before. This extra earning was not drained away by taxation, as is the case in Great Britain, nor could rationing be satisfactorily enforced. Currency Agreement In the spring of 1942, however, an agreement was reached between the Persian and British Governments, by which it was hoped that the currency crisis could be alleviated. The exchange rate was fixed at 129 rials to the pound, and the British Government was to cover the issue in London, 40 per cent, in gold and 60 per cent, in sterling, in return for which the Persian Government was to provide the armies of occupation with currency necessary for functioning. But the Persian Government refused to sanction the new issues asked for, taking the viewpoint that that would cause inflation, and that further food deliveries were a preliminary to any Persian concessions. A compromise was reached when the Persian Government agreed to introduce rationing, so as to utilise to the

(Published by Arrangement with the -Christian Science Monitor")

full existing stocks of food, and to introduce stringent measures to try to stop black-market operations. Transport, the cause of so many hold-ups, is to be placed under a joint AngloPersian Committee, and the Allies have agreed definitely to import more grain for distribution. In Egypt, there are similar difficulties i with grain distribution, because of the 1 obstructive attitude of the big land- I owners and merchants. King FarAk’s J example, for instance, of sellingHhis whole wheat crop to the government at fair prices, was not followed by any of the great estate holders. Steps have, however, been taken to counter the three main shortages from which the people are suffering, namely, bread, oil, and cheap textiles. In the case of bread, cotton-growing districts have been drastically reduced, and grain grown instead. Buying Up Stocks ‘ The Egyptian Government plans, too, to buy up a large percentage of oil and clothing stocks, and sell them to the poorer classes at a low price. Rationing has not been carried through, except in the case of sugar, although the high prices of many commodifies make them out of the question for the greater part of the population. The Minister of Commerce explained the shortages and high prices by saying that the public itself was mainly responsible for this slate of affairs, since it was willing to purchase from those who were disregarding the law. Conditions in Turkey are very similar to those outlined above, although the country is not actually at war. There is hoarding not only of foodstuffs, but of olive oil, and prices are exorbitantly high. The Government had to abandon its plan for buying up and distributing the whole harvest Even fuel and textiles, which are controlled, as are all the products of the State factories, have risen in price by at least 100 per cent. The Turkish Gpyeminent also has had to make pjans for selling food at the cheapest price to the poorest classes. The drastic capital levy now proposed' should bring in some £T1,500,000,000, four-fifths ot which is expected to come from Istanbul., Already defaulters are being heavily sentenced for attempted tax evasion. • In Iraq and Syria the food position Is somewhat easier, both States having small food surpluses. There are signs, however, of the same hoarding of grain and black market racketeering. Axis propaganda is busy here suggesting that ■ the Allied war effort is draining the country of its resources. Embassy’s Difficulties The British Embassy has to give much attention to countering these malicious suggestions. The former President of the Cereals Office resigned his post because of the difficulty of combating the greed of grain dealers. The office was then taken over by the Prime Minister, who introduced a system of coupon and family rationing. Since 1942 there has been a deterioration in the food situation in Palestine, where there is a modified form of rationing in existence. The black market flourishes here, too, and, so far, adequate counter-measures have not been introduced. Grain is being hoarded by the'peasants or sold at high prices into Syria, so that the Government has been forced to import grain from Canada. There have been strikes and agitation in favour of increased wages to meet the increased cost of living. The Government has replied by setting up a commission to study the actual cost of living and recommend wage increases. Additional taxation > has been announced, which will go'tov , wards meeting the annual Government ti subsidy on flour. • • Although many of these difficultK/, r could be alleviated by improved inter j. state traffic and political trust, the" Allied governments have to deal with : the situation from the point of view of united war strategy for the moment. To this end they have already evolved a . workable international economic organisation called the Middle Eastern Supply Centre, which attempts to study and correlate all these problems of supply, and to find the most satisfactory solutions.