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Home > Articles > Postal and Monetary History of the Gulf Arab States and the consequences of the withdrawal of the "external" rupee of Persian Arab Gulf States in 1966.

Postal and Monetary History of the Gulf Arab States and the consequences of the withdrawal of the "external" rupee of Persian Arab Gulf States in 1966.
by Marc Van Daele


From the beginning of the 19th century, the British established contact with different local leaders of the Arab coast and Persian Gulf. In 1820, the representatives of the British government signed a general peace treaty with the Sheik of Bahrain and other important Sheiks on the Pirate Coast, baptized afterwards as the Trucial Coast.

During that time, the most influential Sheiks were the Qassimis who controlled Ras Al Khaimah, Sharjah and other areas of the Gulf Coast, and Lingeh province.
The Qawasims tribe was quite powerful and feared in this area. The British would regularly intervene to obtain the prospect and the revival of the General Truce, the war accords against slavery and the different exact treaties that permitted them to ease economic control of the region and the lines of communication with the Indian Empire.
A "resident politician" was installed in Boushire to orchestrate British interests in the Gulf.
The Treaties of "Exclusive Relations" were to be signed in 1892 with Abu Dhabi, Dubai, Sharjah, Ajman and Umm Al Qiwair: in December 1880 and March 1892 with Bahrain, in 1899 with Kuwait and in 1916 with Qatar.
The treaty with Kuwait was followed by a German project that opened a railway line to Baghdad. The British would pass treaties in 1909 and 1914 with Khorramshar (Muhammarah), yet this emirate would "manu miliari" from Persia in April 1925.
An amnesty treaty pitted the English with the Muscat Sultan after 1978. The British would not judge it to be a wise decision to have passed a similar treaty with the imam of Oman, presenting them with the only opening leading to the coastal territories of the Syed (Lord) of Muscat who took the title of Sultan, later coinciding with the extension of his commercial empire to Zanzibar.
The borders of these nomadically inhabited states were for a long time imprecise and had to be negotiated by the British (for example, the Iraqi mandate and the protected emirates), by the Ottomans (until World War I) and by the Saudis (backed by the Americans after World War I). A primary accord between the British and Ottomans was completed on July 29, 1913, creating the borders between the Ottoman Empire and Kuwait, as well as that of Qatar. The war prevented its ratification.

In November 1914, the leadership of British-ruled India invited the Sheik of Kuwait to reach out to the North in order to support the southern flank of British Indian mission in Bassorah.
It was following this period that the island of Bubiyan was under Kuwaiti control. When a conference opened on November 22, 1922 in Uqair between the Saudis and the British, it was determined that the southern border of Kuwait would cut the emirate into two separate entities for which the British had expressed their hopes in their 1913 agreement with the Turks.
The history of the unraveling of borders for all the countries in the area is very rich. The most salient crisis was that of the Buraimi Oasis in 1955 between Saudi Arabia, the Sultanate of Muscat and Oman and Abu Dhabi. And, the most recent crisis occurred in October 1992 between Qatar and Saudi Arabia.
If one leaves out the special case of the Sultanate of Muscat and Oman, which had passed treaties with the United States (1833), France ( 1846) and the Low Countries (1877), the "exclusive accords" most mentioned are that of the different emirates sharing particular desire for independence. In "standard relations", all political, economic and commercial affairs had to be reviewed by royalty.
The British flag could only wave within the confines of political agencies and residences.

The postal service and currency until Indian Independence

The Indian post office opened in Bahrain on August 1, 1884.
The Indian postal authority obtained a monopoly of service in Bahrain through a treaty on September 4, 1911.
After August 10, 1933, postage stamps in the Indian Empire were printed in Bahrain. A second post office was opened in Muharaq on June 1, 1946.
It was in 1909 that the Indian postal administration opened a post office in Dubai.
From 1902, the prospect of opening an Indian post office in Kuwait was posed. It was opened in January 1915. The Indian postage stamps were introduced in Kuwait on April 1, 1923.
By contrast, the Indian post office in Muscat had been open since 1864, In 1944, Indian postage stamps had been instituted in Muscat, in celebration of the bicentenary of the Al Bu Said dynasty which controlled Muscat and Zanzibar.
All these countries used the Indian currency in conjunction with the Maria Theresa Thalers.
The multiple divisions of the British Indian currency were assisted by payments at all levels of exchange. The rupee equaled 16 annas, 1 anna equaled 4 pices and each pice was divided into 3 pies. This currency is one of the international standards used not only from Burma to Balouchistan, but also in the whole Persian Gulf along the Arab Coast to the end of Kuwait and Bahrain to Aden and British Somaliland, to Zanzibar and on the eastern African coast, in Mauritius and the Seychelles and also in Iraq until 1932.

Indian Independence and Its Consequences

Oil production had started in 1933 in Bahrain, while World War II had postponed the exploration of deposits found in Kuwait in 1938. Likewise in Qatar, the oil found in 1939 was not explored until 1947.
The coastal states had spread since the recognition in 1921 by the British of the separation of Ras Al Khaimam and Sharjah and in 1936 by the separation of Kalba and of Sharjah. Kalba returned to Sharjah in 1951. After April 1947, it was the British Foreign Office that had retaken political control of the Persian Gulf Emirates. When Indian Independence arrived on August 15, 1947, the postal administrative control based itself in Karachi, and it was Pakistan that would take the provisional title in the following months to manage the offices in Kuwait, Bahrain, Dubai and Muscat.
On April 1, 1948, the British postal administration regained control of these offices and the English stamps changed into Indian currency were used at this time.
The Indian rupee was not convertible, an "external" convertible rupee was installed in this zone. It had the same value as the Indian rupee, but was only convertible in certain well-controlled locations. In 1957, the Indian rupee and therefore automatically the external Indian rupee were marginally simplified. It was henceforth divided into 100 "naye" paises ("new" paisas).
This monetary system coexisted with the circulation of Maria Theresa Thalers and old silver rupees from British India. The Sultanate of Oman and Muscat, which had printed the quarter anna and the 1/12 anna, issued the Baisas (Paisas) at the end of 1946 and also the silver rial in the province of Dhofar in 1947.

Development Until 1966

Among the Trucial States, the British recognized the separation of Fujeirah and Sharjah in 1952. The former empire of the Qawasim (Sharjah and Ras Al Kaimah) was broken up.
In July 1962, Abu Dhabi began offshore oil production, and in October 1963 onshore oil production. In 1955, the Sultan of Muscat and Oman took over the administration of the imamate of Oman inside the country. It was followed by a war four years later. In 1964, oil was found in a desert zone behind the "green mountains" of Oman. It was drilled at the end of 1967.
Bahrain was the most politically developed country in the region, but as Kuwait was being menaced by Iraq, it was necessary for Kuwait to achieve independence. In 1958, shortly before the Iraqi revolution, the United Kingdom promised the Prime Minister of the Iraqi Kingdom that they would hand over Kuwait. The establishment of a nationalist republic in Iraq precipitated the movements for independents in Kuwait.
This independence was sealed by an exchange of letters between the Emir of Kuwait and the Government of Her Majesty ending all exclusive agreements of earlier monopolies.
Independence was immediately followed by the sending of troops to protect Kuwait from Iraqi threats.
Kuwait then chose its currency: the dinar divided into 1000 fils. In August 1950, the British postal administration opened an office in Doha, Qatar which used British stamps altered for the Sultanate of Oman and the Trucial States, in other words Eastern Arabia. In February 1956, a post office was opened in Umm Said which would become the industrial center of Qatar.
After January 7, 1961, Dubai also used a series of stamps issued with the label "Trucial States".
On August 1, 1957, Qatar used British postage stamps equipped with a special alternation of the emirate.
The British stamps used in the Indian currency of Eastern Arabia do not bear the mention of any state in the region. On March 30, 1964, the British opened a post office in Abu Dhabi that used the same stamps of Eastern Arabia. In short, these stamps were used from 1948 to 1957 in Qatar, Dubai and Muscat; from 1957 to 1963 in Dubai and Muscat; and 1963-64 in Abu Dhabi and Muscat and from 1964 to 1966 in the Sultanate of Muscat and Oman solely.
After March 30, 1964, the British issued local stamps for Abu Dhabi. The British post would not leave Abu Dhabi until January 1, 1967.
It left Qatar on May 23, 1963; Dubai on June 14, 1963; Bahrain on January 1, 1966 and the Sultanate of Muscat and Oman on April 30, 1966. Elsewhere, the independent postal administrations were opened in Sharjah on July 17, 1963; in Ajman on June 29, 1964; in Fujeirah on September 27, 1964; in Umm Al Quwair on June 29, 1964 and in Ras Al Khaimah on December 21, 1964. At the close of 1965, Sharjah issued postage stamps for Khor Fakkan and the other coast of the peninsula.
On July 5, 1966, Ajman printed separate postage stamps for Manama. If Abu Dhabi, Bahrain and Muscat and Oman printed stamps of obvious moderation; then Qatar, Dubai and five Trucial States in the north printed stamps with riskier themes.
The contemporary series and the commemorative series of local events remained interesting.
During this period, Bahrain and Dubai were largely developed and the external Indian rupee was still in use.

The Devaluation of the Indian Rupee in June 1966

The 36% devaluation of the Indian rupee decided by Indian Prime Minister Indira Gandhi on June 6, 1996, influenced the lowering of the convertible "external" Indian rupee.
It was necessary to establish a new monetary system without delay in Bahrain, Qatar, The Trucial States and Muscat and Oman.,
Bahrain divided its dinar into 1000 fils when economic considerations warranted discretion between oil revenue and that of commerce. On August 14, 1971, Bahrain became completely independent by the mutual denunciation of treaties that placed it under the British domain.
The problem was much more arduous for the other less economically advanced states -- particularly Abu Dhabi and Dubai. Dubai was a strong commercial center, whereas Abu Dhabi had remained a Bedouin emirate.
Moreover, on August 6, 1966, the English ousted the conservative emir of Abu Dhabi in order to replace him with Sheik Zayed bin Sultan Al Mahayan. The last war between Abu Dhabi and Dubai occurred in 1947.
Following the Indian devaluation, Abu Dhabi rejoined the Bahrain dinar as had Dubai, and the northern emirates used a provisional Saudi riyal, On September 18, 1966, Qatar, Dubai and the Northern emirates of the Trucial Coast introduced the Qatar/Dubai rial divided into 100 dirhams. The operation was eased by the good relations that existed between Sheik Rashid Al Maktum of Dubai and his father-in-law Sheik Ahmed Al Thani of Qatar. Coins were issued to 50 dirhams and bank notes from 1 to 100 rials. By 1964, Sharjah had printed a 5 rupee silver coin in the commemoration of President J.F. Kennedy. By the close of 1969, Ajman, Fujeirah and Ras Al Khaimam, and in 1970 Sharjah and Umm Al Qiwain proceeded with the issued of commemorative coins theoretically pegged to the Qatar/Dubai rial (and the quasi-exclusive use of collectors.) These coins would not be circulated as regular currency.
Petroleum exploration did not start until August 1967. Until the deposition of the country's sovereign by his son on July 23, 1970 in Salalah, the country would keep a convoluted monetary system composed of local currency in Baizas, postage stamps in baizas and rupees, the former silver rupee from English India, the Maria Theresa Thaler as well as the different foreign currencies. The province of Dhofar was in a state of rebellion that had been brewing since 1965.
The introduction of the Saudi Riyal ( the name of the royal family) divided into 1000 baizas had resolved the 1970 problem.
By 1970, the Oman postal service took flight. An office was opened in Salaleh in 1970; in Bait Al Falej, Matrah, Mina Al Fahal, Sohar, Sur, Nizua and on the island of Masirah in 1971 and in Ibri and Samail on April 10, 1973.
The 1966 devaluation and the introduction of the Qatar Dubai Rial marked the beginning of a new postal administration in Qatar and the Trucial States, the need to change the new different stamp values would proceed.

The Change in Stamp Values of 1966 and 1967

The Abu Dhabi stamps changed into Bahrain Dinars did not present any identification problems. It was not the same in Qatar, Dubai, Sharjah, Ajman, Umm Al Qiwain, Ras Al Khaimah and Fujeirah in Qatar/Dubai rials because the postal administrations had produced far too many stamps. One should discern the overproduction of thematic stamps from the ordinary stamps or those that concern events and the local anniversaries that are not without interest.
Qatar: Let us discuss the October, 1966 stamps with the change in values from the contemporary series of 11 values originally printed on September 2, 1961. Other series were altered like the "fish" series (17 values) of October 31, 1965; the "Education Day" series of October 10, 1966 (10 values) which was already printed before and did not serve in practice after the change; the UIT series of September 16, 1965 (8 values + non-serrated+ block); the same already altered "Meeting in Space" series of February 9, 1966; the famous adhesive series from the Gulf Monetary Conference of February 24, 1966 and the "astronaut" series of August 20, 1966. The Qatar stamp program had issued two series -- a 14 value series went on sale in November 1966 for collectors of the former currency. The series was printed on November 10, 1966 and the other "World Cup" series was printed on November 27, 1966.
We should also mention that the "Kennedy" series of six values printed on July 18, 1966 with the former values was changed to the new values in the serrated and non-serrated versions.
Dubai: The philatelic program in Dubai was also in the course of printing which the financial events of 1966 struck. On May 30, the new series of 14 stamps came into being. During this year, the notably more sizable production of stamps had a direct relation with economic and political circumstances: oil exploration, the Gulf Arab States Summit, international cooperation with neighboring states and allies. Two series were changed with new values: the May 30 series had been changed into new values in 1967 with the exception of the 1.5 rupee (therefore thirteen values), and the series marking the year of international cooperation on November 5, 1967 and the January 14, 1967 series with the new change in currency (10 values).
Sharjah: Sharjah was thrown into excessive stamp production with various series and partial series.
- the running series of 12 values (comprised of air post) printed on September 1, 1965 with the effigy of Sheik Saqr, dropped, canceled in three large blocks in London (values in dirhams and riyals);
- the three stamps of the UIT series of September 25, 1965 updated into 10 piastres of 50 np, 16 piastres on 120 np and one Riyal of on rupee in connection with the Saudi currency -- the piastre was another name for the guerche;
- five stamps of the series marking the year of international cooperation printed on February 25, 1966 were changed into values of 1,2, 4, 6 and 10 piastres in connection to the Saudi currency;
- further, there was the same "Kennedy" series (3 values) on November 22, 1964 and the "Churchill" series of February 28, 1966.
- the numerous other updated series in dirhams and Rials of Qatar/Dubai: the "fish" series of 17 values, the "monetary" series of 6 values, the "science,transport and communication" series of 20 values, the "Tokyo Olympic Games" series of 8 values, the "Pan-Arab Games" series of 5 values, as well as three "pigeon" stamps of 20 dirhams on 30 naye paises, "local scenery" of 20dh on 20np, and "campaign against hunger" changed from "meeting in space" 30 dh on 30 np on 2 np.
The other series were announced as having been changed with the new currency by the American stamp promoters of the region. Exactly the same political circumstances applied to Khor Fakkan on the stamps printed in this parallel dependence to Sharjah.
Three stamps from the 1965 UIT series, 5 stamps from the "year of international cooperation series", the "rose" series of 6 values and the 1966 "Churchill" were updated into Saudi currency.
The "Pan-Arab Games" series, "fish", "Washington stamp exposition" and the last update for the fourth anniversary of Kennedy's death were changed into dirhams and Qatar/Dubai rials.
Ras Al Khaimah: Ras Al Khaimah has always tended more towards independence than its neighbors. It reacted adversely to eviction of Emir Saqr of Sharjah in 1965. Its first step as an independent state was to form a currency, not only that of Saudi Arabia, but the Bahrain Dinar as well. In the 19th century, the Saudi Kingdom had razed the villages of Ras Al Khaimah. The memory remained. Several stamps were printed in Bahrain fils: the first running series in 1964, the "Churchill" series,"UIT","Kennedy", and "International Cooperation".
Afterwards, "Ras Al Khaimah printed the following series in Dirhams and Qatar/Dubai rials; the first series began in 1964 (8 values), the "UIT" series and block, and "International Cooperation" and block and non-serrated.
Ajman: Ajman launched its first 18 postage stamps in 1964, as well as service stamps, air post and air service in the same year. The "Space Research" series (10 values), "Kennedy"(8 values), and "Tokyo Olympic Games" (10 values) were also printed in dirhams and Rials but these issues were excessive. Manama had seen its postal service open its doors on July 5, 1966 with four Ajman stamps sold in Dirhams and Rials (40d, 70d, 1R, 5R, 10R.) It was followed by a five-stamp series featuring Kennedy in new values (10 and 15d, 1,2 and 3R.)
Fujeirah: The emirate sold its first series of stamps in 1964 in dirhams and rials: the edition ran in service, air post, air service, as well as nine values for the Tokyo Olympic Games. Moreover, it was followed by the "Churchill" series (8 values with two air stamps), "Kennedy" (10 values), "Cairo Exhibition" (9 values plus block), "Space" (8 values plus block.: The last series was excessive.
Umm Al Qiwain: The first series was dispensed in dirhams and Rials (post, air post, service, air service). The other series were sold as follows: "UIT" (9 values), "Tokyo Olympic Games" (7 values plus block), "Kennedy" (8 values plus block), "Churchill" (10 values plus block), "Cairo Stamp Exposition" (10 values plus bloc). These later series are less interesting.

It might be interesting to finish this essay with a slight digression on the particularly excessive issues in some of the countries.
In 1970, the emirates of Fujeirah and Umm Al Qiwain were distinct with their American stamp agent Finbar Kenny, who was in charge of all issuance of all motifs. The same year, Umm Al Qiwain rejected the validity of the 1964 Tokyo series and supplanted it with the Napoleon bicentenary series (7 values serrated and non-serrated plus blocks). Umm Al Qiwain also signified that Mr. Kenny's contract had been nullified, and the first series issued after the contract was the Apollo 7 at the end of 1969.
The same year, the emirate of Fujeirah announced a similar decision relating to its relations with Mr. Kenny and the contract which was signed with the postal administration. A pre-contract signed with the Middle East Stamp Co SAL of Beirut was not ratified and different press reports announced the mutual decision to annul the contract in June and July 1970. The discredit relating to these thematic stamp issues was total. By August 1, 1972, only the postage stamps of the United Arab Emirates were valid in Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman and later in Fujeirah and Umm Al Qiwain
The British Exit from Eastern Suez
As we have already seen, it is the devaluation of the Indian rupee in June 1966 that forced the countries of this region to find a proper monetary system. If it was simple for Bahrain, it was difficult for other countries which were not as well prepared. Qatar, very bound to Dubai, as its emir had married the sister of the emir of Qatar, discovered the solution in the Qatar/Dubai rial. Abu Dhabi and Ras Al Khaimah sought to tie themselves to the new currency in Bahrain. Only Abu Dhabi, with its fledging oil production would succeed. The Sultanate of Muscat and Oman, poor and without resources (10km of pave roads for 212, 000 km2) kept the Indian rupees as stability against the prospect of complete monetary disorder.
The announcement of the British decision to depart East Suez rendered an organized political system all the more important to the region.
The Sultanate of Muscat and Oman had always held independent jurisdiction and development restrained the political and economic changes made possible by the production of oil that began in August 1967. After having dethroned his father on July 23, 1973, Sultan Qabous bin Said Al Bu Said changed the name of the country to the Sultanate of Oman on August 9, 1970.
The Saudi Riyal introduced in 1970 is a modern currency that for the first time was issued in national bank notes. In 1972, the Riyal, still broken into 1000 Baisas was rebaptized Oman Rial. The bank notes labeled Sultanate of Muscat and Oman are then replaced by those marked Oman Currency Board, then in 1977 by those market Central Bank of Oman.
Oman became a member of the United Nations in 1977.
At the end of the 1970s, all societal uprisings ended in Dhofar. The motifs bearing the label "Dhufar" issued by certain groups in association to various exiled rebels were never used. On the contrary, the motifs marked "State of Oman" and issued by the government in exile of the imamate of Oman -- in fact imam Ghalib was in refuge in Cairo --had served as official post placed in circulation by the postal administration in the Jordanian Kingdom in Amman under the auspices of the accords binding the member states of the Arab Postal Union before September 1971. Oman did not become a member of the Arab League and was considered by the other Arab countries as an independent Arab country.
The decision by Britain to leave East Suez presented a different problem for Bahrain, Qatar and the Trucial States.
On February 27, 1968, an agreement was signed between these emirates to form a federal constitution. However, Bahrain had a more urbane mentality in addition to being more politically advanced. Bahrain was under the influence, not solely of the reigning Al Khalifa family, but also and more importantly wealthy business interests. Bahrain would have difficulty belonging to a group of new oil emirates in a traditionally structured society. His Highness Isa bin Sulman Al Khalifa, Emir of Bahrain, proved this point. The independence of Bahrain influenced Qatar, which was very jealous of Bahrain. The independence of Qatar would influence the obligation of Abu Dhabi and Dubai to reconcile to create a federation with the small states in the north on the Trucial Coast.
It was on August 14, 1971 that Bahrain and Great Britain denounced the conventions that they had heretofore agreed. Qatar did the same on September 1 of that same year. Bahrain had been using a solid currency after 1966. Qatar waited until May 19, 1973 before introducing the Qatar rial divided into 100 dirhams and replacing the Qatar/Dubai rial.
On February 22, 1972, the real Emir of Qatar had deposed his cousin Sheik Ahmed bin Ali Abdulla Al Thani. He had already been deposed of all powers under the title of "Deputy Ruler". The accession of Sheik Khalifa bin Hamed bin Abdulla Al Thani marks the restoration of the Hamidite branch of the Al Thaniw, excluded from the throne in 1949. At this time the Emir of Abu Dhabi, Sheik Zayed bin Sultan Al Nahayan, President of the new federation and the Emir of Dubai, Sheik Rashid bin Said Al Maktum, vice-president of the new federation of the United Arab Emirates saw the light of day. The "external" treaties and the different established monopolies, were denounced by the United Kingdom and the seven emirates. The Federation of United Arab Emirates was established on December 1, 1971 with six emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Qiwain and Fujeirah. Ras Al Khaimah tried to stay independent and did not rejoin until February 15, 1972.
Despite the occupation, on November 30, 1971 the Tumbs Islands and Abu Musa, had been convinced by the Shah of Iran of the solidity of their its regime and the fragility of the new federation, and despite the assassination of the Emir of Sharjah, Sheik Khaled bin Muhammad Al Qassimi on January 25, 1972 by his predecessor Sheik Khaled, deposed in 1965; the United Arab Emirates were to have prodigious and enviable stability. Sheik Khaled had been replaced by his brother Sheik Sultan on the throne of Sharjah. The United Arab Emirates would launch a new level of currency on May 19, 1973 with the Dirham divided into 100 fils.
From 1972, this currency was already used on postage stamps. The brief transition was made easier by the quasi-parity between the Bahrain dinar and the new dirham of the federal Emirates. The Bahrain fils was worth a former dirham of Qatar/Dubai or a new fils of the United Arab Emirates.
On October 7, 1990, the Emir of Dubai, Sheik Rashid bin Said Al Maktum, died: a page in the commercial development of this emirate since 1958 had turned.
On February 1, 1994, the Bahrain dinar was worth close to 95 Fb, the Qatar rial 9.85 Fb, the United Arab Emirates Dirham 9.88 Fb and the Oman Rial close to 93 Fb.

Note: This essay is a record dating from December 1990 that was published in 1991 and 1992 in four specialized publications in Brussels.

Of the numerous historical works consulted, the philatelic studies of Neil Donaldson are worth noting:

The Postal Agencies in Easter Arabia and the Gulf, published in 1975 by Harry Hayes, 280 pp.

as well as his published articles in the former publication Stamp Collecting:
India and Pakistan Gulf Agencies:
Gwadur 28. 5.70,
Dubai 18.6. 70,
Bahrain 29.10.70,
Muscat 24.10.70,
Kuwait 28.1.71
British Gulf Agencies:
Bahrain 28.9.72,
Kuwait 12.10.72,
Dubai 17.5.73,
Muscat 31.5.73
Qatar 12.7.73
Abu Dhabi 11 and 18.10.73,
Round up 11.4.74.

Chaos in the catalogues! 30.5.73
The bars of Abu Dhabi 8.6.72.

March 1994


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