granted on more or less charitable grounds. Nor do we question the propriety of the payment by the 'Iraq Government of pension in respect of service rendered to the Turkish Government. But the large increase in the figure has led us to enquire whether any undue generosity is shown in the recognition of claims. We find that the date of His Majesty King Faisal's accession (August, 1921) is taken as the date up to which service under the Turkish Government counts for pension from 'Iraq, and that 'Iraqis who have qualified for pension by Turkish service are eligible for 'Iraq pension if they return and apply for pension within eight months of the ratification of the Treaty of Lausanne, that is to say, before April 7th, 1925. The necessary qualification for a pension is birth in 'Iraq, not service in 'Iraq; but the frequency of transfers from one part of the Ottoman Empire to another makes the application of any other criterion difficult. The decision that military service in the late war should count double for pension appears to us to err on the side of liberality; and the same criticism applies to the decision to allow service to the Turkish Government between the date of the Armistice and the accession of King Faisal to be reckoned for pension.

94. The Accountant-General advises us that a very substantial saving could be made by providing for a re-examination as to physical fitness, of persons drawing pension on grounds of disability, and for grants of land in suitable cases in lieu of payment of pensions. We understand that this would call for an amendment of the law. We recommend that the whole subject of the administration of the Pensions Law should be made the subject of examination by a special committee and we suggest that the High Commissioner should be asked to nominate a member of the committee in order that advantage may be taken of the experience of the British Government in pension administration, which would, we think, be of substantial assistance to 'Iraq. The appointment of a special committee was recommended by the Economies Committee of 1922, but we are not aware that effect was given to this recommendation. Any laxity in the administration of the Pension Law is an expensive luxury, and is calculated to exercise a corrupting influence.

We should look for some reduction in the annual charge for pensions, but we realise that much of this can only be realised after the law has been amended. For the present we recommend that the provisions of the law should be strictly observed, and that any extension of them, whether on the strength of resolutions of the Council of Ministers, or by Departmental practice, should be cancelled.

POLICE.

95. In 1924-25 the expenditure upon the Police Force was 70.46 lakhs, or 14.7 per cent. of the total budget expenditure, for a force of 2,761 mounted men, 3,124 unmounted men, and 569

officers (6,454 in all) This is a heavy burden, especially if it be remembered that the country maintains also an army of 9,000 men, and 1,159 qolchis, or armed revenue messengers, employed by the Ministry of Finance (800) and the Customs (359).

Due consideration must of course be given to the special circumstances of the country. The land frontiers are long and troubled. In parts there are social differences which are a disturbing factor. A considerable proportion of the population is still nomadic, and difficult to control. In the marshes of the Euphrates, on the fringe of the western desert, and in the northern hills, there are areas that are difficult of access, and inhabited by tribes which have a traditional disregard for the law. In general, the lawlessness inherited from Turkish days has not yet been wholly eradicated by stronger and better government. For all these reasons the maintenance and improvement of civil order must needs for the present be a chief concern of the administration, and involve special burdens.

96. Nevertheless, we see reason to doubt whether the most economic and effective use is being made of the forces of the country which are available to keep the peace. It appears to us that, for reasons of temporary expediency, the police are called upon at times to discharge duties which should properly be discharged by the military. We instance the special force which has been maintained on the Mosul frontier, during the recent period of tension there, at a cost of 1.80 lakhs per annum. The task appears to us to be one that prima facie should have been undertaken by the army. It is true that a policeman costs no more than a soldier, although it is the more expensive mounted policeman that is needed, and that the police unit ordinarily employed is smaller than the military unit. Nevertheless it is more economical to make use of the army for such purposes. The substitution of military for police involves no increase in military forces, and it makes it possible to reduce the police forces, or at any rate to avoid a part or the whole of the increase in those forces which is otherwise required as the arm of the law is extended to new areas. We recognise that the employment of military in small scattered posts is unwelcome to military authorities, and for good reasons. Especially in the case of a young army, it interferes with training, and with the cultivation of that esprit de corps and discipline which are their chief concern. But under the present financial stress, 'Iraq needs to get whatever immediate return she can from her big expenditure on the army.

97. In addition to the special temporary police force of 100 men in the Mosul area, for which, we are informed, it is proposed to include a provision of 0.3 lakhs for 3 months in the estimates for 1925-26, there are other frontier police posts in the area of about 256 men, costing about 1.8 lakhs per annum, which appear to us to be discharging duties that are properly those of the military. Were all these to be released by the transfer of their

duties to the military, they would be more than adequate to provide for certain demands for new posts that are put forward for the present year. These are in respect of Hamar Lake and Diwaniyah, and are estimated to cost one lakh.

Deducting this requirement of 1 lakh from 2.1 lakhs which might be saved by substitution in the north, it appears that the substitution would effect an economy of 1.1 lakhs in the budget for 1925-26, by the reduction of police forces.

Further requirements that have been put forward, for 1925-26, for police in respect of Amadia, and for intelligence work at Abughar, and estimated to cost 1.6 lakhs, could, in our opinion, more properly be fulfilled by the military, and no provision should be made therefor in police estimates.

We see reason to doubt whether the expenditure of 1.92 lakhs per annum on the Tel Afar camel corps is justified. The substitution of police would effect an economy of 1 lakh. From the point of view of financial policy, the allowances to Shaikhs estimated for in the budget for 1924-25 (Chapter 6, Section 4) at 2.28 lakhs, and re-included this year, are undoubtedly unsound, and should be discontinued. The same must be said of the allowance of 1.12 lakhs for local Shebana (Chapter 6, Section 3), for which police could be substituted at a reduced cost of about .5 lakhs.

98. The suggestions made above would, if adopted in full, result in relieving the budget of 1925-26 of expenditure to the amount of 6.6 lakhs.

We recognise that a decision on these suggestions involves questions of policy that are outside our province. We abstain, therefore, from making final recommendations thereon; but we venture to urge that a committee of the Council of Ministers should be appointed forthwith for the express purpose of considering economies to be effected by the substitution of military for police in suitable cases, and deciding upon the other specific suggestions made in this section.

DEFENCE.

99. In considering the prospects of arriving at a balanced budget in 'Iraq, we have necessarily devoted special attention to the expenditure of the Ministry of Defence. This chapter shows a higher figure than any other in the sanctioned estimates, and it is a growing figure. Actual expenditure in 1923-24 was 65 lakhs, in 1924-25 101 lakhs. The reduction of the "Treaty period" from twenty years to four, made by the Protocol of April 30th, 1923, has meant a complete restatement of the problem of defence; and there is no disposition to assume that the problem as restated can be solved without further increases in expenditure. We are not competent to express an opinion as to the military forces and technical equipment necessary for the defence of 'Iraq. During the period of our enquiry the Secretaries of State for the

Colonies and for Air have made a personal visit to 'Iraq, and have arrived, on behalf of His Majesty's Government, at an understanding with the 'Iraq Government, as to the military programme which will be carried out, and the financial assistance which His Majesty's Government will contribute towards it. We have taken the programme prescribed and the assistance promised as two of the data from which our enquiry makes its start, and have sought to discover what it will cost 'Iraq to conform to the programme.

In

100. We find that the actual expenditure of the Ministry of Defence for the year 1924-25 was approximately 101 lakhs, against an estimate of 118; but there was a carry-over of about 12 lakhs, representing a liability for stores on order, so that the true cost of the Army for the year may be put at 113 lakhs 1924-25 two new Infantry Battalions, (the fifth and sixth,) were started. In 1925-26 provision must be made for the running costs of these units for twelve months, instead of for shorter periods. On the other hand, the budget is relieved of the heavy initial charges in respect of them. The approved programme involves the commencement of another (the seventh) Battalion in September, and provision must be made for its initial charges and an appropriate proportion of running costs. There is to be a considerable addition to the number of British Officers attached to the 'Iraq Army, some in an instructional, some in an executive capacity. There is a carry-over from 1924-25 which seems to us to be abnormally large, and as we do not anticipate as large a one from 1925-26 into the following year, this means an extra weight on the budget.

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We think it prudent also to assume a large increase in the charge for rations for man and horse. On the other hand, the British Government will make a contribution of 12 lakhs towards the expenditure of the year on the 'Iraq Army. Taking all these facts into consideration, we come to the conclusion that 'Iraq can carry out the approved programme at a cost in the year 1925-26 of 147 lakhs, or, allowing for the British subsidy, 135 lakhs.

101. We do not ignore the fact that the figure at which we have arrived is a much lower one than that formulated by the Ministry of Defence as expressing their requirements. The Ministry asked for a provision of no less than 190 lakhs, and this before the formation of a new Battalion during the year was contemplated. We think that the Ministry of Defence has been affected by the habit of overestimating, to which we make reference hereafter (paragraph 106). But this will not account for the whole difference between their original figure (which was subsequently reduced) and ours. The reason for this difference is to be found in the circumstance that we have felt it our duty to rule out proposals for expenditure which are useful, and even perhaps ultimately inevitable, if they cannot be shown to be here and

now essential for compliance with the programme. We recognise that, if our recommendation is accepted, it will mean the disappointment, or at least the postponement, of hopes legitimately framed by the military authorities, and possibly an aggravation of the burden of defence expenditure in later years. But in view of the retrenchment and sacrifice of praiseworthy ambitions which we have found ourselves compelled to recommend in the case of other useful public services, we have felt that for the present only so much money must be expended on defence as is absolutely necessary to comply with the approved programme.

102. In 1926-27 provision must be made for the running costs of the Seventh Battalion for a full year. On the other hand the Budget will be relieved of the initial charges for that Battalion. Further, there will be an increase in the number of British officers employed, but the contribution of His Majesty's Government is to be increased to 18 lakhs. Allowing for these differences, we estimate the full cost of the defence programme for 1926-27 at 143 lakhs and the net cost, after deduction of the British grant-in-aid, at 125 lakhs.

OTTOMAN PUBLIC DEBT.

103. Special reference is made in our terms of reference to 'Iraq's liability in respect of the Ottoman Public Debt and we have carefully considered it. We are informed that the contributive share of 'Iraq (including the Mosul Vilayet) as determined by the Debt Council is as follows, in lakhs of rupees :

Thereafter there is a gradual reduction as loans are paid off, with one big drop of 9.75 lakhs after 1944-45 on the termination of the annuity payable in respect of the arrear period from March 1st, 1920, to August 5th, 1924.

'Iraq entered an appeal against the determination of her share by the Debt Council. The appeal has been heard and judgment has been given by the Arbitrator. At the time of writing we have not seen the details of his award; but we understand that he has decided that the question of the currencies in which the contributive parts in respect of various loans are payable falls outside his competence, and that consequently it is not possible to give an exact figure of 'Iraq's liability. We offer the opinion, with all reserve, that the following table might be taken as a reasonable estimate of 'Iraq's "Treaty liability."