SECRET
THE GULF
55. There could be severe damage to our commercial and political interests if the arrangements whereby British Service personnel are loaned to the oil producing states of Kuwait (20% of our oil imports) UAE (5.4%) and Qatar (4%) were terminated: all three states pay the full cost of these loans. Defence sales contracts with Kuwait worth £166 m and UAE (£24 m) would be imperilled. 56. The withdrawal of the British Military Assistance Team in Sharjah (one of the states of the UAE) could be executed without military or political repercussions. The formalities would be straightforward. Reassurances on the loan of British Service personnel at the time of declaration would be helpful in presenting it to the Rulers. It would not be necessary to consult other countries in the area.
57. The Iranians attach importance to naval exercises with us and would not take kindly to their cessation (there are substantial defence sales prospects with the Iranian Navy worth £300 m). As for naval visits, while the ships are in the area they have to call at Gulf ports anyway for recreational purposes. However, naval visits per se could be cut out without difficulty though this would not save much expenditure:
it would not be necessary to declare this
decision to the Gulf States, none of which have held us to our 1971 undertaking of 4 visits a year.
CONCLUSIONS:
OMAN AND THE GULF
58. A) The implications of ending our support for the Sultan would be the possibility of his replacement by a hostile regime, a chain reaction in the Gulf States, damage to our relations with Saudi Arabia and Iran, an angry reaction by the United States and risks to our interests in the Gulf area.
3) Masirah and Salalah could be given up but this would require very careful handling.
C)
If we were considering ending our commitment to the Sultan, audi Arabia, Iran and the United States should be consulted before- hand.
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SECRET
/D)