File 3877/1912 Pt 3 ‘Turkey in Asia: oil concessions’ [‎216r] (197/372)

Sir L. Mallet to Sir Edward Grey .—{Received July 3, 6-30 p.m.)
Constantinople, July 3, 1914.
(July 3, 6 p.m.)
(No. 405.) R.
YOUR telegram No. 292
Company could in any case be called upon to constitute itself as Societe anonyme
ottomane, and tins cannot be disputed. In view of extent of enterprise, I consider
that presence of Turkish director on the board might be mutually advantageous, but
it is in any case a minor point.
In anticipation of difficulties in this connection, I have already drawn up, in
conjunction with my German colleague, formula of reply in the sense of my
telegram No. 393 , adding that, in view of arguments therein expressed,
possibility of having to indemnify any third persons seems to me to be excluded,
unless there should be interested parties with whom Ministry qua concessionnaire had
entered into any special engagements, which engagements could in the circumstances
only have a temporary character. This addition is to cover any claim in respect of
local lease of oil wells for short periods, some of which company might allow to expire
normally.
It is possible that company will in the end have to [group undecypherable :
? grant] some indemnity, but this is a matter for after-negotiation in my opinion, and
in that of Whittall and Stock, with whom I discussed this question yesterday. Copy
of this note goes to you by post this afternoon.
Grand Vizier has referred in conversation to some decision of Council of State
declaring original firman A Persian word meaning a royal order or decree issued by a sovereign, used notably in the Ottoman Empire (sometimes written ‘phirmaund’). granting concession illegal, but his official reply to identic
notes of German Ambassador and myself asking for lease states that Ministry of
Finance, finding itself substituted for Civil List in respect of oilfields, grants lease to
company. No mention is made of any decision of Council of State, precise effect of
which it is difficult to estimate, but it may be presumed that Ministry do not attach
much importance to it in view of terms of their reply. This gives one good ground
for regarding Council as an advisory body. It would of course be impolitic to consult
Turkish authority on the subject.
In any case position of His Majesty’s Government up to date of this decision is
unassailable, because until that time the validity of the firman A Persian word meaning a royal order or decree issued by a sovereign, used notably in the Ottoman Empire (sometimes written ‘phirmaund’). was never for a moment
disputed. I would, moreover, refer you to your letter to Silley’s lawyers enclosed in
your despatch No. 321 of 21st May, in which they were told that Silley, in any case,
has no claims. The memorandum enclosed in my despatch No. 354 clearly shows
weakness of Silley’s case.
Whittall anticipates that negotiations between company and Government will
take a long time, and that great patience will be needed to bring them to a successful
conclusion.
If you desire to retain lever of monopolies agreement, it will not be possible to
sign it for some weeks or even months.
I would strongly deprecate conveying any more threats to the Grand Viziei at
present.