File 1855/1904 Pt 10 'Koweit:- Relations with Turkey. Sheikh's properties at Fao and Fadaghia' [‎4r] (7/398)

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[This Document is the Property of His Britannic Majesty’s Government]
EASTERN DEPARTMENT.
SECRET SERIES.
[July 29.]
Section 1.
[28300]
No. 1
Memorandum communicated to the Turkish A mbassador, July 29, 1911.
(Confidential.) . ,
HIS Majesty’s Government have not failed to give their caretul attention to tire
important proposals contained in the memorandum of the 1st March last fiom t e
Ottoman Government. . , .
These proposals, though they affect interests so closely interwoven that they
cannot be settled independently the one of the other, have, for the purpose of
convenience, been set forth under three distinct headings :
(i.) The Bagdad Railway question. . . .
(ii.) The respective interests of Great Britain and Turkey in the region of the
Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. . . ,
(iii.) An increase from 11 per cent, to 15 per cent, ad valorem m the lurkish
customs duties.
(i.) The Bagdad Railway Question.
On various occasions His Majesty’s Government have indicated the conditions
under which they would favour the participation of British capital in this enter pi ise ,
and while it is not now proposed to recapitulate the earlier stages of this question,
it may be recalled that in July 1910, as a result of prolonged discussions with the
Ottoman Minister of Finance who was then in London, it was intimated that an
arrangement securing to British interests a representation of 55 per cent, ot the
whole in regard to the Gulf sections of the line might be regarded as a satisfactory
solution,—and, having regard to the great preponderance of certain interests m other
sections of the line, such a proportion cannot well be looked upon as excessive,
especially if the great extent of British trade in those regions and the vast tonnage
of British shipping are borne in mind.
Since the arrangement laid before Djavid Bey represented a large measure
of concession on the part of His Majesty’s Government, they have received the
suggestions now made by the Ottoman Government with some surprise.
The Turkish proposals for the final portions of the railway are that a new
company should be formed, and that the capital should be divided between the
Ottoman Government, who would receive 40 per cent, of the whole and British,
French, and German groups, who would each receive 20 per cent. The details of
the financial arrangements are left for subsequent settlement between the parties
i^eiHif Majesty's Government regret that they are unable to accept these proposals.
If a new company is formed for the construction and working of the railway south
of Bagdad, and if it is to be constituted upon an international basis, His Majesty »
Government can only accede to such an arrangement provided that British mtei ests
are represented in a degree at least equal to that of any other Power including
Turkey and, in order to effect this and with a view to emphasising the international
and commercial character of the undertaking, they would suggest that, Russia should
be admitted to participation and that the percentage allotted to each country should
^ ^Assuming that this distribution is adopted, His Majesty’s Government consider
that a Convention should be concluded by the Powers concerned P^dmg lor the
exclusion of differential rates on any railways m Asiatic Turkey and for equality
of treatment in regard to transport facilities and cogna e ma eis_, or , '
of the railway south of Bagdad and the conditions under which it is to be constructed ,
for the introduction of approved financial arrangements tending to foster the develop
ment of traffic ; and for guaranteeing that the interest m the enterprise of the several
parties concerned shall be of lasting duration and not subject to termination on the
expiry of the Bagdad Railway concession.
[2123 f—1]