File 3516/1914 Pt 13 'German War: Persia; Saulet and Kawain; quarterly adjustment with Foreign Office' [‎41r] (87/406)

Persia :
Division of Charges.
J. In August 1916 the Secretary of State laid before Council a note (P. 3839/16)
prepared m the Political i)ep_artinent, giving information as to existing relations
between the Government of India and the Home Government in relation to Persia
Persian policy and Persian expenditure. The note described the general position as
In 1S9J the Government of India described Anglo-Indian interests in Persia as
commercial, political, strategical and telegraphic. Much of the British
trade, particularly in the south and east, is with British India, while the
north and west avenues of entry are devoted in the main to commercial
connections with the British Isles. The political interests of Great Britain
in Persia, which, at their revival a century ago, were mainly Indian in
inception, are still largely Indian in character. The strategical interests
arise from conditions with which India is most intimately concerned, and in
lecent ^ yeais I eisia (and especially Southern Persia) has assumed a
strategical importance in relation to British India which tends to increase
rather than diminish. The telegraphic interests may be said to be equally
divided between the mother-country and India. The Consular officers in
Southern Persia (and at Meshed) are, by agreement with the Foreign Office,
_ members of the Indian Political Department, and in their political capacity
report to the Government of India.”
2. In paragiaph 242 of the Report of the Indian Expenditure Commission
(1900), better known as ^ the “ Welby Commission,” the following opinion was
expressed : The two Governments are not agreed as to the extent of their
“ respective interests in Persia. It is, in our opinion, desirable to adopt a general
principle of division which will put an end to these discussions. Both countries have
“ admittedly a large interest in Persia, and we think that the charges of the Mission
“ and Consulates should be evenly divided between the two countries.” The reason
why this principle was applied to diplomatic and consular expenditure only was
presumably because there was at first no other charge necessitating a division. From
1890 to 1900 India had contributed a moiety of the Karim subsidy (2,0001 per
annum), but,- on the recommendation of the Welby Commission (Report, para
graph 246), the whole subsidy was, after 1900, defrayed Rom Imperial revenues as
a set off to the Baghdad-Basra mail subsidy paid by India.
3. Since 1900 the principle of equal division has repeatedly been put into practice.
Apart from interest-bearing loans to a very considerable amount, in all of which we
took our share, we have frequently contributed towards expenditure forming no part
of the “charges of the Mission and Consulates,” c.r/., (1) we paid half the expenses
of the British section of thq Turco-Persian Frontier Commission, and even shared in
the compensation paid to the Secretary to the British Commissioners (a Foreign
Office officer) for injuries sustained while on duty; (2) we have shared the monthly
advances made to the Persian Government under the so-called “Moratorium ” scheme,
and also (3) certain payments made to the British Minister at Tehran for secret
service purposes ; and (4) we have contributed to various subsidies paid to different
individuals and tribes in Persia, both before and during the present war.
4. The question of the incidence of Persian charges was carefully re-examined
in 1917 in connection with the cost of the South Persia Rifles and of the Seistan
Levy Corps. It w r as exhaustively discussed in a Memorandum prepared by the
Financial Department of the India Office The department of the British Government to which the Government of India reported between 1858 and 1947. The successor to the Court of Directors. (dated the 15th September 1917), of which
a copy is annexed to this Note. The conclusion reached avus that, while the cost'of
the levies raised in Seistan Avas properly chargeable to Imperial revenues, as forming
part of expenditure on military operations in Persia, 1 the cost of the South Persia
Rifles, of subsidies and loans during, the Avar, and of secret sendee expenditure, so
1 Under the terms of the Parliamentary Resolutions of November 1914, Imperial revenues bear all
the " extraordinary ” charges of Indian troops employed on military operations out of India.