File 2764/1904 Pt 5 'Baghdad Railway: Anglo-Turkish negotiations; concessions proposed in respect of Kowait; negotations with Hakki Pasha in London; Anglo-Turkish agreement.' [‎250r] (524/536)

'O
j '/“ a documeniis the property 0 / t7 ie Secretary 0 / State / or /lidig i w Coun cil.
Secret.
Bagdad-Basra Railway.
T. The present position.—kt the interdepartmental conference of 30th
March 1911, Sir E. Grey proposed that we should ask for 50 per cent,
participation, and a memorandum for the Turkish Government was prepared
on this basis. On the 7th April 1911 the Board of Trade wrote that there
were “only two practicable policies” (1) “ to participate in the working of
“ tlie southern section on terms of equality with Germany, but to the
<c exclusion of all third parties as regards control,” and (2) to refuse
participation altogether. No further communications passed between the
departments on this subject, but on 12th July 1911 a draft memorandum to
the 1 urkish Government was privately communicated to 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. .
1 his memorandum contained the proposal, which was actually made to the
Turkish Ambassador on 29th July 1911, that Great Britain, Russia, France,
Germany, and Turkey, should participate at the rate of 20 per cent, each,
and that a convention should be drawn up precluding differential rates on
all the railways of Asia Minor. The Turkish Government replied on 15th
April 1912, not expressly rejecting this proposal, but substituting 25 per
cent, participation for Great Britain, France, Germany, and Turkey, to the
exclusion of Russia. But in the private discussions that preceded the
despatch of this reply the Turkish representatives more than once stated in
the strongest terms their objection, on political grounds, to the inclusion of
Russia, and said that if His Majesty’s Government pressed it they would be
obliged to insist on the admission of Switzerland. This His Majesty’s
Government would of course not be able to accept, for it would strengthen
the Bagdad Railway Company’s interest at our expense. Russia, it will be
borne in mind, has said that, while she only wants to help us, she wants to
be admitted if France is admitted.
The Turkish counter-proposal of 15th April 1912 is therefore not a mere
modification of our own, but, in effect, a complete rejection of it. A new
situation is thus created, and it is submitted that in the circumstances His
Majesty’s Government are bound to consider it on its merits, and that it is
possible for us, without doing any violence to diplomatic conventions, or
giving any just cause of offence to Turkey, to treat our proposal of 29th July
1911 as completely out of court, and to substitute for it a better one, if such
can be found.
It may be conceded that as we have actually proposed the admission of
France and Russia our position is no longer as strong as it was for proposing
their omission. But here the Turks have fortunately helped us. For if
Russia insists on participating in the event of French participation, while
Turkey will admit France but not Russia, the result is a deadlock of wdiich
the only solution is the omission of both.
The following considerations are intended to show that the proposal
of 29th July 1911 should not be pressed, and that the terms which Sir
E. Grey originally wished to put forward are, as the Board of Trade held,
the only ones on which we should now consent to participate.
II. The objections to the last proposals made by His Majesty's Govern
ment .—The view underlying those proposals is that, provided we can secure