'F 80 File 82/34 I APOC Concession' [‎202ar] (348/436)

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THIS DOCUMEMT IS THE PRO PERTY OF HIS B RITANNIC MAJESTY'S GOVERNMENT
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PERSIA.
CONFIDENTIAL,
[E 6518/3880/34]
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OONFtQWTIAL flEQOfm J
December 9, 1932.
S ection 1.
No. 1.
705) ^ ^ 0 ^ in ^ mon - — {Received December 9.)
^ r ' T -rj x ttu i Moscow, December 6, 1932.
, ^ ^ honour to report that the cancellation of the Anglo-Persian Oil
Uompany s concession has been recorded with considerable satisfaction by the
boviet press. An extremely partial review of the history of the concession
appeared m an article in the Izvestiya of the 2nd December.
vt \ This article begins by observing that the Anglo-Persian Oil Company,
like the Standard Oil and Royal Dutch Shell " forms one of the strongest props
of international imperialism, and plays a large political and economic role in the
system of the ^itish Empire, being closely linked up with the British General
btan, and it adds that the history of the company presents a " rare picture of
colonial rapacity." After describing the original terms of the D'Arcy
Concession, it remarks that these terms were only "conditionally " carried out,
and that the company emancipated itself from all central control, maintained its
own armed forces, and finding that its political privileges were restricted after
the war, attempted in 1924 to raise the local tribes against the Central Govern
ment. The increase in production and in capitalisation of this "giant of the
present-day " oil industry is recorded, and the article then observes that in spite
of the company s vast income it attempted to reduce the royalties payable to the
Persian Government by means of the " virtuous practice of writing down "
capital and profits, and by reckoning its investments in Allied enterprises as part
of its overhead expenditure. The company is then accused of having
systematically infringed '' the subsequent agreement (the Armitage-Smith
Agreement), which it was obliged to make after its first large scale conflict with
the Persian Government in 1920. Notwithstanding the decrease in the company's
production in the current year of 600,000 tons compared with the previous year,
the Izvestiya suggests that its profits were employed in further investments so as
to reduce the surplus available for the calculation of royalties payable to the
Persian Government, and quotes the statement of the chairman of the company
at the last general meeting to the effect that the " previous year's working showed
the exceptional financial strength of the company." In these circumstances, it
adds, the reduction in royalties provoked new criticism in the Persian press and
demands for the annulment of the concession.
3. The concluding paragraph of this article, of which I enclose a translation,
supports the action of the Persian Government in cancelling the concession,
suggesting that^ its existence is incompatible with the Persian Constitution. It
adds that the '' decision of the question does not lie within the scope of legal
formulas, but depends upon the interplay of political forces," and applauds the
cancellation as an act of considerable courage " that was only possible owing to
the decline in the prestige of the British Empire.
4. I am sending a copy of this despatch to the Department of Overseas
Trade.
I have, &c.
ESMOND OVEY.
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Enclosure in No. 1.
Extract from the Izvestiya of December 2, 1932.
(Translation.)
WHAT does the annulment by the Persian Government of D'Arcy's
Concession really mean ? The telegraph agencies are already reporting that the
English Government denies the possibility of annulling or re-examining the
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