'P. 4. 2410/1903. Persia:- Financial Situation. Loans.' [‎437r] (878/1026)

[This Document is the Property of His Britannic Maieatv's finvamnw i
PERSIA.
CONFIDENTIAL.
[31328]
[August 29.]
Section 16.
Mr.. O'Beirne to Sir Edward Grey .—(Received Auqust 29.)
(No. 350.) * /
Sir ’ ii x x , . St. Petersburgh, August 21, 1910.
ON the 16th instant, having received your telegram No. 438 of the previous day, 3<: 1
I called on the Acting Minister for Foreign Affairs and handed to him the aide-
memoire of which [ have the honour to enclose a copy (Enclosure No. 1) stating that
the Persian I^overnment had accepted the terms on which the Anglo-Persian Oil
(company proposed to make them a loan of 500,000/., and that the loan contract was
ready for signature. I enquired whether the Russian Government had any objection
to the company s agent in lehran being authorised to sign the contract without further
delay.
M. Sazonow said at once that in principle the Russian Government entirely approved ,
of a loan such as proposed ; and I may mention here that a good reason for their
welcoming an advance of money to the Persian Government by private firms is that it
removes the pressing need for an advance by the two Powers, in which as you are
aware the Russian Government agreed to join only in deference to the wishes of His
Majesty’s Government and to which the Russian Finance Minister in particular
consented with the greatest reluctance. M. Sazonow added, however, that the Russian
Government had this objection to the immediate signature of the loan contract, that
it would in their opinion destroy all prospect of the conversion of the debts due from
the Persian Government to the Russian bank.
Yesterday, his Excellency handed to me the memorandum of which I have the
honour to enclose a translation (Enclosure No. 2) giving the substance of a telegram from
the Russian Minister at Tehran on the subject of the proposed loan. M. Poklewsky, after
giving details regarding the proposed agreement between the Anglo-Persian Oil
Company and the Persian Government, expresses the opinion that from the point of
view of Russian interests it would be unquestionably desirable that the contract should
he postponed until the completion of the negotiations for the conversion of the debts
due to the Russian bank, “ to which ‘ conversion,’ he adds, “ the Persian Government
are to proceed one of these days.”
In handing me this communication, M. Sazonow remarked, that its concluding
sentence seemed to hold out some hope of the conversion of the bank debt being
carried through. His Excellency also called my attention to M. Poklewsky’s statement
that the company wished the surplus of the southern customs to be made part security
for the proposed loan, and he seemed to consider that this would he inconsistent with
the stipulation agreed to by His Majesty’s Government at the commencement of last
month, to the effect that both southern and northern customs should be security for
the joint advance then in contemplation by the two Powers. I said, in reply, that if
the oil company’s loan was concluded, I rather supposed that the idea of the joint
advance would be dropped. The question of the security for the latter would, therefore,
not arise.
I need not report to you the arguments which I have used to M. Sazonow on .
different occasions to show that the conclusion of the oil company’s loan would not in ;
reality be prejudicial to the conversion of the debts to the Russian bank. It is i
evident that the Russian Government wish to delay the company’s loan not because
it would in itself prejudice the conversion of the floating debts, but because by with
holding their consent to it they can bring pressure to bear to expedite the conversion
negotiations. I may point out, however, that if it came to a choice between a loan ■
being made to the Persian Government by a private firm, and the Russian Govern
ment being called upon to join in an advance, they would greatly prefer the former
alternative. It is possible, therefore, that if the Persian Government, in view of the
postponement of the company’s loan, now apply to the two Powers to carry out their
offer of an advance which is still open, the Russian Government might be disposed
to reconsider the position which they have taken up in this question.
I have, &c.
HUGH O’BEIRNE.
[2854 f—-16]
COPY TO INDIA
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1 SECRETARY'S N“ .4.7....