'File 73/7 I (D 19) Status of Kuwait & Baghdad Railway, and Anglo-Turkish negotiations 1911' [‎227r] (487/631)

ter
m ' 1 ! ' Grey i made acquainted as soon as possible with the views of Viscount
V. 7 ; 0 . the Government of India, on the subject in order that he may be
enabled to reply to Mr. Jacksou without undue delay,
tr.v H am M 0 • ad f f n ® x P resslo n of Sir E. Grey's hope that it may be found possible
lor His Majesty s Government to express themselves as favourably towards the
scheme as the Russian Government have done,
I am, &c.
LOUIS MALLET.
(Copy sent informally to the Army Department for transmission to the Divi
sion of the Chief of the Stafi.)
{Received on 26th April 1911, with Political Secretary's letter No 14 dated
the 7th April 191L)
I ndia O ffice,
I
29th March 1911,
slk,
I am directed by the Secretary of State for India to acknowledge the receipt
of your letter of the 16th instant on the subject of the Baghdad Railway and
♦ To Governor-General, dated 18th March C0l mected questions, and in reply to enclose
1911. copy of telegrams* exchanged with the
From ditto, dated 23rd March 1911. Government of India.
2. Since your letter was written a Convention has been signed between the
Ottoman Government and the Anatolian Railway Company whereby the latter
relinquishes its concession for the section between Bagdad and the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran.
on the understanding that it receives in a new company to be formed a share not
less than that of any other non-Turkish Power, and subject to a claim to be
indemnified for loss arising out of construction expenses guaranteed on that section.
The conclusion of this Convention no doubt facilitates the opening of negotiations
between this country and Turkey. It also, in Viscount Morley's opinion,
removes all inducements to open them.
3. When the written proposals of the Turkish Government were received it
was understood that they were not final, but were of a tentative nature, and did
not exclude the hope that more favourable terms might be obtained for this
country. To any such hope the door is apparently closed by the new conven
tion. It is not probable that in an international company to be formed for promo
ting a railway on Turkish soil, Turkey will consent to reduce her share below the
40 per cent, proposed, and if that is so, unless France is to be practically excluded,
it is arithmetically impossible for Great Britain to obtain more than 25 per cent.
In 1909 the total trade of Baghdad was 2,918,120/, of which 1 ,954,000/ belonged
to Great Britain and India, or about 67 per cent.; 237,379/ to France, or about
8 per cent; and 65,349/' to Germany, or less than 2j per cent. Comment on these
figures is unnecessary, and Lord Morley believes that no Government that consent
ed to permit the increased Customs duties in return for participation upon these
terms, or upon any terms at all resembling them, could stand before the criticism
that would be invoked.
4. This view,—in which there is, no doubt, an element of sentiment—is con
firmed by an examination of the question on its merits as a matter of business.
From this point of view I am to observe that, apart from providing profitable
scope for British capital (which is not withouu scope elsewhere and is not likely
to be attracted to an enterprise in which it will have to begin by paying an mdem-
nitv to the original concessionnaires), the sole measure of the advantage of parti
cipation is the control that it affords ; and the degree of control afforded by a
20 per cent, or even 25 per cent, share is illusory. Nor, on the other hand, does it
appear that we stand to lose commercially by non-participation, since, if it is
i