'P. 2. 2410/1903. Persia:- Financial Situation. Loans.' [‎365r] (734/1058)

FOREIGN SECRET TELEGRAMS.
Secret Department.
From Viceroy, September 1906.
Foreign Secret. Your telegrams of 12th September and 14th September.
TV e respectfully would point out thatbefore the receipt of Grant Duff’s telegram
of 9tb September we had received no intimation whatever of the possible
intention of His Majesty’s Government to grant a joint loan with Russia
to Persia, and our remarks about Bunder Abbas-Bam road were based
upon report in Grant Duff’s telegram of 2nd September that a secret
loan was being negotiated independently by Persia with Russia. We now
learn that a joint loan is contemplated on basis of general settlement of Persian
question, and that instructions in regard to that settlement were sent to His
Britannic Majesty’s Ambassador at St. Petersburg on 12th September.
Matter is one we consider vitally affecting interests and safety of India, and
though we may not fully have understood nature of proposals as necessarily
set out in brief in your telegram, we venture with greatest respect
to offer certain remarks on those proposals as indicated in your
telegram of 14th September in hope that these may be considered
before any arrangement is finally effected. In series of despatches
and telegrams, extending from Despatch of 21st September 1899 from
Lord Curzon’s Government to Lord Minto’s telegram of 9th January
1906, Government of India have consistently advised that Foreign
Powers should be excluded from owning ports in Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. and that line
south of which no concessions for roads, railways, or telegraphs should be
granted to any Power other than Great Britain was line from Khanikia to
north of Birjand. That policy was practically endorsed by Lard Lansdowne’s
statement to the Shah on 21st August 1902 and his further declaration in
the House of Lords on the 6th May 1903. Government of India therefore
view with gravest apprehension drawing line of concessions as far east as
Bunder Abbas, which will open up all the ports west of that place to Foreign
Powers with possible concessions for railways leading down to such ports
and fortification of naval bases. This must inevitably lead t.o necessity for
maintaining strong naval force in Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. able to cope with foreign
squadrons that may be stationed there with resultant ]
serious charge on British revenues. In any case, useful though route may
be as means of supporting Seistan, it would be difficult if not impossible to
hold Bunder Abbas-Seistan line without large force if hostile port were to
be made at Lin gab, and if Kerman were to pass under control of strong
military power and to be linked up by railway with Tehran. Further, we
have it on record that expert Railway Officer reported, after careful
local examination in 1903, that possible route for railway with grades
not exceeding one in forty leads from Ahwaz to Shiraz and Kerman and
then to Nushki. If Baghdad Railway is ever constructed this line will be
of importance as direct commercial route to India, and it is desirable it
should be in our sphere of concessions. Based as it would be on sea in West
and with connecting line to Bunder Abbas it would give us strong com
mercial and political hold on Southern Persia. Proposed line would sacrifice
this and would also expose our commerce in the Gulf, now over eighty per
cent, of total, to serious risk of prohibitive tariffs and obstruction in Persian
ports. It would also so weaken our present predominant position in the
Gulf as to render it impossible for us to exercise much influence on the
outlet of the Baghdad Railway or even to hold our own on the Arabian
coast, while our pledges to Sheikhs of Mohammerah and Koweit would
become incapable of execution. Finally, we venture to demur to proposal
to allow Russian loan to be secured on customs of all principal ports in Gulf
except Bunder Abbas, as these are already pledged as security for Indian