File 2764/1904 Pt 4 'Baghdad Railway: Anglo-Turkish negotiations; proposals of Turkish Govt; status of Kowait' [‎240r] (484/674)

[This DQ c n men t is the Property of His Britaniiic Majesty’s Government.!
EASTERN DEPARTMENT.
■ ■ -
SECRET SERIES.
* [13720]
21APR1911
No. 1.
[April 10.]
Section 2.
(No 105 ) Sir Edward Gre y t0 Sir G - Buchanan.
Sir
’ T ASKTT'n P. + I 1 * , , Foreign Office, April 10, l§ll.
• f -L " i " -i ^ e ^ lc j; ve:l ido r E to-day what were the views of his Government
vith regard to the Bagdad-Gulf section of the Bagdad Railway.
lie told me that, since Germany had renounced the Bagdad-Gulf section and the
On!™ 110 l T& eT a PP®? red t0 between England and Germany alone, the Russian
Go ernment thought that it would be a good demonstration of the co-operation d trois if
they, as well as France, participated m the Bagdad-Gulf section. Co-operation d trois
r^-establSied° PPed ° Ut ° f Slgllt ’ and the Russian Government would like to see it
I entirely agreed with this, but 1 explained to Count Benckendorff our difficulty
with regard to the Bagdad-Gulf section. As a matter of fact, Germany had not
renounced this section ; she had stipulated for a participation in it as great as that of
a P^, 0 + thei ‘ 1 ower . ex 1 ce P t . lurk ey, and the German concessionnaires had reserved the
right to claim an indemnity for loss of profit on kilometric guarantees.
1 also told Count Benckendorff that we had not yet sent in our reply to the
proposals which the Turkish Government had made to us. When we did reply we
should certainly point out that the position which they now put before us was quite
different to that which Djavid Bey had suggested last summer as a possible way of
meeting our views. Djavid Bey had then asked us whether we thought that a settle
ment c o ul d_be reached if Turkey had a free hand with regard to the Bagdad-Gulf
section. We had replied that this might provide a basis for a settlement, provided
that, if the participation of foreign capital was invited, our participation was in pro-
portion to our trade ; this would give ns about 60 per cent. In any case, it would be
difficult to reconcile British public opinion to a bargain unless we had at least 50 per
cent. But, m the new circumstances created by the German agreement with Turkey,
if we had 50 per cent., Germany was also to have 50 per cent., Turkey would drop out
of financial paiticipation, and the question would still be one to be discussed between
us and Germany.
. France, I understood from M. Gambon, wished to secure railway advantages in
regions quite different from that of the Bagdad Railway ; and she would participate in
the latter railway only if we desired her to do so, for she did not look upon it as her
affair.
My view was that Russia should make her bargain as she had begun to do at
Potsdam. France should make her own stipulations with regard to the matters in
which she was most interested. We ourselves should make the best terms we could
about the Bagdad-Gulf section. I hen, when we were all three ready, we would
simultaneously agree to the increase of the Turkish customs dues. Simultaneous
agreement of this sort would have an excellent effect.
Count Benckendorff said that the fact that Germany had not unconditionally i
renounced the Bagdad-Gulf section made a considerable difference. He thought the !
Russian proposal was founded on the assumption that Germany was out of the question. I
The Russian desire was to help us, and therefore their proposal w^ould not hold if the
question was one between us and Germany alone.
He thought, however, that if it was ultimately decided to have French co-operation,
Russia should come in too, for the participation of Russia as well as France, entailing
the division of the railway section into five shares instead of four, might just turn the
balance in our favour.
I agreed that if France came in it would be desirable that Russia should come in
also, and if the negotiations took a turn in this direction I would bear the point in
mind. Meanwhile, I thought it better to leave the question open, and I promised to
let Count Benckendorff know how the negotiations progressed. It might be that, as a
result of the terms which Germany had made with Turkey, the negotiations would
revert to an attempt on our part to arrange a settlement with Germany and Turkey
alone as the only way in which to get the large share in the Gulf section which British
public opinion expected.
[1969 k—2]
I am, &c.
E. GREY.