Papers of the Interdepartmental Conference on Middle Eastern Affairs [‎33v] (66/290)

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doing their best to maintain high prices. Indiscriminate importation of goods would
result in the wealthy merchants buying up wholesale, and thus cornering supplies. The
Russian hank has been taken over by the British, and is being conducted by them, but
this can only he a temporary arrangement. Undoubtedly, steps will have to be taken
at an early date by the Allied Governments to encourage imports and bring down prices.
r I he financial question caused by the unstable position of the rouble requires also careful
consideration, not only in Azerbaijan, but in the whole of Trans-Caucasia. Financially,
the whole country seems to be rushing to ruin. It is to be noted that the French
representatives are already booking trade orders in considerable quantities, and it might
be advisable that British representatives, who have some knowledge of trade conditions
in Russia, should be sent out to look after British interests. In each case, some form of
granting credit would have to be arrived at by the British Government. All imported
goods would have to be sold to the consumer, and under Allied control, otherwise
cornering and profiteering will be rampant.
General
From the above it will be seen that the situation in Azerbaijan is more complicated
and more full of danger than in Georgia. These dangers are :—
1 . The lack of anybody holding the confidence of the people and administrative
capabilities.
2 . The anti-British attitude of the labouring and lower classes, due to their idea that
the British Government intends taking Baku from Russia.
3. The fact that the population is armed.
4. The proximity to the Bolshevist army, and the hope of support from them. A
strong Bolshevist propaganda is in progress.
5. The lack of employment for thousands of people, who naturally get themselves
into mischief.
An official declaration of the Allied policy in Trans-Caucasia would do away with
many of these difficulties, though it may necessitate the employment of troops to insis
on that policy being carried out. While Georgia and Azerbaijan are endeavouring to
maintain their independence, the Russians in Trans-Caucasia are strong upholders of
some form of Russian Government there, and the same may be said of the Armenians
outside Armenia. Whatever is decided, it is very doubtful whether those small States
can ever he wholly independent. Free trade between the States, with one railway, postal,
and telegraph system, appears absolutely essential owingto the interdependence of one
part of the country on the other, and the governing factor that the Baku oilfield
supplies not only the motive power, but the money for fuller development
(Signed) G. F. MILNE, General,
Commanding-in-Chief, British Salonika Force.
G.H.Q., Constantinople, February 6 , 1919.
APPENDIX II.
(B, 1/2487. M.I. 2 .) March 3, 191<h
THE Director of Military Intelligence presents his compliments to the Acting
Under-Secretary of State for Foreign Affairs, and begs to transmit herewith, for Sir
Ronald Graham’s information, copy of a report on the Georgian Government by Major
McDonnell, received from General Headquarters, Constantinople.
The Acting Under-Secretary of State, Foreign Office.