"الملف 73/7 II (D 22) وضع الكويت - سكة حديد بغداد، والمفاوضات الأنجلو تركية" [و‎‎٧‎٢] (٥٤٠/١٤٩)

[This Docmnent is the Property of His Britannic Majesty's GoYemnient.1
[A-]
ASIATIC TURKEY AxTO ARABIA.
CONFIDENTIAL.
[April 24.]
Section 1.
[16000]
No. 1.
>
A
Joint Minute hy Sir A. Ilirtzel and Mr. Parker on the Turhish Government's
Memorandum communicated on April 15, 1912.
1. Bagdad Railway.
(a.) Division of Share-capital in the Bagdad Bussorah Section.
UTS Majesty's Government originally proposed, in July 1910, that British interests
should be represented by 55 per cent, of the total share-capital.
Turkey replied that she would prefer a distribution of 40 per cent, for herself,
of 20 per cent, to Germany, 20 per cent, to France, and 20 per cent, to England.
To this, in July 1911, His Majesty's Government made a counter-proposal that
the distribution should be 20 per cent, each to Turkey, France, Germany, England,
and Russia; the idea being to secure 60 per cent., or a majority, to the 3 Entente
Powers : England, France, and Russia.
Turkey now professes to fall in with the British view, by distributing the capital
equally between herself, France, Germany, and England, in the proportion of 25 per
cent, each, the Chairmanship and casting vote being reserved to Turkey! No mention
is made of Russia; but, in our informal discussions, the Turks intimated that they
would not willingly admit Russia, and that, if His Majesty's Government persisted,
they would have to introduce another country, say Switzerland, to counterbalance her.
The effect of giving 25 per cent, to each of four Powers, and allotting to Turkey
a casting vote, would be to place control in the hands of the Turco-German group,
in so far as control does actually depend on the percentage of capital held. Control
probably does depend upon the voting rights of the various sections of shareholders
in so far as the appointment of a manager" :1: ' and other high officials and similar
matters are concerned. But though the control to be exercised by the Board of Directors
will not be absolute (since it is proposed to fix by Convention the maximum and minimum
scales of tariff rates and many details regarding transport facilities), and it is therefore
possible to attach too great importance to the distribution of the share-capital as a
means of control, we cannot recommend acceptance of the Turkish proposal, which
we believe would be generally regarded as politically a defeat of His Majesty's
Government, while financially the small amount of British capital that would find
employment would cause great disappointment.
Sir H. Babington-Smith has expressed his belief that Turkey, on the analogy of her
holding in the Bagdad Railway, which is only 10 per cent., would be satisfied with
a share of 10 per cent, or 15 per cent, in the Bagdad-Bussorah section, and he appears
to have discussed the subject with the Turkish Ambassador in London. But we are led
to think that his impression is erroneous; since the Turkish delegates represented to us
that Turkey, as the territorial Power, was already making a great concession in
limiting her share to the same amount as that of the other Powers participating and
Djevad Bey has since forcibly expressed the same view in writing.
Unless some via media can be found between the proposal of His Majesty's
Government for five Powers, and the Turkish proposal for four Powers, a deadlock may
be reached. _ ^ < • • • tt- tvt • >
If, for political reasons, it is desired to retain Russian participation, nis Majesty s
Government might perhaps reply that they cannot agree to the distribution suggested
by Turkey (four Powers at 25 per cent, each) and that they therefore revert to the
proposal made last July of 20 per cent, to each Power (Turkey, France, Germany,
England, and Russia), but that they would be willing to agree to the President of
the Company being a Turk. By this arrangement of a Turkish President, Turkey
We might stipulate that the Manager should be British.
[2435 oa—1]
B