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of Sir Eyre Crowe in the communication of December 29, 1921, above mentioned, with reference to the presentation of a further memorandum in which he hoped to be able to give the American Ambassador the fullest assurance regarding the mandate for Mesopotamia, my Government entertained no doubt that it would be consulted before the consummation of final arrangements in regard to the administration of Mesopotamia. The expectation of my Govern. ment that it would be consulted in regard to the administration of this territory was supported by the fact that, before the adoption by the Council of the League of the British mandate for Palestine and the French mandate for Syria and the Lebanon, my Government was given an opportunity to express its views regarding the terms of those mandates.
My Government has fully appreciated the fact that the political situation in Iraq has changed in material respects since the draft mandate for that territory was first presented. It has no disposition to question in principle the necessity for a modification of the mandatory arrangement in the general sense of the decision adopted by the Council on September 27, 1924. It has noted, however, with some apprehension, the omission from the modified arrangement of provisions similar to those inserted in the mandate for Syria and the Lebanon respecting the reestablishment of the capitulations upon the termination of the mandatory arrangements and respecting the observance of the principle of equality of opportunity in regard to the exploitation of the natural resources of the mandated territory. It is firmly of the opinion that no arrangements to which it is not a party could modify the rights to which it is entitled in Iraq by virtue of the capitulations of the Ottoman Empire, and it believes that, in accordance with the principles which my Government has consistently advocated and which it is not believed His Majesty's Government would be disposed to contest, American nationals should be placed on an equal footing with the nationals of any of the Allied Powers with respect to economic and other rights in Iraq.
While my Government has no desire to question the finality of the acceptance which other governments may have accorded to the arrangements between His Britannic Majesty and His Majesty the King of Iraq, and is not disposed to suggest a reconsideration of the general arrangement reached, it would be pleased to be informed whether His Majesty's Government, as the Mandatory Power in Iraq, is prepared to give assurances of the character believed to be necessary for the regularization of the situation of Iraq in relation to the United States. Such assurances, I may state, might, in the opinion of my Government, be appropriately embodied in a convention somewhat similar to that recently concluded with respect to Palestine. In view of the particular situation existing in Iraq it might be desirable to consider the possibility of securing the concurrence of Iraq in any such arrangement." I am [etc.]
FRANK B. KELLOGG
CONTINUED NEGOTIATIONS TO ENSURE RECOGNITION OF THE PRINCIPLE OF THE OPEN DOOR IN THE TURKISH PETROLEUM COMPANY'S CONCESSION IN IRAQ *
8903.6363 T 84/226 : Telegram The Secretary of State to the Ambassador in Great Britain
WASHINGTON, December 5, 1925—4 p. m. 357. Negotiations regarding the Turkish Petroleum Company.
1. The Department has been informed by the American Group that there is serious danger that their negotiations with the Turkish Petroleum Company will reach an impasse due to failure up to now of the other groups in the Turkish Petroleum Company to come to an agreement with Mr. C. S. Gulbenkian.69 See first paragraph in Department's telegram No. 331, September 20, 1924, 2 p. m. The situation described in that telegram is very much like that existing
2. The American Group informs the Department that they would be sincerely sorry to have to withdraw from further attempts to obtain participation in the Turkish Petroleum Company on a fair basis and that they are still hopeful that an agreement will be reached which will make participation possible. Negotiations with the Turkish Petroleum Company are being carried on by Mr. Piesse on behalf of the American Group.
3. You may wish to confer with Mr. Piesse regarding the status of the negotiations at present. However, such a critical stage seems to have been reached that the Department wishes you promptly to present the matter again orally to the British Foreign Office, setting forth the view which the Department has consistently maintained and which is fully explained in its telegram No. 331 of September 20, 1924. Except for subparagraph (c) of the third paragraph, the considerations presented in the third, fourth, and fifth paragraphs of that telegram apply to the present situation as well as they did to that of last year. On the point covered by section (c) of the third paragraph, the situation is modified by the fact that a concessionary contract between the Turkish Petroleum Company and the Iraq Cabinet has been signed,"1 so that presumably the present claims
Continued from Foreign Relations, 1924, vol. II, pp. 222-241.
Calouste Sarkis Gulbenkian, naturalized British subject, a minority stockholder in the Turkish Petroleum Company.
** Foreign Relations, 1924, vol. II, p. 232. * Turkish Petroleum Company, Limited, Convention with the Government of 'Iraq, made the 14th day of March, 1925 ([London, 1 Blundell, Taylor & Co. (1925)).
are based not on the pre-war claims of the Turkish Petroleum Company but upon the recent alleged concessionary grant.
4. In making your representations at the Foreign Office you should stress especially the views outlined in the fifth paragraph of the telegram of September 20. The Department is aware that neither our Government nor the British Government would wish to intervene in negotiations which are of a purely business nature. The British Government, however, in view of its connection with the Anglo-Persian Oil Company which is one of the chief parties to these business negotiations, may be able to persuade British subjects or companies not to assume an attitude which would make it impossible for American interests to participate in the Turkish Petroleum Company. It is the belief of the Department that its wish to avoid any further controversy regarding the Mesopo oil question is shared by the British Foreign Office. The American and British Governments have agreed on important questions of principle regarding this matter, and the development of a selected part of the Mesopotamian oil field by a company in which important oil interests of four nations were to participate was to give practical application to these principles. Effect was being given to the open-door principle as applied to territories under mandate, and thus there was to be brought about a wide basis of participation in developing these oil resources.
5. Should the American Group withdraw because of failure to obtain participation in the Turkish Petroleum Company on a fair basis, the Department would reserve its entire freedom of action if any reasonable and proper efforts should be made by the interested American companies to secure the right to a fair share in the development of the oil resources of Mesopotamia through other means than the Turkish Petroleum Company.
6. Should oral representations not be sufficient, the Department would consider sending a written communication on this subject. Please make report.
890g.6363 T 84/229 : Telegram The Ambassador in Great Britain (Houghton) to the Secretary of
LONDON, December 9, 1925–6 p. m.
[Received December 925 p. m.] 377. Department's 357, December 5, 7 p. m. was discussed with Foreign Office today in reviewing the Turkish petroleum situation. Oliphant 72 gave fullest assurances of the desire of the British Government to see American interests remain. From the latest information the Foreign Office is hopeful that the proposal to resort to arbitration will be accepted by Gulbenkian and by the British interests in Turkish Petroleum. Foreign Office has not ceased to urge this course on British group and I understand from Oliphant that French Government has been exercising similar pressure on French group.
In reply to a question in the House this afternoon the Prime Minister replied:
"His Majesty's Government regard as undoubtedly valid the convention made on March 14, 1925, whereby the Government of Irak granted to the Turkish Petroleum Company for a period of 75 years the exclusive right to extract and dispose of petroleum and similar products in the whole of Irak with the exception of the 'transferred territories and the vilayet of Basra.
They welcomed the inclusion of French interests in the Turkish Petroleum Company and have watched with sympathy negotiations for the inclusion also of American interests. If these negotiations result in American interests acquiring an interest in the Turkish Petroleum Company such a result will be welcomed by His Majesty's Government."
8909.6363 T 84/233
The French Embassy to the Department of State
The French Government is informed that difficulties have arisen between the French and British Groups on one part and the American Group on the other, which are parts of the Turkish Petroleum Company, concerning the interpretation of the “heads of agreement” agreed upon between them last March and inserted into a final contract.
The American Group is threatening to withdraw and to negotiate by itself with the Turkish interests.
The British and French Governments are proposing that the question should be settled by arbitration. Such a procedure would be entrusted with four experts who would have to decide upon the interpretation to be given to the Convention. Should the experts not reach an agreement, they would designate one sur-arbiter and the contract drawn by them would engage all the interested parties.
+2 Lancelot Oliphant, head of the Eastern Department of the British Foreign Office.
The French Government would deeply appreciate any steps which the American Government could take in order to induce the American Group to give its consent to the proposed procedure.
It is needless to insist upon the serious inconveniences of all kinds which, in the present circumstances, the retirement and an isolated action of the American Group could have.
WASHINGTON, December 18, 1925.
890g.6363 T 84/233
Memorandum by the Chief of the Division of Near Eastern Affairs
[WASHINGTON,] December 18, 1925. The French Ambassador called to see the Secretary on December 18 and left with him a memorandum, of which a copy is attached, ** expressing, on behalf of the French Government, the hope that this Government would intervene to prevent a break between the Turkish Petroleum Company and the American Group.
The Secretary asked me to outline to the French Ambassador the present status of these negotiations, which I did, somewhat as follows:
I pointed out that the negotiations between the American Group and the Turkish Petroleum Company were negotiations of a business character and that in principle the Department did not intervene in such negotiations; that we were of course interested in maintaining the principle of the Open Door in Mesopotamia and the right of American companies to obtain a fair share of participation, if they so desired, in the development of the natural resources of Mesopotamia. This policy the Department had consistently maintained in correspondence with the British Government, of which the Ambassador was possibly aware.
I told the Ambassador that the American Group had been negotiating for the past two or three years with the Turkish Petroleum Company and that an agreement had been practically reached when serious difficulty was encountered in view of the attitude assumed by a minority shareholder in the Turkish Petroleum Company, Mr. Gulbenkian. The latter had apparently insisted that the various partners in the Turkish Petroleum Company should have a stock interest only in the Company, as he himself only desired such an interest. The American Group, on the other hand, informed the Department that they were interested in securing their pro rata share of the crude oil produced by the Company and were not interested in mere stock participation.
With respect to the suggestion contained in the French Ambassador's note that the American Group consent to the arbitration of