890g.6363 T 84/21

The Ambassador in Great Britain ( Harvey ) to the Secretary of State

No. 749

Sir: In my telegram No. 930 of November 18, 5 p.m.,28 I had the honor to advise you that the Note transmitted by your Confidential Instruction No. 233 of November 4, with reference to the claim of the Turkish Petroleum Company in Mesopotamia, had been presented to the Foreign Office. The content of the last paragraph of the Instruction was stated orally as directed.

I have the honor to transmit herewith the text of the Note as delivered. Copies were mailed to the Missions at Berlin, Paris, Rome and Berne, and to the High Commission at Constantinople.

I have [etc.]

For the Ambassador:
Post Wheeler

Counselor of Embassy
[Page 89]

The American Ambassador ( Harvey ) to the British Secretary of State for Foreign Affairs ( Curzon )

No. 287

My Lord: I have the honour to advert to my memorandum of August 24th last,29 in which, in connection with the question of A mandates, I stated that my Government was unable to conclude that any concession was ever granted by the Turkish Government to the Turkish Petroleum Company and would shortly take up the considerations which have been advanced by His Majesty’s Government upon this subject.

In the Memorandum referred to, the position of my Government with regard to its interest in the disposition of mandate territories was again stated and it was assumed that by reason of the relation of the United States to the victory over the Central Powers and in view of the fundamental principles which have been recognized by His Majesty’s Government, there would be no purpose in relation to any of these territories to discriminate against the United States or to refuse to safeguard equality of commercial opportunity.

The Government of the United States does not desire for its citizens any special privileges in the mandate territories, and expects, of course, that private rights actually acquired before the war will in general be respected.

It is believed, however, that in the consideration of claims to rights His Majesty’s Government would not entertain any desire to exclude American interests from participation in the development of any important resource, and will appreciate the justice of my Government’s contention that the claim of the Turkish Petroleum Company in particular, which relates to the entire petroleum resources of Mesopotamia, should not be recognized except in accordance with the principles which have been accepted by the British Government as applicable to the mandate territories and on the basis of a satisfactory determination of the character and extent of the rights of the company.

Since it has seemed from Your Lordship’s most recent communication on the subject that the views of His Majesty’s Government with regard to this claim were widely at variance with those of my Government, I was instructed to suggest in my Memorandum of August 24, 1921, that if the claim of the Turkish Petroleum Company continues to be asserted appropriate provision should be made for its determination by a suitable arbitration.

[Page 90]

In a note dated February 28, 1921,30 Your Lordship was good enough to set forth the various considerations upon which the British Government based its opinion that the Turkish Petroleum Company possesses rights in Mesopotamia. It was stated that the concessions for the oil fields in the two vilayets of Mosul and Bagdad were bestowed by the Sultan on his Civil List in 1888 and 1898 respectively, and that by firmans issued in 1908 and 1909 the concessions had been transferred from the Civil List to the Ministry of Finance. In the negotiations before the war between the British and the German Governments and between each of these Governments and the Turkish Government, the disposition of the oil fields of Mesopotamia was under discussion, and a British Company, called the Turkish Petroleum Company, was organized, representing the amalgamation of German and British interests.

I shall not undertake to review what is said upon this subject in Your Lordship’s note, as I do not find in Your Lordship’s recital any suggestion that any negotiations which had thus taken place had ripened into any agreement or concession prior to the summer of 1914. The question then comes to the effect of what was done in that year.

It appears that Said Halim Pasha, to whom Your Lordship refers as the Turkish Grand Vizier, addressed on June 28, 1914, a communication to the British Ambassador at Constantinople, a part of which has been stated by Your Lordship, and which is understood to have been identical with a communication of the same date to the German Ambassador at Constantinople. This communication, according to the information in the possession of my Government, reads in translation as follows:

“Mr. Ambassador:

“In your response to the note No. 985 which Your Excellency had the kindness to address to me under date of the 19th instant, I have the honor to inform you as follows:

“The Ministry of Finance being substituted for the Civil List with respect to petroleum resources discovered, in the vilayets of Mossoul and Bagdad, consents to lease these to the Turkish Petroleum Company, and reserves to itself the right to determine hereafter its participation, as well as the general conditions of the contract.

“It goes without saying that the Society must undertake to indemnify, in case of necessity, third persons who may be interested in the petroleum resources located in these two vilayets.

“Be pleased to accept, Mr. Ambassador, the assurance of my very high consideration.

(Signed) Said Halim.”

[Page 91]

In Your Lordship’s note of February 28, 1921, it is further set forth that during the war the German interests in the Turkish Petroleum Company came into the hands of His Majesty’s Government by liquidation, and have been allotted to the French Government in the San Remo Petroleum Agreement, which is explained as the adaptation of pre-war arrangements to existing conditions.

Your Lordship comes to the conclusion that the Turkish Petroleum Company possesses a right to the lease of the oil fields of the two vilayets of Mosul and Bagdad, resting on an official undertaking given by the Turkish Government to the British and German Governments after prolonged negotiations, and that neither the rights claimed by the Company nor the provisions of the San Remo agreement would preclude the Mesopotamian state from enjoying the full benefit of ownership or from prescribing the conditions on which the oil fields shall be developed.

Without entering into a detailed discussion of legal principles which may be applicable, the Government of the United States is of the opinion that the communication of June 28, 1914, from Said Halim Pasha, even in connection with the communications to which it is understood to have been a reply, cannot well be considered a definite and binding agreement to lease. Since both the extent of the participation of the Ministry of Finance in the operations of the company and the general conditions of the lease were, according to this communication, to be fixed at a later date by one of the parties to the alleged agreement, there would seem to be room for doubt whether, even if war had not intervened, a lease would actually have been executed. As Your Lordship observes with respect to the letter of June 28, 1914, the Ministry reserved “the right to fix later on its share in the enterprise as well as the terms of the contract.” There appears to be no reference in Your Lordship’s note to the provisions of Turkish Law applicable to the execution of a lease or to the transfer of a concession; and there is no indication, if these provisions were intended to be disregarded, that any progress had been made toward obtaining the approval of the Turkish Parliament.

The relations between the Turkish officials concerned and the Turkish Petroleum Company would appear, therefore, to have been those of negotiators of an agreement in contemplation rather than those of parties to a contract. Your Lordship makes no mention of any communications subsequent to those of June 28, 1914; but from other information in the possession of my Government it would appear that, in later notes addressed to the Turkish Grand Vizier, the British and German Ambassadors raised certain questions with regard to one of the conditions indicated in that communication.

[Page 92]

It is hardly necessary to observe that in dealing with the resources of mandate territories, placed under conditions of trusteeship, there should be no consideration of alleged monopolistic claims based on rights asserted to have been vested before the war, unless such rights are established by convincing proof, and it is assumed that this position would be taken by the British Government as a mandatory power, irrespective of the question whether such claims were advanced by British nationals. Hence, the immediate question is one of the proof of the alleged prior contract and an examination of the evidence thus far produced has not disclosed that any prior contract was made with the Turkish Petroleum Company.

The Government of the United States does not believe that any presumption should rest in favor of establishing in the mandate territories arrangements which were merely under diplomatic discussion before the war, but, on the contrary, is strongly of the view that such contemplated arrangements of a monopolistic character and inconsistent with the principles applicable to the mandate territories should receive no sanction.

I am instructed to express again the desire of my Government that the claim of the Turkish Petroleum Company, if it continues to be asserted, should be determined by a suitable arbitration, which, it is believed, should take place prior to any action which might involve further commitments or in any way imply recognition of the claim.

I may observe that the claim which is asserted by the Turkish Petroleum Company in Mesopotamia is regarded by my Government as in an entirely different category from the rights which are understood to be possessed by an American company in Palestine. The latter are apparently far from monopolistic and seem to have been regularly granted according to the prescribed formalities of Turkish Law by the proper authorities of the Turkish Government. Adverting further to the suggestion in the note of February 28, 1921, that the attitude of my Government with respect to the claims of the Turkish Petroleum Company in Mesopotamia is scarcely consistent with its position in regard to American rights in Mexico, it may be observed that those of the latter which have been made the subject of representations by my Government were not merely contemplated or in course of negotiation but were acquired in apparently full conformity with the local law.

In previous communications,31 my Government has made clear its attitude toward certain British interests in Costa Rica and has stated its policy with reference to an Act of the Philippine Legislature relating to petroleum development, which is regarded by Your Lordship [Page 93] as in contradiction of the general principles enunciated by the Government of the United States.

Shortly after the enactment in question, the Government of the United States recommended that it should be so amended as to conform to the reciprocity provision of the United States general leasing law of February 25, 1920.32 At the last session of the Philippine Legislature an amending bill was passed, the object of which was to relax substantially the restrictions embodied in the original Act. Nevertheless, in the opinion of the Government of the United States, the proposed amendment did not sufficiently meet the situation; and Your Lordship was informed in my Memorandum of August 24, 1921, that it was the intention of my Government to take all appropriate steps with a view to bringing about at the next session of the Philippine Legislature a further amendment so that the Act may conform to the reciprocity provision above referred to. My Government has already taken certain of the steps which it deems appropriate, and believes that its position with regard to the natural resources of the Philippines is entirely consistent with the principles which it desires to see applied in other territories.

I have [etc.]

George Harvey
  1. Not printed.
  2. See telegram no. 448, Aug. 4, to the Ambassador in Great Britain, p. 106.
  3. See telegram no. 160, Mar. 1, from the Ambassador in Great Britain, p. 80.
  4. See telegram no. 216, Apr. 15, to the Chargé in Great Britain, vol. i, p. 651.
  5. 41 Stat 437.