767.68119/500a
The Department of State to the British Embassy
Memorandum
On March 17th Mr. Craigie informally called the attention of the Chief of the Division of Near Eastern Affairs to the letter addressed to Lord Curzon by Ambassador Child at Lausanne under date of February 4th79 regarding the economic and financial clauses of the Lausanne Treaty and suggested that it might serve to avoid misunderstanding if the views expressed in this letter could be elaborated by specific reference to the clauses which might be considered as objectionable or open to an ambiguous interpretation.
As it seems possible that the recent counterproposals of the Angora authorities which have been considered by the Allied Powers in London will result in a renewal of negotiations, the Department may desire to take a later opportunity to submit a more detailed expression of its views. However, without undertaking an exhaustive survey of the economic and financial sections of the Lausanne draft Treaty, it may be stated that the provisions which Ambassador Child had chiefly in mind in his letter of February 4th were such as appeared to have possible bearing upon rights or concessions granted or alleged to have been granted either before the war or more recently by the Turkish authorities at Constantinople or Angora. It was felt that misunderstanding might result if the contracting powers should attempt a settlement by provisions of a treaty of questions of a juridical character which might involve the interests of nationals of the United States and of other countries.
Inasmuch as the exigencies of the situation had been deemed to be such as not to admit of what was considered by the American Mission to be adequate opportunity for the discussion of certain provisions of the character indicated, it was suggested by Ambassador Child that there be inserted in the treaty a blanket provision for the settlement by arbitration of conflicting claims of private and national interests.
The most important of the provisions to which Ambassador Child adverted are contained in Article 94 of the draft treaty. Paragraph 2 of this Article reads as follows:
“All conventions or contracts relating to concessions made between Turkey and Allied subjects, and any agreements and decisions in regard thereto, prior to October 29th, 1914, are also confirmed if they have begun to be put into operation, or have formed the object of agreements between the Ottoman Government and an Allied Government, [Page 973] notwithstanding the non-fulfillment by Turkey of all the conditions requisite for their final confirmation.”
It is felt that this provision, if incorporated in a treaty between the Allied Powders and the Ottoman Government, might possibly be invoked by interested parties as confirming or validating claims to concessions which had not in fact been granted and finally approved by the Ottoman Government prior to October 29, 1914. This Government considers that it would be unfortunate for the Allied Powers to insist upon the insertion in the treaty of any provision designed to confer upon Allied nationals, with respect to concessions which prior to October 29, 1914, were the subject of conventions, contracts, agreements, or decisions, rights more extensive than those which were acquired under or by virtue of the conventions, contracts, agreements, or decisions in question.
The observations just made are applicable with respect to concessions which, under Article 96 of the draft treaty, might possibly be claimed from the governments of territories detached from Turkey. In this connection, also, it may not be inappropriate to call attention to the provision, in Article 65 of the draft treaty, to the effect that States in whose favor territory is detached from Turkey shall acquire without payment all property and possessions situated therein belonging to or registered in the name of the Ottoman Empire or of the Civil List. It is presumed that any property or possessions acquired by any State through the operation of this Article would be subject to existing legal or equitable rights of interested parties. It is believed, however, that future controversy might be avoided if the language were more explicit.
Another provision of the draft treaty apparently susceptible of an interpretation which would be objectionable, and which is believed not to have been intended, is contained in Article 97, which reads as follows:
“The Allied Powers shall not be bound to recognize in territory detached from Turkey the validity of the grant or transfer of any concession by the Ottoman Government or by local Ottoman authorities, effected after October 29th, 1914”.
This Government could not admit the impairment, through the operation of this Article, of any rights acquired by American nationals in good faith and upon compliance with the applicable laws.
The annulment under Article 98 of concessions granted to German, Austrian, Hungarian, or Bulgarian nationals or companies in which the interests of such nationals are preponderant cannot, it is presumed, be intended to deprive American citizens of rights which may have been acquired by them in good faith in such concessions.
[Page 974]Article 115 provides that
“No disposition of the treaties, conventions or agreements concluded by Turkey with any Power whatsoever may be held to run counter to the present Treaty. Turkey further undertakes to denounce any disposition irreconcilable with the present Treaty”.
The provision of this Article is somewhat sweeping. Presumably it is not intended to comprehend any existing agreement between the United States and Turkey nor can it directly affect the legal status of any existing treaty rights of this Government.
As has been indicated in the opening paragraph of this Memorandum, no attempt has been made, in presenting these observations, to comment in detail on the two sections of the Lausanne draft treaty, namely the Economic and Financial Clauses, which have been taken under consideration.