890g.6363 T 84/126
The Associate General Counsel of the Standard Oil Company of New Jersey (Guy Wellman) to the Secretary of State
[Received January 18.]
My Dear Mr. Secretary: Referring further to the Department’s letter of December 18, 1923, its file NE 890g.6363, T/84/123,52 and to the copy of our cablegram to Mr. H. E. Nichols of the 19th of that month,53 a copy of which was sent to the Department on the latter date, we are just in receipt of a cablegram from Mr. H. E. Nichols addressed to Mr. Teagle,54 dated January 15, 1924, with reference to Article 34 of the Draft Convention between the Iraq Government and the Turkish Petroleum Company, Limited.55 This telegram is in reply to our telegram of December 19th above-mentioned, and reads as follows:
“Referring to your telegram December 19th and 4 conditions therein.
- “1. We guarantee operation subleasing system will not be defeated by collateral understanding. No provision is made in agreement for application of British law but as Iraq law still in process of evolution we can obviously give no guarantee as to its final scope.
- “2. Amendment has not been submitted Iraq Government and withdrawn.
- “3. Turkish Petroleum Company guarantee carry out open door policy and would try to secure from Iraq Government on disclosure of policy undertaking to safeguard its application.
- “4. Turkish Petroleum Company offer required assurance but we have not approached foreign office and seriously doubt wisdom and utility of asking them undertake suggested responsibility. Position now extremely critical and further complicated by fact that Iraq Government now pressing strongly acceptance Sassoon’s amendments article 34 though Keeling56 suggests they might accept in lieu thereof right to disapprove any particular sublessee.
To avoid absolute dead-lock would you accept this if Keeling can secure it. Having regard to all circumstances do you definitely advocate immediate disclosure open door notwithstanding all risks this would in my opinion entail. Alternatively would you advocate disclosure open door at later stage when convention ready for signatures, when risks might be less. Telegraph your views urgently as until this point settled progress in our negotiations is impossible.”
Unless the Department views the matters differently, we are disposed to accept, as a sufficient compliance, the various assurances and guarantees given in this telegram from Mr. Nichols, as Managing Director of the Turkish Petroleum Company Limited, although it is to be noted that no assurances are forthcoming from the Foreign Office.
Referring to the statement that the Iraq Government is now pressing strongly for acceptance of Sassoon’s amendment to Article 34, as reported to us this amendment contemplates that each sublease or transfer of areas, covered by the principal Convention made by the Turkish Petroleum Company Limited shall be subject to the approval of the Iraq Government, on the condition that such approval shall not be unreasonably withheld and shall not embody conditions not contained in the concession. In response to the proposal for this amendment, we urged on behalf of the American Group that a reservation of this right of approval by the Government might, in practice, absolutely vitiate or nullify the practical operation of the Open Door Plan. In this connection it is to be noted that the last cablegram from Mr. Nichols states that Mr. Keeling suggests that the Iraq Government might accept in lieu of the right of approval of subleases, the right to disapprove any particular sublessee.
Subject to the Department’s wishes in respect to this important matter, we are considering making a proposal to Mr. Nichols whereby the contentions of the Iraq Government might be met by a provision that it should have the right of disapproval in respect to any particular sublessee where the Government could reasonably contend [Page 224] that the proposed sublessee or sublease would impair its sovereign rights.
It is also our view that the Turkish Petroleum Company Limited should disclose to the Iraq Government the plan for subleasing under Article 34 in accordance with its accepted Open Door Policy, and that, as to whether this should be done immediately, or at any time before the execution of the Convention, those in charge of the negotiations should determine.
Respectfully,
- Ibid., p. 262.↩
- Ibid., p. 263; Mr. Nichols was the managing director of the Turkish Petroleum Co.↩
- W. C. Teagle, president of the Standard Oil Co. of New Jersey.↩
- For text of draft convention, see Foreign Relations, 1923, vol. ii, p. 247.↩
- E. H. Keeling, representative of the Turkish Petroleum Co. in negotiations at Bagdad with the Government of Iraq.↩