The Secretary of State to the Ambassador in Great Britain (Houghton)
Sir: The Department refers to your telegram No. 172 of July 26, 1926,60 reporting briefly with respect to the conversations held in London between Messrs. Sterling and Dulles, representing the Embassy, and officials of the British Foreign and Colonial Offices in connection with the proposed negotiation of a convention relative to Iraq. A detailed report of these conversations has been made to the Department by Mr. Dulles in the form of an official despatch dated September 1, 1926, a copy of which is enclosed for the information of the Embassy.60a
The Department has given careful consideration to the informal counter proposals of the British Government, and, with certain exceptions which will be discussed below, it finds them acceptable. As these counter proposals are given concrete form in the British counterdraft of the proposed convention (see letter dated July 30, 1926, from Mr. Thomas Spring-Rice to Mr. Dulles, enclosure No. 3 to his despatch of September 1, 192661) they will be discussed in the order in which they appear in that document.
The form of preamble in the British counter-draft follows in general the form suggested in the Department’s draft and is acceptable. In particular, the Department concurs in the proposal, incorporated in paragraph 10 of the preamble of the British counter-draft, that Iraq should be included as one of the contracting parties to the convention.
The Department finds preferable the alternate form of Article 1 of the British counter-draft of the convention which appears on the right hand side of page 3 of that document.
The minor modifications in phraseology which appear in Articles 2 to 5, inclusive, of the British counter-draft give rise to no objection on the part of this Government.
In view of the statement of the British authorities to the effect that they were not legally in a position to extend their extradition treaties to Iraq and having in mind “The Extradition of Offenders Law 1923” (see enclosure No. 4,61 Mr. Dulles’ report of September 1, 1926) put into effect by decree of the King of Iraq, the Department is disposed to accept Article 6 of the British counter-draft.[Page 797]
With respect to Articles 7 and 8 of the Department’s draft of the proposed convention, the Department desires to make clear to the Embassy that its object in suggesting these articles was to obtain from the British Government certain assurances to clarify or supplement those contained in the documents recited in or annexed to the draft convention. The reasons which prompted this action are set forth clearly on pages 3, 4 and 5 of the Department’s written instruction No. 627 of April 20, 1925.
With respect to the text of Article 7 as suggested in the Department’s draft, after a careful consideration of the British counter proposal, and following the precedent set in the negotiation of the Palestine and Syrian mandate conventions, the Department feels that it is unnecessary to include Article 7 either in the form originally proposed by this Government or in the form suggested in the British counter-draft. Effect is given to the essential provision of this article, i. e. that contained in the first paragraph thereof, by the recital, in the preamble of the draft convention, of the Decision of September 27, 1924, of the Council of the League of Nations, and by the incorporation of the Decision, by reference, in Article 1 of the British counter-draft. The second paragraph of the Department’s draft of Article 7 was, as already indicated, intended to supplement or clarify the first paragraph. In view of the special situation in Iraq as it has developed since the conclusion of the earlier “A” mandate treaties, this Government is disposed to not press for its inclusion in the convention. The Department proposes, therefore, the omission in toto of Article 7. Should this proposal be accepted by the British and Iraq Governments the Department would wish the Embassy to point out to the plenipotentiaries of those Governments that it is the understanding of this Government that, when the convention comes into effect and during the period of the “special relations” defined in the British counter-draft of the convention, there will be a suspension of the capitulatory regime in Iraq in so far as the rights of this Government and its nationals are concerned and that such rights will be exercised in conformity with the Decision of the Council of the League of Nations dated September 27, 1924.
The Department perceives no objection in principle to the British counter proposal to omit Article 8 of the Department’s draft convention, providing written assurances are furnished this Government that the undertaking to grant full equality of treatment in matters of taxation, commerce and navigation, the exercise of industries or professions, et cetera includes the granting of concessions. (In this connection, see Mr. Dulles’ report of September 1, 1926, page 7). The following clause is suggested as appropriate for inclusion in [Page 798] an exchange of notes on this point between the American plenipotentiary and the representatives of Great Britain and Iraq respectively:
“It is understood by the high contracting parties that the term ‘industries’ as employed in Article XI of the Anglo-Iraq Treaty of Alliance signed October 10, 1922, covers the granting and operation of concessions.”
If such assurances are forthcoming, the Department is prepared further, in view of the special situation in Iraq, and without prejudice to the general position in the matter taken by the Government of the United States, which is expressly reserved, to withdraw its tentative suggestion with respect to the possible desirability of the inclusion in the proposed convention of the provisions relating to monopolies contained in the second paragraph of Article 8 of the Department’s draft. Confidential. If satisfactory assurance is given on the above point, American interests would be entitled to suitable opportunity to compete in the event that the granting of any monopoly should be contemplated.
The minor modifications in phraseology suggested in Article 8 of the British counter-draft (Article 9 of the Department’s draft), meet with the Department’s approval.
The Department is prepared also to accept the text of Article 9 of the British counter-draft (Article 10 of the Department’s draft), provided, however, (1) that the words “subject to the provisions of the second paragraph of Article 7” are deleted, their inclusion being unnecessary in view of the proposed omission of Article 7, and (2) that the British and Iraq Governments agree to the addition of a second and final paragraph reading as follows:
On the termination of the special relations established by this Convention and until an agreement shall have been reached in regard to the future relations of the United States and Iraq and the rights of the nationals of each country in the territories of the other, the nationals, vessels, goods and aircraft of the United States and all goods in transit across Iraq, originating in or destined for the United States, shall receive the most favored nation treatment.
The Department desires that an early occasion be found for renewing the discussion of this matter and that at that time the Department’s views as expressed above be put before the appropriate authorities of the British Government. A new draft of the proposed convention embodying the changes thus suggested is enclosed.63
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