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

No. 848

Sir: The Department has received and given careful consideration to your despatch No. 1598 of January 21, 1927 enclosing a copy of a Foreign Office note dated January 18, 1927 containing certain explanations and proposals connected with the redraft of the proposed convention relative to Iraq which accompanied the Department’s instruction No. 740 of November 12, 1926. The Department desires that you communicate with the Foreign Office in the following sense regarding the various paragraphs of its note with respect to which it would appear to be necessary or desirable for the Department to submit further observations or comment:

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Paragraph 2. The Department, in its turn, is pleased that so large a measure of agreement has been reached with respect to the form and provisions of the proposed convention. It appreciates that it will be necessary for the Foreign Office to consult with the Iraq Government before its proposals may be considered as final.

Paragraph 6. The Department concurs in the proposal to substitute the term “exercise of industries” for the term “industries” in the formula suggested in paragraph 8 of Mr. Sterling’s letter to the Foreign Office (presumably the same formula as that contained in the first paragraph of page 4 of the Department’s instruction of November 12, 1926) regarding the assurance desired by 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.

Paragraph 7. The Department accepts the counter-draft of the last paragraph of Article 8 of the proposed convention, providing the following clause is added thereto:

“it being understood that there is excepted the treatment which is accorded by the United States to the commerce of Cuba under the provisions of the Commercial Convention concluded by the United States and Cuba on December 11, 1902,66 or any other commercial convention which hereafter may be concluded by the United States with Cuba, or to the commerce of the United States with any of its dependencies and the Panama Canal Zone under existing or future laws.”

You should point out to the Foreign Office that a clause to the foregoing effect is included in the Treaty of Friendship, Commerce, and Consular Eights concluded by the United States with Germany December 8, 1923,67 and in similar treaties concluded since that date by the United States with Hungary, Esthonia, and Salvador.

It should be added in this connection that the Department understands that the position of American nationals in judicial matters after the termination of the special relations existing between Great Britain and Iraq as defined in the convention is adequately guarded by that part of Article 8 which provides that “the nationals … of the United States … shall receive in Iraq the most-favored-nation treatment.”

Paragraph 8. The proposed modifications in the phraseology of paragraph 7 of the Preamble give rise to no objection on the part of this Government.

The Department perceives no objection and agrees to include in the preamble, between paragraphs 9 and 10, the proposed statement of American recognition of Iraq as an independent state.

Paragraph 9. You may communicate to the Foreign Office the formal assurance of this Government that it does not interpret Article 3 of the draft convention as prohibiting the local government from expropriating American property for public purposes under normal expropriation laws of general application and the previous provision [Page 804] for just and reasonable compensation. You will note that the phraseology of the foregoing assurance is slightly different from that proposed in paragraph 9 of the Foreign Office note. You may mention in this connection that the Department believes the present phraseology more accurately describes the situation which it presumes the British Government envisages should expropriation proceedings be undertaken with respect to American property in Iraq for the public use or benefit.

Paragraph 10. The Department finds preferable and accepts the suggested redraft of Article 4 of the proposed convention.

Paragraph 11. The redraft of the last sentence of the convention is wholly acceptable to this Government. In view of this Government’s acceptance of the proposed modification of paragraph 7 of the Preamble, there will, of course, be only three schedules to the convention.

You will note from the foregoing that the Department accepts the redraft of the proposed convention enclosed with the Foreign Office note of January 18, 1927, providing a single addition is made, i. e. that set forth above in the Department’s comment with respect to paragraph 7 of the Foreign Office note. It would not appear necessary therefore to enclose with the present instruction a further redraft of the convention.

The Department desires that you furnish it with a copy of any communication which you may address to the Foreign Office embodying the observations and comments set forth above, also a copy of Mr. Sterling’s letter to the Foreign Office referred to in paragraph 3 of the Foreign Office note of January 18, 1927. You will, of course, inform the Department fully regarding such further discussion of this matter as you may have with the appropriate authorities of the British Government.

I am [etc.]

Joseph C. Grew