874.6363 Petrol/17

The Minister in Bulgaria ( Sterling ) to the Secretary of State

No. 91

Sir: I have the honor to refer to my despatch No. 85 of December 4, 1934, and the earlier correspondence regarding the protection of American interests under the Bulgarian petroleum monopoly project, and to report that the decree-law establishing the monopoly was approved by Royal Decree No. 203, dated December 1, 1934, and proclaimed in the Official Gazette No. 208 of December 12, 1934. The text is identical with that which I had obtained in advance from the Foreign Office, as stated in my despatch December 4.

It is a mere skeleton amendment of alcohol monopoly law which had been enacted several weeks previously, and extends that law to cover petroleum products by inserting words or phrases in appropriate places.

A translation of the new law as it appeared in the Official Gazette is enclosed.12 Upon comparison with the draft text, which was forwarded to the Department with my despatch No. 82, of November 26,13 it will be noted that the only significant change is in Article 42 [Page 109] which, in the original draft, provided a means for granting concessions for private initiative within the monopoly organization. This article now consists of only the first paragraph as quoted in the original draft, with an additional paragraph designed to exempt from the monopoly certain special mineral oil preparations (insecticides, etc.). This paragraph was paragraph (h) of Article 3 in the draft copy. Paragraph (i) of Article 3 of the draft does not appear in the law. The regulations provided for in the law have not yet been issued; they will perhaps cover the other points which were treated in a general way in the draft and quite suppressed in the law as it now stands.

As regards the situation, not much has developed since December 4, the date of my last despatch on the matter. The Belgian, British, French and Netherlands Legations have made representations at the Foreign Office filing notes similar to mine, and I understand the Rumanian Legation has taken parallel action, although I have not seen a copy of its note. No reply has yet been received from the Foreign Office to the Legation’s note of December 3rd, copy of which the Department has now doubtless received.

An interesting legal situation arose, in that in extending the earlier alcohol monopoly law to cover petroleum products, the petroleum monopoly presumably became effective on December 12 when the new law was promulgated, and the sanctions for private trade except by authorization of the monopoly board should then have come into force. Mr. Arnold tells me that he enquired of the administration whether he should circularize his offices to suspend all further business. Dr. Karamboloff, head of the monopoly, seems to have completely overlooked this contingency, and assured Mr. Arnold that it was by no means the intention of the monopoly to stop Petrole’s activities for the present. Mr. Arnold obtained a written confirmation of the interview. The incident is mentioned as illustrating the weakness of the patchwork in tying together the two monopolies.

Mr. Arnold has also reached an agreement with the Government regarding new Petrole imports to cover the company’s needs for the immediate future, the Government agreeing to all the terms stipulated in Petrole’s proposal.

The Government is now occupied with many projects, and the alcohol monopoly is meeting some administrative difficulties as well as popular opposition. The enthusiasm of the monopoly proponents is now not so loud, and it might reasonably be expected that the administration will avoid precipitate action toward a full application of the petroleum monopoly.

Respectfully yours,

F. A. Sterling
  1. Not printed.
  2. Neither printed.