The Chargé in Iran (Engert) to the Chief of the Division of Near Eastern Affairs
Dear Wallace: I should not be surprised if by now you felt that I had completely forgotten your personal letter of April 15, 1937, regarding the oil concessions, which arrived here shortly after I did. The contrary is, however, the case for it has been constantly on my mind and I have for many months been engaged in gradually assembling such fragmentary information as I have been able to collect without appearing to be unduly interested.
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The following observations are therefore conclusions arrived at (almost instinctively!) as a result of a number of conversations with the persons mentioned above, as well as with a few others not directly interested but who seemed to have some knowledge of what took place behind the scenes last spring:
1. The British. As a matter of general policy the British Government welcomed the advent of American capital in Iran on a large scale. In the first place, because if British interests could not themselves obtain the concessions in question there is no other country in the world they would rather see here than the United States. And secondly, because—looking, as is their custom, beyond the immediate future—they still foresee the possibility of fruitful cooperation (however informal) between British and American oil interests in Iran. In fact, they seem convinced that unless the Anglo-Iranian and the Amiranian companies evolve some kind of a tacit working agreement the Iranians will constantly try to play one against the other to the detriment of both. And they realize that such a tacit arrangement, based upon mutual advantage, good will and confidence, would not be possible with the interests of any other nationality.
Although at the Iranian Ministry of Foreign Affairs they try to give one the impression that the Iranian Government (or rather His Majesty) very obligingly handed the concessions over to the Americans in the teeth of the most violent opposition and protests from Great Britain and Russia, this is a slight exaggeration which must be discounted. I feel personally quite certain that the British Government did not make an official protest. Apart from the fact that the British Minister (Horace Seymour) told me so—and I have, of course, no reason to doubt his word—the statement appears corroborated from other sources.[Page 759]
On the other hand, I feel equally certain that the Anglo-Iranian Oil Company did formulate some kind of representations. Not only has the General Manager (L. C. Rice) been most evasive in all his replies, but the British Minister himself hinted at something like that when he told me once that he did not, of course, know what “the company” might have done about it. From other remarks I have been led to believe that the company made reservations of a general nature merely to keep the door open in the event that, at some future date, the American interests should withdraw and the British should desire to revive the claims of the North Persia Oils, Ltd. To this extent it is even possible that the British Minister may, informally and orally, have associated himself with the company in informing the Iranian Government that British acquiescence in the recent granting of an oil concession to an American company must not be construed as an abandonment of whatever rights the North Persia Oils, Ltd. may have had in the northern provinces.
Technically, therefore, the position would seem to be that while neither the British Government nor the Anglo-Iranian Company have the slightest present intention of questioning the validity of the American company’s title, they did not wish to go on record as having for all time abandoned rights which they once felt had been legally acquired by a British concern.
2. The Russians. As far as I have been able to ascertain from the Soviet Ambassador (Tchernikh) and the present Chargé (Kartashov) the granting of oil concessions in North Persia is viewed by Moscow from a purely political angle. The Soviets evidently still like to think of certain parts of Iran and of Afghanistan as coming within their sphere of Bolshevist influence and they are reluctant to assume the rôle of disinterested spectators. The Ambassador put the whole thing in a nutshell when he said to me “We felt it would have been more courteous if the Iranian Government had consulted us before granting oil concessions so near our frontier”. They were piqued because they were ignored, and it was chiefly for this reason that they decided to lodge a formal protest against the granting of these concessions. Kartashov told me that the protest was based on Article 13 of the Russo-Persian Treaty of 1921 and, more generally, on the fact that Soviet Russia, in return for its willingness to abstain from claiming anything for itself, expected its neighbors to confer with Moscow regarding matters which were obviously of interest to it. Both the Ambassador and the Chargé have been very emphatic in stating to me that their Government raised no objection whatever because the interests which acquired the concession were American. On the contrary, they felt that as “the relations between the United States and the Soviet Union were now so friendly” Moscow was rather glad that [Page 760] we got the concession instead of some other Power. Kartashov, on another occasion, said to me very significantly and in all seriousness “If the Germans had been given the oil concessions we would not have permitted it”! He also said that if, for example, German “or non-American” capital were to be allowed to participate in the Amiranian exploitations his Government might have to revise its attitude towards the whole affair.
At the Ministry of Foreign Affairs I was once told by the Under Secretary (Mostafa Adl) that the Soviets had been very angry and that they had tried by “all sorts of intrigues” to block the deal. He implied that they were jealous of American achievements in the petroleum industry and pointed out that although Russia possessed some of the richest oilfields in the world they had been so mismanaged that last year there was not only no surplus of gasoline for export but Russia actually had to import a considerable quantity from Rumania. Adl thought this was a disgraceful exhibition of inefficiency and could not understand how a country like that dared interfere in the affairs of a neighbor.
Whenever I tried to find out how the Russians felt about the validity of the Khoshtaria concession I received an evasive reply from both Ambassador and Chargé. They usually said something like this: “Quite apart from the Khoshtaria concession, the Iranian Government should have consulted us etc. etc.” Which was not very helpful. Incidentally, although the American concession only covers a small corner of the old Khoshtaria concession in the province of Astarabad (now Gorgan), it happens to be geologically one of the most promising oil-bearing districts of the entire area.
The Iranian Foreign Office, of course, has been perfectly consistent throughout in denying the validity of the Khoshtaria concession. Only a month or so ago when I mentioned it to the Minister of Foreign Affairs (Enayatollah Samiy) he waved it aside contemptuously and said “We have told the Soviet Embassy and the British Legation that this concession never could, and cannot now, give rise to any claims whatsoever. And that is final”.
Summing up my general impressions I should say that, for the present, the Amiranian interests have nothing to fear from either the British or the Russians. In other words, so long as our relations with Great Britain and the Soviet Union remain more or less normal and friendly neither government has any intention of attacking the title of the American concession. But probably both feel that in these troublous times no one can predict how suddenly the world situation may change, and they did not want deliberately to sign away rights which they might find it useful to invoke, at least for bargaining purposes, at some future time. Should such a contingency [Page 761] arise we may perhaps be able to persuade all parties to submit the question of the Khoshtaria concession to arbitration, and—unless there are documents in existence of which we have no knowledge—the American claims should have a very fair chance of prevailing.
Please do not hesitate to let me know if there are any other points which I may be able to help clear up.
Very sincerely yours,