890G.6363/396: Telegram

The Minister Resident in Iraq (Wilson) to the Secretary of State

120. My telegram 109, March 15; despatch 234 March 16; and previous. Skliros came to see me last night and told me he had brought [Page 654] to a close the negotiations he has been conducting concerning oil concessions by signing with Nuri two agreements which have been referred to his board of directors in London for them to choose between.

The first [of] these agreements relates only to the Basra Petroleum Company and in it the Iraqi Government agrees to a moratorium starting from May 2, 1941 and ending 2 years after the signing of an armistice with Germany, Italy or Japan whichever is last against a loan of 1,000,000 pounds payable June 1, 1943 and recoverable from oil royalties.

The second agreement covers both the CPC [BPC] and the Mosul Petroleum Company which he says has succeeded the old British Oil Development Company and contains the same conditions as the Basra agreement except that amount of the recoverable loan is placed at 1,500,000 pounds, 1,000,000 payable on June 1, 1943 as in first agreement and 500,000 payable the first of January after the signing of an armistice with Germany, Italy or Japan whichever is last.

Before calling upon the Iraqi Government to enact the necessary special law ratifying one of these agreements the oil companies are free to choose which one they prefer and to tear up the remaining agreement or the oil companies are free to reject both agreements in which case the dispute is referred to arbitration. He thinks arbitration is unlikely and that the second agreement above described will be accepted by the oil companies. In the event neither is found acceptable and the dispute goes to arbitration, he does not think such arbitration would be possible before the end of the war. He seems satisfied with the result of his efforts here and to be perfectly certain nobody else could have done any better in the circumstances. He discussed again with Nuri the question of revising the terms of the concession but with the result that he is confirmed in the opinion he has held all the time that this is not the time to enter on such a course with any possible chance of success.

Poliros [Skliros] departed this morning for Haifa and expects to fly to London later arriving there some time between the 10th and 15th of April.