883.6363/96: Telegram

The Minister in Egypt (Kirk) to the Secretary of State

499. Department’s 413, February 29, 5 p.m. Foreign Office has not as yet replied to informal memorandum referred to in Legation’s airgram 95, February 1932 asking for information concerning details of manner of application of new 15 percent export duty but basic fact remains that as matter now stands tax applies to all petroleum products.

After informal discussions with Foreign Office and Minister of Finance, Legation has every reason to believe that tax was imposed purely as a revenue raising measure and was intended to be applied only for duration of hostilities.

I have, however, pointed out orally to appropriate Egyptian officials including Under Secretary for Foreign Affairs and Cabinet member that American oil interests now preparing to resume exploration operations in Egypt state that they are so seriously concerned at the effect of a 15 percent export duty being added to the usual 15 percent royalty payable under mining regulations that they are considering abandoning operations.

Present status is that Government Commissioner for Customs who is now dealing with question on behalf of Minister of Finance has just stated to officer of Legation that he does not feel that Egypt’s best interests are served by imposition of any export duty, that he was not [Page 70] consulted prior to issuance of present export tax decree and believes it to be highly objectionable means of raising relatively small amount of revenue. He states he is now strongly urging Finance Minister with considerable hope of success to have a decree issued repealing the whole tax.

British Embassy states it has received information from Commissioner for Customs similar to that given Legation and being hopeful that question may be settled soon is exercising no further pressure for time being.

In view of foregoing, Legation is not urging matter further for a few days.

  1. Not printed.