§ *LORD LAMINGTON rose to ask the Secretary of State for India "whether he can say what is the present position as regards Persia obtaining a loan from private sources, and whether it is a fact that in the early part of the year Persia was prevented from obtaining any such financial aid; and to move for Papers."
§ The noble Lord said.: My Lords, this Question refers to a matter which I have previously brought to the notice of your Lordships, and I think His Majesty's Government will admit that I have not unduly pressed them for a reply. This is a delicate matter, but I think there is justification for putting this Question at the present moment, because there has recently been presented to the Persian Government an ultimatum with respect to the disorder that exists in Southern Persia. I dare say that it is quite reasonable and proper, in the interest of our trade which is so largely carried on by ourselves and our Indian fellow-subjects in Southern Persia, that we should insist, if possible, on the trade routes being made secure. We are only doing what. Russia has done in the North for many months past; but the point is whether it was ever necessary to present this ultimatum. Persia cannot possibly govern without money, and from time to time, quite apart from the joint loan from Russia and ourselves offered to Persia, I understand that there have been private offers of money made to the Persian Government which at our instance or that of the Russian Government have been forbidden. Hence it is that there is this state of unrest and disorder in Southern Persia.
It is alleged that possibly the money, if supplied, would be misappropriated by the Persian Government, but that seems to me a very weak excuse. After all, the sum itself it not so very large, and I do not see how it could have endangered our interests or the interests of Russia if the Persian Government had the administration of this money. In any case, Persia could not go far astray in the administration of this fund with two powerful neighbours on the North and South of her. The result has been that it is perfectly impossible for her to bring order into her widely extended territory and into regions that are so very difficult of access. Our whole conduct has been inconsistent not
only with our agreement, but with the assurance of the British Minister at Teheran, when he told the Persian authorities that—
Persia will be perfectly free to manage her own affairs in her own way.
§ It is ludicrous to say when you prevent a country from obtaining a loan that you are allowing her to administer her own affairs in her own way. No one rejoices more than I do at our friendship with Russia, but at the same time that friendship must not prejudice our own interests either now or hereafter.
§ In my view we are drifting to a perilous state indeed. I would ask if at the present time you dare not trust the country with a comparatively small sum of money what chance is there that in a certain limited period by policing certain districts of the country you are going to restore stability to Persia? Her prestige has been immeasurably injured by the fact of large Russian forces sitting down in her Northern territory, and you are now going to further reduce her prestige by policing or securing order in her Southern districts. At the same time you prevent her getting the money to put her administration on a sound basis. As far as human foresight can see, is it likely that the Persian Government will be in a better position in the near future than she is to-day? Will it not be rather the reverse? Therefore you are drifting towards what may possibly lead to the partition of Persia, or, on the other hand, to a shilly-shallying policy on our part—one moment saying we are going to restore order in the country and. the next moment retiring. Last, and above all, we are offering a serious affront to the Mahomedans of Persia and thereby affronting the Mahomedans of India. I feel that the possibility of the state of affairs in Persia being regenerated and the Government of Persia becoming stable lies in her being allowed to have a sum of money with which properly to equip her administration.
My Lords, His Majesty's Government have no desire, nor, if they had the desire, would they be in a position, to prevent the Persian Government obtaining loans from private sources, always provided—and. I think everybody will agree that it is a reasonable proviso—that any such loan shall in no wise prejudicially affect the securities already set aside for existing loans to 831 British and Russian banks in Persia. With regard to the latter part of the noble Lord's Question, in March a certain London syndicate made an offer of a loan to the Persian Government, but at that particular time negotiations were proceeding for a joint advance from the British and Russian Governments, and not only was that so, but the interest on British loans was considerably in arrears. Taking those two circumstances into consideration, his Majesty's Government did not see their way to adopt any other course than to warn the Persian Government that while those negotiations were proceeding, and until the arrears of interest had been paid, they were not prepared to agree to the hypothecation by the Persian Government of any sources of its public revenue to any advance except that under negotiation.
That was communicated on March 15. Subsequently, when the negotiations for the joint advance broke down, a joint Note was presented on April 7 by the British and Russian Ministers in Teheran to the Persian Government informing them that neither Government would oppose loans from a third party, provided that these conditions were observed:—First, that the Customs and other revenues which had been already pledged for British and Russian loans should not be affected by fresh financial obligations; and, secondly, that the British and Russian debts should first be converted. Since then no communication has been made to the Persian Government about loans from private sources; but several firms and individuals or groups have approached the Foreign Office in order to learn the views of His Majesty's Government on the subject, and in each case they have been told the conditions laid down in the Note of April 7, and have been informed that that is the attitude which His Majesty's Government are prepared to maintain.
In regard to the present position, His Majesty's Government have taken no steps to oppose any particular loan. In one case they have declined to give their support; and it is quite obvious that they must reserve to themselves the power to give or withhold support in future and to take any steps which may be deemed necessary to safeguard British interests. It is understood that at the present moment negotiations are proceeding between the Imperial Bank of Persia and the Persian Govern- 832 ment with a view to a loan. In any case to attribute the entire state of unrest to the fact that the Persians cannot get money is, perhaps, rather an exaggerated view of the case, for the Persian Government can get money if they are willing to obtain it on reasonable terms. By reasonable terms I mean that no political conditions should attach, and this the Persian Government have been given clearly to understand is a necessary condition. The only condition which would be attached would be a guarantee that such sum as was advanced would be spent in putting the general condition of Persia into better order than, unfortunately, it is at present. The noble Lord asks for Papers. Papers relating to Persian affairs generally are being collected with a view to presentation; but some delay in issuing them is unavoidable. In any case, only such communications as have passed between the two Governments can be published.
§ LORD LAMINGTON
On the whole the statement of the noble Lord is satisfactory, but I would like to ask whether the conditions mentioned were the same as were laid down earlier in the year, or have the original conditions been modified.
The conditions originally laid down no longer hold good, and the Persian Government have been given to understand that that is the case.
§ LORD COURTNEY OF PENWITH
My Lords, I am sorry to say that the answer which has just been given by Lord Herschell will not entirely relieve the minds of many sober-minded people who are anxious about the position in which we stand in Persia. The intrusion of our Government in the sphere of Persian finance is a matter which I view with some anxiety. Of course, no fresh loan should affect the securities already possessed by present creditors, but I cannot refrain from expressing some misgiving in regard to the conditions which the Government have attached to the borrowing of any loan by Persia. No loan is to have any political conditions attached thereto. I do not know what kind of political conditions are in contemplation, or how far it is desirable that we should interfere with loans on the part of the Persian Government, provided they are acting entirely within the proper sphere of action of an independent Government. We really seem to be getting into 833 the position in which we have been on one or two other occasions, slipping from a position that involves no risk into one of great difficulty and even danger. In my opinion, our interference in this matter is calculated to create embarrassment in our relations, not only with Persia, but with the friendly Power which has acted in co-operation with us in Persia. I would press upon the Foreign Office that Papers in respect to the financial conditions to which the noble Lord referred might be made public without delay, so that we may know exactly how we stand in relation to the financial administration of Persia; and I hope that the production of those Papers will remove the apprehension that we are in danger of drifting into a position in regard to Persia similar to that which led to our intervention in Egypt.
§ THE LORD PRIVY SEAL AND SECRETARY OF STATE FOR INDIA (THE EARL OF CREWE)
My Lords, I think my noble friend will understand that I do not desire to enter at this moment into a general discussion of the state of Persia and our policy in regard to that country. I merely desire to set him right on one point as to which I think he is under a misapprehension. He seemed to gather from my noble friend Lord Herschell's observations that when it was a question of money being lent to Persia from outside sources some embargo, so to speak, was placed on a loan of that kind on account of political considerations being possibly involved. The objection, so far as objection has been taken, to the loan of money from outside sources to Persia has been of the economic kind described by my noble friend; that is to say, that if the money could not be raised without com- 834 promising the security which is possessed by already existing creditors—and my noble friend Lord Courtney entirely agrees that that is a reasonable attitude —in that case we should feel bound to object to a further loan. That is how the matter stood.
As regards the general question, I may perhaps just say this, particularly as representing the Department which I now do, that we are fully alive to the inconvenience which must always attach to any apparent interference in the internal affairs of a country such as Persia. We are fully alive to all those considerations to which my noble friend has drawn attention from the analogy of our dealings with Egypt, although I think it would not be difficult to show, if this were an opportunity of doing so, that the circumstances in Egypt and in Persia are indeed very different. If it will at all reassure my noble friend, I can assure him we are fully alive to the importance of these considerations both from the point of view of British interests and certainly not less from the point of view of Indian interests.