HL Deb 06 April 1911 vol 7 cc1078-84
LORD NEWTON

My Lords, I rise to ask His Majesty's Government whether they are able to state the nature of the compensation which the Baghdad Railway Company is entitled to obtain from the Turkish Government on account of the renunciation of the right to construct the section of the line from Baghdad to the Persian Gulf. I put this Question on the Paper in consequence of an answer which I observed was given by Sir Edward Grey in another place on March 23. In reply to a Question with regard to the Baghdad Railway, the Foreign Secretary said— An agreement between the Turkish Government and the Begin lad Company on ibis subject was signed on the 21st inst. It provides for the renunciation by the company of the right to build the section of the line from Baghdad to the Persian Gulf, and to construct a port at Basra, in favour of a new Turkish company, on condition that no Power except Turkey shall have a share in. the new company greater than that of the Baghdad Railway Company, and that the latter shall have the right to demand from the new company or from, the Turkish Government compensation on account of the above renunciation. The Baghdad Railway Company are also to construct a port at Alexandretta and to build a branch line from there to Osmanieh on the main line, without a kilometric guarantee. I submit that the wording of the answer also implies that some further compensation is contemplated to the Baghdad Railway of which at present we are ignorant. I believe that the Foreign Office is to lay Papers shortly on the subject, and I hope, nevertheless, it may not be the case that the noble Viscount opposite may decline to answer my Question on this ground.

I cannot resist taking the opportunity of pointing out what an extraordinarily favourable position is now enjoyed in Asia Minor by the Baghdad Railway Company—in other words, by the German Government—justifying the boast of the official organ of the German Foreign Office that "With pride we are able to look upon a new monument of German work, German application, and the German spirit of enterprise." What is the position? The Baghdad Railway Company have now obtained agreements to construct a railway from Konia to the Gulf, although, as we also know, they have abandoned the right to construct the final section. On the Konia-Bulgurlu section, which only amounts to something like 125 miles in length, the Company, I understand, have made up to now a profit reaching something like £800,000, and that profit could only come out of kilometric guarantees and construction guarantees, because the country which it traverses, as I know from my own experience—unless it has considerably changed in the last few years—is little better than a howling desert. In addition to that, they have obtained the immensely valuable concession of making the line from Alexandretta to Osmanieh, a concession so valuable that they are not even insisting upon the kilometric guarantee. They have also obtained the right virtually to turn Alexandretta into a German port; and that, I may point out, may have the effect of entirely altering the commercial future of the railway. I would also point out that under the terms of this new agreement there is no prospect of the Turkish Government ever recovering possession of the Port of Alexandretta, because they will be precluded from doing so unless they acquire at the same time the Taurus section, which as everybody knows is an extremely unprofitable one and would cost an enormous amount of money to make. In addition to that they have, so far as we know, come to an arrangement with the Russian Government by which German trade is going to find its way into Persia viii Khanikin to the prejudice of this country.

What, I would like to ask, does this so-called renunciation amount to? They apparently are making a great parade of having renounced the final section from Baghdad to the Gulf. All who have expressed an opinion on this subject are united in the view that in no circumstances is this particular section likely to be of any commercial value whatever. It may have a considerable amount of political value, but it has no commercial value whatsoever. Where, therefore, does the question of renunciation come in? If they were renouncing something that was going to be commercially profitable, they would clearly be entitled to compensation; but as there is no question of deriving any advantage from this section, commercially or economically, there does not seem any obvious reason why any compensation should be awarded.

This so-called renunciation merely amounts to this, that it is practically a stipulation that no country with the exception of Turkey is to hold a larger share in the undertaking than the Baghdad Railway Company, or, in other words, the German Government. I understand that the proposal is that the shares should be apportioned as follow:—The Turkish Government, 40 per cent.; Germany, 20 per cent.; France, 20 per cent.; and ourselves, 20 per cent. Everybody knows that such commerce as there is in those parts is entirely our own. We are infinitely more affected than anybody else, and it appears to me on the face of it that our interests are not safeguarded by the share of 20 per cent., which will enable us to be outvoted whenever it is necessary to do so. In these circumstances I venture to express the opinion that I am entitled to ask the Question standing in my name, and I hope the noble Viscount will be able to give us a reassuring answer.

THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT MORLEY OF BLACKBURN)

My Lords, I do not at all complain of the noble Lord for drawing the attention of the House to this most important topic. He has made a number of very interesting observations, but he has left out of account, if he will allow me to say so, the cardinal fact that this is Turkish territory, that the Turkish Government is a sovereign Government, and that they may make arrangements with the German concessionaires or others—subject, of course, to diplomatic action on our part or on the part of France or any other Power—to make whatever arrangements may seem to them to be to their general advantage or to the advantage of European or Eastern trade. The noble Lord, I think, overlooks, or dangerously minimises, the fact that the Turkish Government is really the master of its own territory. We had an interesting debate on this matter on the occasion of Lord Curzon's Motion about a fortnight ago, and it was then my duty to inform the House of the position in which the various issues concerned stood at that moment. Since then negotiations have been proceeding between Turkey and the concessionaires.

As to compensation, the nature of the compensation would naturally be the subject of agreement—not between us and the German concessionaires, but between the German Company and the Ottoman Government. It appears to be taken for granted by the noble Lord also that the construction of the section of the railway between Konia and Baghdad is likely, according to expert opinion, partly for the reasons that the noble Lord has indicated, to cost proportionately more than the section between Baghdad and the Gulf. The Baghdad Railway Company, as I understand, have therefore reserved the right to claim, either from the Ottoman Government or from the new company which, as the noble Lord is aware, the Ottoman Government is about to form to construct and work the section between Baghdad and the Gulf, the right to pecuniary compensation for their renunciation of their conceded rights over this particular section. I do not think—and the noble Lord, if he thinks about it, will agree—that anything is to be gained by further discussion at this, we might almost call it the initial, stage of the discussions between the Ottoman Government and the Baghdad Railway Company, on the one hand, and between the Ottoman Government and His Majesty's Government on the other hand. Very important steps are being taken in the way of discussion, but at this stage, things being what they are in both these aspects, I am afraid I can only say that nothing would be gained by any further discussion.

THE MARQUESS OF SALISBURY

Your Lordships have listened with interest to the further contribution which the noble Viscount has made to public enlightenment on this difficult subject, but I am not sure that my noble friend will think that he has obtained very much light from the answer. We understand that Papers are to be laid. How soon, may I ask, does the noble Viscount think that Papers will be laid?

VISCOUNT MORLEY OF BLACKBURN

I understand they are being prepared with all expedition.

THE MARQUESS OF SALISBURY

That may mean a great deal or not very much. I know they have to be prepared with great care and that a great number of consents have to be obtained, and I do not complain because His Majesty's Government are taking proper time to prepare them. But I was a little surprised by one observation of the noble Viscount. He said that the negotiations were only in their initial stage. I think that any of your Lordships who listened to the debate the other night would have thought, from the attitude the Government took up then, that they were very near absolute completion. I am rather glad to hear that they have only reached the initial stage.

VISCOUNT MORLE Y OF BLACKBURN

I was very careful to use the words "hopeful and of good promise," which are words characteristic of an initial stage.

THE MARQUESS OF SALISBURY

I should have hoped that they were characteristic of all stages of a negotiation. I do not in the least quarrel with the noble Viscount, and I was not trying for a moment to convict him of inconsistency. He was speaking with a great sense of responsibility on both occasions, and from the necessarily not very precise language he was able to use I gathered a wrong impression; but I thought, and I believe a great number of your Lordships thought, that matters had reached a very forward position. I am glad to hear that the negotiations are only in their initial stage, for I am bound to say that my impression has been that on this particular matter the British Government is not going to make a specially good bargain. I may be right, or I may be wrong, but I should be glad if His Majesty's Government would realise that if they make what is not a very good bargain that bargain will be subject to a great deal of criticism hereafter.

It appears to me that His Majesty's Government are not going to make a very good bargain because I gathered from the speech of the noble Viscount ten days ago that the effect of the new arrangement is that over the greater part of what is known as the Baghdad Railway the British Government will occupy a very inferior position, if, indeed, it occupies any position at all. As regards the Gulf section, the last section of the line to which my noble friend Lord Newton referred, although the British Government will occupy a definite position, it will still be an inferior position. Considering the history of this subject, and the great part which Great Britain has played in the affairs of Turkey and in the solution of these different points of policy, it is a matter of some surprise that we should occupy so inferior a position as the result of this bargain. I do not grudge Germany her success. I think it is very important that every country should have an opportunity of furthering its own interests and its own objects of policy. It is important for Germany to have such an opportunity, for I cannot help thinking that the German Government think they have not been well used in the past, and that by the fortunes of diplomacy they have not had such fine opportunties as other countries have had. If the result of the policy of His Majesty's Government is to remove that feeling, it may be of great public advantage. But as to how that matter may stand we must reserve judgment until we see the Papers. From the hint which had been given we were under the impression that we were not going to make, so far as this country is concerned, a good bargain; but if the matter is still in the initial stage there may be an opportunity of revising it a little in our favour.

The noble Viscount said, in answer to my noble friend Lord Newton, that he (Lord Newton) seemed to forget that this territory belonged to Turkey, and that Turkey is a sovereign Power and has control over her own territories. That is, of course, a perfectly true observation up to a certain point. Everybody knows, however, that owing to her financial circumstances Turkey is not entirely mistress in her own house, and has not been mistress in her own house ever since any of us can remember. She has, owing to misfortune or misgovernment, or both, lost complete control of her own affairs. She has lost it because she has been bankrupt, and therefore has been unable to pay her way. Consequently, all the great Powers in Europe have, and ought to have, a certain control over her policy, and that control takes the form of a power to prevent her raising her Customs Duties—that is to say, to prevent her having complete control over her own revenue and the method of raising it. It is all very well to say that the territory belongs to Turkey, but the financial control of Turkey is not her own but is largely vested in the Powers; and I submit that we are bound to use the power we possess; and that it is not an answer to a question whether British interests are safeguarded to tell us that this is Turkish territory and that Turkey is an independent sovereign State. I will not say more, except express my sorrow on behalf of my noble friend that he has not been able to obtain more clear information from His Majesty's Government. We shall await the promised Papers with interest.

LORD NEWTON

My Lords, unless I misunderstood the noble Viscount, the Baghdad Railway Company, otherwise the German Government, are going to obtain, in addition to other advantages, pecuniary compensation for not making a line which under no circumstances would be commercially popular. That may be an instance of the extremely practical nature of German diplomacy, but I do not think it redounds greatly to its morality, and I cannot conceive the British Government being successful in a similar attempt.