RELATIONS WITH PERSIA.

HL Deb 25 June 1931 vol 81 cc408-22

LORD LAMINGTON rose to ask His Majesty's Government for the latest information as to our relations with Persia; also as to what steps have been taken to protect British commercial interests in connection with exchange control and also with the recent establishment by the Persian Government of a trade monopoly, and as to the present condition, of Persian affairs; and to move for Papers.

The noble Lord said: My Lords, as long ago as 1902 I raised the question of our interests in the Persian Gulf and on that occasion I obtained from the late Lord Lansdowne an historic declaration about our position in the Persian Gulf and the way in which we should regard the position if a first-class Power tried to obtain a recognised position in the Gulf. Since then, unluckily, our harmonious relations with Persia were rather interrupted by the Anglo-Russian Convention and then by our operations in the War, which the Persians did not altogether realise were for their own protection. After that, we tried to obtain the Persian Government's assent to the Anglo-Persian agreement. Although on several occasions I have raised questions about Persia, I have not done so since 1925. Only the other day Lord Passfield showed his appreciation the importance of the question of Persia and the Persian Gulf by the fact that, when the Motion moved by the noble Lord, Lord Trenchard, in regard to the air position in the Central East was under discussion, he said that policy concerning the Persian Gulf was not a matter of Departmental inquiry or decision but was always put before the Cabinet as a whole. I think I have some reason, therefore, for troubling your Lordships this afternoon in regard to our relations with Persia. At the same time I admit that I have no policy to suggest, still less do I wish to criticise the conduct of the Government in their relations with Persia.

There are two countries interested in Persia at the present time: the Russian State and Great Britain. Economically, politically and geographically, we are the two Powers that really have a great stake in that country. Our methods of treating our interests there are diametrically opposed. Our interest is always to see Persia independent, prosperous and friendly. The Russian policy, whether in the days of the Tsar or at the present time, has been quite opposed to this. They are always trying to seek their own aggrandisement, whether territorial or commercial. In 1921, after the War, the Soviet Government, as first established, made very generous and liberal concessions to Persia in matters connected with Russia's stranglehold upon her prosperity up to that period, but after 1921 these liberal concessions gradually disappeared. For instance, in 1926 Russia placed an embargo on all Persian imports, except cotton, into Russia. At the same time she raised her duties on the export of oil, and inconvenienced Persia to such an extent that Northern Persia had to try to get supplies from the Muzzid-i-Suleiman oilfields in the South. These could only be obtained at great expense, owing to the very heavy cost of haulage over the rough and wild country that lies between Northern Persia and the Persian Gulf.

Two years after this there was a strike at Abadan, where the Anglo-Persian oil refineries are, with great disorder. This appeared to be at the instigation of the Soviet. A plot was discovered by which they had apparently intended to burn the refineries and develop a revolutionary movement in that part of Persia. In Northern Persia Russian clubs have been established, together with Russian subsidies to the Persian Press in Teheran and elsewhere, and they have started five schools, both in Teheran and in other places. It was discovered by the Persian Government that a very large consignment of revolutionary literature had come into Persia for the distribution of propaganda in these schools, and this was seized at the Northern ports on the Caspian Sea. Russia also set up large commercial organisations all over Southern and Central Persia. They established a Russian bank with various branches. I gave private notice to the noble and learned Lord the Lord President that I would ask him whether it is true that in 1928 Persia refused to enter into a Central-Asian Mahomedan League in alliance with Moscow.

When Russia established a Communistic system of trade and commerce in Persia, the managers of these transactions always kept a very large balance in Persia, and were thus able to buy sterling, which accrued to their practical use for the purposes of the five-year plan throughout the world. The result was that Persia had to take charge of all exchange operations, and Russia was left with a large sum of Persian currency which she was not able to convert into sterling. I think it was about this time—I dare say the noble and learned Lord will be able to say—that the National Bank was established in Persia as a State Bank. That position had previously been held by the Imperial Bank of Persia, which was practically a British institution. This year the trade agreement between Persia and Russia expired, and Persia told the Soviet Government that she intended to exclude all Russian trade organisations from Persia. Russia retorted to this that, by the liberal Treaty of 1921, to which I have already referred, Persia was not able to do this, though on her side Russia could properly exclude Persian merchants.

All this time Russia had been dumping her goods to the greatest possible extent in Persia. I believe it is true to say that the match industry has been practically destroyed. Apparently Russia is determined to exploit Northern Persia ruthlessly, to help in developing the five-year plan, and to do this at the expense of the trade in Southern Persia. As a last resource against these measures taken against Persian commercial interests, on February 25 of this year the Mejliss, which is the Persian Parliament, passed a Bill to give the Persian Government a monopoly of all foreign trade, so that they could compel Russia at the frontier to take foreign goods on equal terms with those applying to Russian exports. This, I imagine, has had a very deleterious effect upon Persian trade, and possibly also on foreign trade, particularly our own trade in regard to Persia.

Our own policy with regard to Persia is very different. We are most conciliatory in all our efforts to bring back her friendship and develop a good understanding. We have just concluded a Treaty of Commerce, and we have also in other respects, as much as we can, made friendly concessions. There are one or two subsidiary questions in addition to those which appear on the Paper of which I have given notice to the noble and learned Lord. One is regarding the payment of £2,000,000, or even mare, in respect of the Southern Persian Rifle Force which we formed during and after the War. I do not know what the position of that £2,000,000 is. I should like to know also whether he could say anything about the position of the Bahrein Islands, which your Lordships may remember the Persian Government recently claimed as coming under their suzerainty, which we denied. Then there is the matter of the abolition of the capitulations. I do not know whether the noble Lord is able to say anything about that, and what is the present position. Also, as I read in The Times, not long ago, there is a question of Turkey making a road from the Black Sea, from Trebizond, into North-West Persia, so as to avoid commerce going to Persia having to go through Soviet Russia, where all these impediments are put in the way of Persian trade.

I was going to ask a question about the Imperial Airways, but only two days ago the Secretary of State for Air gave us a very clear exposition of the position of Imperial Airways in traversing Persia. It is, however, very noticeable that Jonkers, the German Company, have been for some years operating in Persia, to the great advantage of Persia. I think they have traversed about 4,000 miles of the country and have carried 10,000 passengers without any serious accident. In fact German influence in Northern Persia is becoming very considerable. The chief financial adviser of Persia is a German. Again, the French are very busy indeed in forming educational establishments in Persia, and are operating a big wireless station in that country. In fact our position and influence in Northern Persia has considerably lessened, compared with that of other countries. In saying this I am not doing so by way of complaint against His Majesty's Government. I suppose there may be various causes which have led to this rather humiliating position.

Certainly it is very remarkable that in the reign of Shah Pahlevi very great improvements have been made in Persia. There is now, I understand, no brigandage, and the roads are not only safe but about. 6,000 miles of road can be traversed with reasonable comfort. About 7,000 motor vehicles are now to be found in Persia. In 1928 1,300 cars and 1,700 lorries were imported. When it is remembered that formerly transport in Persia was almost entirely by camel it is a remarkable development in a short space of time. The condition of the people has also been improved. Medical regulations have been adopted and steps have been taken to deal with child mortality and the regulation of the hours of labour for women and children. Other matters that have been dealt with include dyes for their carpets. All these things have been accomplished very largely at the instance of His Majesty the Shah, who put a final touch to all that he is doing by the assistance which he gave to the Persian Exhibition in this country—a wonderful exhibition of Persian art.

Therefore I hope the noble Lord the Leader of the House will be able to say that our present relations with Persia are satisfactory. In 1924, when I moved for Papers, I was told the matter would he considered. No Papers have been published with regard to Persia since thee, and it does seem to me important that at the present time, with this very vexed question going on with regard to the intrusion of Soviet trade in Persia, we should be able to know what is taking place. Therefore I hope that the noble Lord will be able to lay Papers with regard to affairs in Persia.

LORD PARMOOR

My Lords, I would wish at the commencement to deal with the last matter to which the noble Lord refered. I am not aware of any Papers that could be laid, but I can assure the noble Lord that all inquiries will be made, and if there are Papers in the direction indicated they shall be laid. The speech of the noble Lord was partly general, and partly referred to four or five particular points of which he had given me notice. On those points I am able to give him the information which I have derived from the Foreign Office. I will for one moment, however, refer to the general question. It was stated in reply to a Parliamentary question in the House of Commons on July 25, 1929, that the "one desire" of His Majesty's Government "is to see Persia prosperous and peaceful under a strong and independent Government." It has, in fact, for many years been the policy of His Majesty's Government to do their best to strengthen and assist the Central Persian Government in every possible way, and to establish friendly and cordial relations between the two countries. If I understand the purport of the general observations of the noble Lord, that is what he would desire. Obviously that is so, judging from the interest which he has taken in Northern Persia.

Negotiations for a general treaty and a commercial treaty between the two countries have been proceeding for a considerable time through His Majesty's Minister at Teheran. Agreement has been reached on a number of points, but certain difficulties are still outstanding. His Majesty's Government have given every indication of their readiness to reach an equitable settlement of these questions also, and they are confident that if the Persian Government so desire the negotiations could without difficulty be brought to an early and successful conclusion. Unfortunately, it has nut been possible of late to make further progress in these negotiations, although His Majesty's Government are not without hope that the Persian Government will in time come to realise that a settlement of outstanding questions is in the mutual interests of both countries. I think everyone here will realise the importance of that settlement.

The principal measures regarding exchange control and a trade monopoly, to which the noble Lord has referred, are as follows: The exchange control law of February 24, 1930, set up a Commission for fixing the rate of exchange, and placed stringent restrictions on all dealings in foreign exchange. Of course, that was not favourable to foreign trade, or to the trade between this country and Persia. The so-called foreign trade monopoly laws of February 25 and March 11, 1931, are in reality in the nature of import restriction measures. Under these laws the import of certain goods (luxuries and articles competing with local products) has been prohibited and that of others seriously curtailed. Such imports as are admitted, within the limits of fixed quantities, are only admitted against a guarantee to export foreign produce to an equivalent value.

LORD LAMINGTON

Does this apply to all Persia, South and North?

LORD PARMOOR

I understand so. Yes, certainly to Northern and to Southern Persia. These restrictions have undoubtedly placed all foreign traders in Persia in a position of great difficulty. The restrictions imposed last year on exchange transactions prevented foreign traders in Persia, in most cases, from transmitting any money out of Persia. Representations have been accordingly addressed by His Majesty's Minister at Teheran to the Persian Government on the general question of these exchange regulations, and their adverse effect on trade, and further representations have repeatedly been made on behalf of individual British firms whose interests have been affected by-the difficulty of transmitting to this country the proceeds of their sales in Persia. The further legislation passed in February and March of the present year—the so-called monopoly law—has in fact brought all trade to a standstill.

EARL PEEL

Is that foreign import and export trade?

LORD PARMOOR

I think both, because there is a great restriction of import trade, and, as regards export trade, money was not to be taken out of the country. The conditions on the Persian market are so unsettled that for the present no orders for foreign goods are going forward. As soon as His Majesty's Government learnt of the intention of the Persian Government to introduce such legislation, His Majesty's representative at Teheran was instructed to inform the Persian Government of the apprehension with which His Majesty's Government viewed such a proposal, and of their desire to be reassured as to its effect upon British traders in Persia and on British trade in general. The Persian Government replied to this note that their decision to adopt this policy had been taken on account of the acute economic crisis prevailing in the country, and added an assurance that they would exert their utmost care to ensure that no unlawful preferential treatment would be accorded to the detriment of any of the countries in commercial relations with Persia. Of course, our special interest was to see that we were not subject to special disadvantages under this general restriction of Persian trade.

Upon the entry into force of the monopoly law, His Majesty's representative at, Teheran was instructed to request the Persian Government to allow the unrestricted admission into Persia of goods which had been shipped before March 1, and so to deprive the law of its retroactive effect. The Persian Government, however, have not seen their way to comply with this request The general attitude of His Majesty's Government towards this Persian legislation has not yet been defined, and its effect upon British trade is being closely watched by His Majesty's Government. It will be realised that, short of violating international obligations, countries are at liberty to introduce such economic measures as they may consider necessary for the protection of their national interests. That is to say that Persia, as an independent country, can take the attitude which it is taking in these commercial matters within the rights which she possesses as an independent nation. Moreover, Persia's treaty obligations do not prevent her from imposing, as a temporary measure, restrictions for the purpose of protecting, in extraordinary and abnormal circumstances, the vital interests of the country. There is no reason why Persia should not do it.

Whether the present very elaborate restrictions, which are bound to result in a great dislocation of normal trade relations, can properly be reconciled with Persia's treaty obligations is a question which is still under the consideration of His Majesty's Government, who do not desire to do anything which would seriously embarrass Persia in meeting her difficulties, provided that the restrictions imposed upon British trade do not last longer than the emergency which they are designed to meet., and provided that in practice British trade is not handicapped in competition with the trade of other countries. His Majesty's Legation at Teheran is in constant touch with individual British firms whose interests are affected, and in this country the Department of Overseas Trade have endeavoured regularly to keep those British firms and banks concerned familiar with the Persian regulations, and to assist them generally, through the medium of the Commercial Secretary to His Majesty's Legation at Teheran, in the difficult economic conditions which have arisen.

That is all the information of a general kind which I can give. But there were some incidental, but very important, matters on which the noble Lord asked me for special information. I beg to thank him for giving me notice. I could not have given him the information had I not known what the nature of his inquiries would be. The first matter on which he asked for information was with reference to Soviet activities. He desired to know whether Persia in 1928 refused to enter into a Central-Asian Mahomedan League in alliance with Moscow. Reports have reached His Majesty's Government to the effect that the Soviet Government some years ago were exploring the possibility of arranging for some kind of combination with Moslem States. While there is no reason to suppose that such a project was welcome to the Persian Government, His Majesty's Government are clearly not in a position to state what precisely was the attitude adopted towards it by the various Governments concerned. So far as we know, therefore, it was not very favourably entertained by the Persian Government.

The second question is whether a statement could be made as to the effect of the abolition of the capitulations. Since the abolition of the capitulations on May 10, 1928, all foreign nationals in Persia have been subject to the jurisdiction of the Persian Courts, and the fact that few, if any, serious complaints from British subjects of injustice have been brought to the notice of His Majesty's Government tends to show that the Persian authorities are fully alive to their responsibilities in this respect, and are endeavouring to the best of their ability to establish an efficient and adequate judicial system. In matters of taxation British subjects receive the same treatment as Persian nationals. I hope that that, at any rate, will be a satisfactory answer to the noble Lord.

His third inquiry was for information as to the agreement with Imperial Airways. It is assumed for the purpose of my answer that Lord Lamington intended to refer to the arrangement under which Imperial Airways have been permitted by the Persian Government to run a service along the Persian coast of the Persian Gulf. This arrangement was concluded for a period of three years, which expires on March 31, 1932. The Persian Government have recently indicated a new route across Central Persia to be used for international aviation between Iraq and India. Imperial Airways have been permitted to survey this proposed route.

The next question that the noble Lord asked me was about payment in connection with the South Persia Rifles. I think this is a point upon which there has been some misapprehension and I will try to make it clear. The South Persia Rifles were a local force raised by the British authorities during the War. They were disbanded in 1921. It is not understood to what payment the noble Lord, Lord Lamington, refers. No payment is due to His Majesty's Government from the Persian Government in connection with the South Persia Rifles.

The noble Lord's next question was about the Bahrein Islands. I think I am right in saying that those islands are off the Arabian coast but quite close to it. It is public knowledge that the Persian Government have revived an ancient claim to the Bahrein Islands From which they were expelled in 1783 by the ancestors of the present Arab rulers. The Persian Government have in the past few years addressed several communications to His Majesty's Government on this subject and have sent copies of those communications to the League of Nations. His Majesty's Government gave a full and detailed statement of their reasons for refusing to admit this claim, which they regard as quite untenable, in a Note addressed to the Persian Minister in London on February 18, 1929, of which a copy was also communicated to the League. In that sense, it has been published. There have been no subsequent developments of importance in connection with this matter.

I am glad to say that I have now come to the last of these questions. The noble Lord asked whether information could be given about the suggested road in Turkey, and enclosed a cutting from The Times to save trouble. This is the information I can give him about that road. His Majesty's Government's information is to the effect that the Turkish Government have decided to repair the old route between Trebizond and the Persian frontier. Repairs were to have been begun at the end of May or early in the present month, and it is proposed that the work, which has been entrusted to a Turkish company, mild be completed in two years.

VISCOUNT MERSEY

Could the noble and learned Lord give us further information about that road? It is the road, I suppose, from Trebizond to Rowanduz?

LORD PARMOOR

Yes.

VISCOUNT MERSEY

It was never a metalled road at all.

LORD PARMOOR

I hope the further information I am about to give will meet what the noble Viscount is asking me about. The Rowanduz route between Iraq and Northern Persia is at present under construction. That is an alternative way between Northern Persia and Iraq. When the work on these roads is complete and they are open to motor traffic, North-Western Persia will have new and important means of communication with the West, which should much facilitate trade with that district. That is the information which I have obtained on this special point about which lord Leamington asked for information. I do not say that he will approve of the information, but I hope he will consider the information given satisfactory to him. It is the best I have been able to obtain and, I think, is all that can be obtained at the present time. I will not go back to the general question but I might emphasise, in conclusion, that it is the great desire of His Majesty's Government to be on a friendly footing with the Persian Government in order that together and for their mutual advantage they may do what is necessary for all forms of prosperity so far as Persia is concerned.

EARL PEEL

My Lords, I think the House is very much indebted to my noble friend Lord Lamington for introducing this subject again. As he says, we have not had an opportunity of being informed upon or of discussing the affairs of Persia for the last six years. I remember very well that before that period my noble friend, who has long taken a great deal of interest in Persian matters, raised,, I think, an annual discussion upon this subject, partly because, as an old Governor of Bombay, he fully realised the great importance of a prosperous and independent Persia not only to us but to the Indian portion of His Majesty's Empire. But I am bound to say, though we are much obliged to the noble and learned Lord for the detailed information he has given us, one cannot regard it as very satisfactory information. The whole story that he has told us, with some parts of which we were familiar, as to the monopoly of trade, the difficulty of exporting money and the great difficulties that are laid before traders, both British and others, may be rather depressing in the present situation when, of course, we are met with so many difficulties in other parts of the world. But I understand from what the noble and learned Lord says that His Majesty's Government are doing their very best by representations and otherwise—

LORD PARMOOR

Hear, hear.

EARL PEEL—to see that, first of all, no discrimination is exercised against British trade and, secondly, that everything is being done to try to bring about a situation in which trade will commence again. I think he realises himself that the picture he has drawn is, on the whole, rather a melancholy one. He told us something about the exchange in Persia at the present time, but I do not think he told us what changes have been made in the exchange. The last figures that I have show that the rate was fixed recently at 89½ krama to the £ sterling, the rate last year being 59½. From those two facts alone your Lordships will see what difficulties have been introduced into trade by that de-valuation of the krama.

I do not think I have much comment to make on many of the observations of the noble and learned Lord, but I do not think he told us very much about the operations of the Soviet Government in Persia and the points that were put by my noble friend as to the extent of the propaganda that was being carried on there both in Teheran and elsewhere. He did, however, say something about the arrangements that had been come to, and was able to give some degree of information in regard to them. I was also very interested to hear the definite line that has been taken about the claims of Persia to the Bahrein Islands. That has been looked into at different times, and His Majesty's Government and others always come to exactly the same conclusion that the claims for the Bahrein Islands were shadowy and dated back to a period of nearly two hundred years ago.

On the general question on which the noble Lord dealt, our attitude towards Persia is an extremely simple and plain one. It is highly to our interests, and to the interests of India, that we should have an independent Persia, a Persia which is enabled to negotiate on free and equal terms with all her neighbours, and a country which, by maintaining her stability, adds very much to the stability of the East. That is our attitude. We should be very glad if there was some reciprocity shown as regards our trade by the Persian Government itself. We can only wish that the friendly attitude we maintain towards Persia, and our desire that she should retain her independence and her position, was followed by the other neighbours of Persia.

VISCOUNT MERSEY

My Lords, if I may add a word to what has been already said it is this. I think that possibly the noble Lord the Lord President might reconsider what he has said about laying no Papers. I do not say that he should lay Papers at this moment, but we are extraordinarily ignorant nowadays about what is going on in Persia, and I think that the four suggestions at any rate which have been mentioned this evening would bear a great deal more detail than has been given, and particularly the possibility of getting trade routes by avoiding Soviet Russia. That, I think, could certainly be examined into. Would it not be possible for a Despatch to be called for from His Majesty's Minister at Teheran at some future date, and be laid on the Table of this House?—a Despatch that would give information both to this House and to the trading community, and would be more valuable, I think, than the speech, informing as it was, which the noble Lord has just delivered. I do not mean to press for it at this moment, but perhaps later on, in two or three months time, we might have fuller information in detail. It would be appreciated by those persons who are interested in Persia and who know something of their own knowledge about it, and would be useful also to the trading community at large.

LORD PARMOOR

I will certainly represent those views to the Foreign Office, and will then communicate with the noble Viscount.

LORD LAMINGTON

My Lords, I have to thank the Lord President for the considerable amount of information which he has given us. After a silence of six years it will elucidate many problems for those who are interested in Persia. The noble and learned Lord was very tactful in the remarks he made. He never referred to the commercial oppression to which, I understand, Persia is being subjected at the present time. She has had to impose this monopoly to save herself from commercial tyranny. All other countries, as the noble Lord said, suffer accordingly. I understood him to say in regard to the Trebizond road that it is being made in conjunction with or on the same footing as the one from Persia. The two roads will meet, and form one trunk road between Turkey and Persia. If there is an understanding between the two countries that is an important matter. It is very satisfactory indeed to hear that the abolition of the capitulations have not given a cause of grievance to any British subject. It shows what an enlightened policy Persia is now taking, placing herself among the great nations of the world and recovering her old prestige. It was very satisfactory indeed to get the assurance from His Majesty's Government that what we desire in our own interests is a strong, independent and prosperous Persia. I would ask whether the noble Lord would, if possible, see whether Papers could be laid about the commerce of Persia at the present time. I think we are entitled to that information.

LORD PARMOOR

I cannot do more than say I will make inquiries at the Foreign Office to see if there are such Papers.

Motion, by leave, withdrawn.