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u Wo have tlie honour to aoknowlcdpo the rocoipfc of your Sccrot dospatch No. 38, dated the
25tli August 1904, regarding a proposed loan to the Persian Government for the purposo, and
on the security of a schemo for tho irrigation of Arabistan.
Vrom Llentcn.nt l.orin,„, No. 26. dated th. Tho mattor is ono which had already engaged
2nd July 1004. our attention, and wo now have the honour to for-
(2) Memorandum on tho Rivera of Arabistan by ward copies of the marginally noted papers on tho
Major E. IJ. Burton. subjoct.
3. In our telegram of tho 4tli September, wo suggested the deputation of an expert from
India to examine the potentialities of irrigation in this rogion. We bavouot yet recoived a final
expression of your views on this proposal, which we trust will meet with your approval. Pend­
ing such an examination as wo contemplato, wo feel that any opinion which we may express on
the subject must nccessati'ly bo of a tentative character. Sc far, however, as we can at present
jud^c wo incline to bclievo that the schemo is ono which is deserving of the support both of His
Majesty's Government and of tho Government of India, and in which wo should bo prepared to
load financial assistance.
4. We aro equally unable to discuss in detail tho terms on which our support should bo
lent, until we aro in a position to appreciate more clearly the probable scope of the undertak­
ing. There aro certain points, however, which may be noticed at the prosent stage. In his
despatch No. 133, dated tho 19th July 1904, Sir Arthur Hardinge reported Mons. Nous's
suggestion that the intended loan shouldfbo secured both on tho revenues accruing from the
projected works and on the domains fertilised thereby, and that tho transaction should ako
include an undertaking by tho Persian Government that all restrictions on tho export of grain
. _ . . ... ... ._ ... ... . . from the Karun valley should henceforth be abo-
• Forwarded by tho Minister with hie despatch r . T . * r i ruu a , i „
Vo. 44, dated the 20th Auguet 1904 (copy enclosed). llshe(1- In his note* ot the 19th August, how-
over, wo observe that Mons. Naus makes mention
of tho hypothecation of the crops only, and not of the lands, and, further, that no reference is
made to the removal of embargos on the exportation of com. We consider these points to be
important, and would lay stress on the adoption of the terms as stated in Sir Arthur Ilardioge's
despatch of the ]9th July.
5. We are in full agreement with the view stated by Lord Curzon in his Minute of the
1st August 1?04 that, in considering any scheme of irrigation, we must not lose sight of the
possibility that the diminution of water caused thereby may render further navigation of the
Karun impossible. Major Burton in bis memorandum has expressed the opinion that this
result must follow if the barrage at Aliwaz be reconstructed. Though wo should not neces­
sarily regard the prospect of this contingency as precluding us from encouraging projects of
the kind contemplated, wo hold that it fully justifies our claiming that tho irrigation schemes
should be worked on lines approved by us, aud that simultaneously with the c;*nclusiou of
arrangements for their execution wo should receive a formal concession of tho right to
substitute for the thoroughfare which tho Karun now providos, such roads, or railways, with
suitable maritime termini, as may be requisite for the purposes of our commercial interests
in Arabistan. A furthor concession which might well be demanded is that we should be
entitled to full voice in any further schemes for the development of Arabistan by irrigation
from tho other rivers of the province besides the Karun, such as the Kerkha, Shaur, Diz, or
Jerrahi Rivers; and that, should it be necessary to obtain financial assistance from non-Persian
sources, the British Government or British firms should have tho preference. For the grant
of such undertakings there is obviously full justification. The opening of tho Karun to
navigation was obtained through British influence. Tho trado which now passes by its waters
i*6 practically entirely British. Tho bulk of the traffic is in the bands of the British firm of
Messrs. Lynch Brothers. We have also taken the principal part in the development of the land
routes by which tho merchandise thus importod is subsequently distributed. The road from
Ahwaz to Ispahan was built by a British firm, and a British compauy is now arranging to
open up another line of corarauijication to the north by virtuo of a concession which they hold
from the Shah's Government.
6. Apart from the considerations to which wo have just referred, there are other factors
which give us a special position. The proposals which havo been referred to us purport, wo
understand, to emanate from the Central Government at Tehran. Similar projocts, how­
ever, as will be seen from Lieutenant Lorimer's
f Encloauro No. 1.
letteist have been considered by the Sheikh of
Mohammerah. This Chieftain is entitled to full consideration in connection with the scheme,
which could not be executed without his consent—a consent which there would doubtless be no
difficuliy in persuading him to withhold, should there be any doubt as to the advantage to
himself or to us. The question of occupancy and proprietary rights in the soil of Arabistan
formed the subject of discussion between the Shejkh and the Shah in 1902, and the reconcilia­
tion of tho interests of the local tribes and of the Government at Tehran is a matter which may
cause some difficulty in connection with the proposed undertaking.
7. A further point which requires consideration is that of tho manuor ia whioh the loan
should be disbursed. Wo should havo little contideuce in tbe allotment of the loan ta the
purpose for which it is intruded if the money actually passed through the hands of any
Persian offioial, and- wo consider that the oply practical way of securing our object is that a
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