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                         presumed that the pre6onco of theso French officers is not unconnected with the sohemo which
                         has been advocated and urged by Dr. Tholozan, the Shah's physician, which has for its object
                         to const ruct a dam at A hwaz, and to irrigate and cultivate the adjacent lands by a French
                         Company Government arc awnro that a concession was aotually grunted to Dr. Tholozan for
                         this enterprise and signed by the Shah, but Her Majesty’s Minister succeeded in obtaining its
                         cancellation. It was, I think, understood at that tirao that the French Government did not
                         favour the scheme. It appears now, if His Royal Highness tho Zil-us-Sultan’s statement can
                         bo relied nn, that tho sebemo is again beinsr actively pressed, and that tho French aim also at
                         securing for themsclvos tho right of navigation as well as irrigation. There is, at tho present
                         moment, a Fieneh Engineer in the service of tho French Government (M. Dieulafoy) proceed­
                         ing from Baghdad to visit Dizful, Shuster and Korun, and I havo no doubt ouo object of bis
                         visit to thoio districts is in connection with Dr. Tholezau’s Echcrac.
                            7.  It would appear therefore, assuming the Zil-us-Sultan’s statement to be correct, that
                         tho French are, through Dr. Tholozan, actively endeavouring to obtain exclusive control of the
                         Korun, and arc supported by Russian influence at Teheran, whilst tho British Government is
                         urging tho free opening of the river to all nations, and that tho Shah has referred these matters
                         to the Zil us-Sultan. who is disposed to give preference to tho British. So far as I cau form an
                         opiuion, I am inclined to bolievo this is the real position of matters.
                            8.  Tho importance to British interests of opening up the Karun by British means is
                         enhanced by the presence and designs of the French. It appears to me that the French scheme
                         of damming up the Karun at Ahwaz is incompatible with the English one of opening the
                         navigation, and that if, on the other side, the navigation wero conceded, it would put a 6top
                         to the French enterprise. It ia at tho same time quite possible that both schemes could bo
                         worked if under ono control, and it may be tho French aim at securing both objects,
                            9.  It is obviously of much importance to the British Government, in a political as well
                        as a commercial point of view, to prevent French influence being established in that part of
                         Persia. Arabistan is a country which is susceptible to external influence, and should a foreign
                        power obtain such a footing as the French scheme aims at, it would not be difficult to detach
                         much of the province from Persia. It may onoday beof importance to England to have access
                        to the centre of Persia by the routs of tho Karun river, a strong reason for objecting to have a
                        European power predominant in its valley. To Franod and to Russia it ia easy to see the
                        prospect is agreeable. To Pranoe it would, in the outset, open new fields of commercial enter­
                        prise, and, in the future, render her alliance of increased value to Russia in the East. If tho
                        French gained a footing in Arabistan, it would bo almost imperative on the British Govern-
                        ment to take political action there also, and the conflict of intorests would inevitably become
                        a source of disagreement bet ween the two powers whoso interests havo not as yet clashed in
                        those parts. I think, therefore, the French irrigation scheme should be opposed, and, if pos­
                        sible, prevented, both as incompatible with the free navigation of the Karun, and as a danger
                        to the political interests both of England and of Persia.
                            10.  So far it seems clear enough that it is for the interests of the British Government to
                        oppose the French irrigation scheme and to work for the opening of tho navigation of the
                        river under British an-pices. It does not appear, however, quite clear to me that, as matters
                        stand, the permission for free navigation will necessarily be followed by the appearance of
                        English stearaerB on the river. French officers are on tho spot, and possibly might, if delay
                        occurred on the part of the British firm, forestall the latter and placo French vessels on the
                        river. This would certainly not be so serious a matter as the colonization, but it is a contin­
                        gency which l think should be, as far as possible, guarded against This could best be done,
                        assuming the concession of an English monopoly to be now out of the question, by an under­
                        standing being arrived at between the British Government and the firm of M essrs. Gray,
                        Dawes & Co. as to the support to be acoo'ded to them, and the steps they would be prepared
                        to take immediately on the permission of the Persian Government being intimated. I would
                        recommend the grant of a Government subsidy being accorded for at least a limited period.
                        This, besides being an encouragement to the Company, would go far to frustrate any attempt
                        at French competition, and pla- e Government in a good position to require the project to be
                        speedily and effectually carried out, and also to insist on fair play on the part of the Persian
                        Government and authorities.
                           11. Regarding His Royal Highness the Zil-us-Sultan’s expressed desire to receive a
                        decoration in recognition of his proposed service in forwarding British interests, I may, in a
                        confidential report, be permitted to say a few words. Such a favor would of course be out
                        of the question except with the assent of the Shah. As matters now stand, His Majesty
                        has avowedly placed the matter in the Zil-us-Sultan’s hands, and if the latter obliges the
                        British Government, there would be an open reason for acknowledging the obligation, if jt
                        pleased the British Government in the manner suggested. If the Shab did not object, it
                        does not appear why tho feelings or interests of other members of the Royal family need be
                        considered. The two younger sons of the Shah are known to be no friends of England, and
                        if the British Government fiod one of the family cordially diepu6ed, some marked recognition
                        of the fact might have a beneficial effect in Perrin.
                           12. As a commercial enterprise the opening up to the Karun route has a doublo aim—*
                             (1) To divert the foreign traffic from the present long, arduous, and expensive route
                                 of Bushiro Ispahan to the shorter oue of Shuster-Ispahan.




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