In consultation with a Turkish representative, Hakki Pasha, all economic questions concerning German undertakings were settled in the main according to the wishes of the Deutsche Bank. The most important concession Sir E. Grey made to me personally was the continuation of the railway as far as Basra. We had dropped this point in favour of the connection to Alexandretta; up to that time Bagdad had been the terminal point of the railway. An international commission was to regulate navigation on the Shatt-el-Arab. We were also to have a share in the harbour works at Basra, and received rights for the navigation of the Tigris, which hitherto had been a monopoly of the firm of Lynch.
By this treaty the whole of Mesopotamia as far as Basra was included within our sphere of influence (without prejudice to already existing British navigation rights on the Tigris and the rights of the Wilcox irrigation works), as well as the whole district of the Bagdad and Anatolian railway.
The coast of the Persian Gulf and the Smyrna-Aidin railway were recognised as the British economic sphere, Syria as the French, and Armenia as the Russian. If both treaties were executed and published, an agreement with England would be reached which would preclude all doubts about the possibility of an "Anglo-German co-operation."
The Question of the Navy
The Naval question was and is the most delicate of all. It is not always regarded rightly.
The creation of a powerful fleet on the other side of the North Sea—the development of the greatest military power of the Continent into the greatest naval power as well—was bound to be felt in England as at least "inconvenient." There can be no doubt about this in any reasonable view. In order to maintain her advantage and not to become dependent, in order to secure the rule over the seas which is necessary for her if she is not to starve, she was compelled to undertake armaments and expenditure which weighed heavily on the tax-payer. England's international position would be threatened, however, if our policy created the belief that warlike developments might ensue—a state of affairs which had almost been reached during the time of the Morocco crises and the Bosnian problem.
Great Britain had become reconciled to our fleet within its then appointed limits, but it was certainly not welcome, and was one of the causes—though not the only cause and perhaps not the most important—of her adhesion to France and Russia; but on account of the fleet alone England would not have drawn the sword any more than on account of our trade, which has been alleged to have produced jealousy and finally war.
From the very beginning I maintained that, notwithstanding the fleet, it would be possible to arrive at a friendly understanding and rapprochement if we did not introduce a new Navy Bill and our policy were indubitably pacific. I also avoided mention of the fleet and the word never passed between Sir E. Grey and me. On one occasion Sir E. Grey said at a meeting of the Cabinet, "The present German Ambassador has never mentioned the fleet to me."