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The United States, having refused in the Senate to assume a League of Nations mandate over Armenia, decided to not participate in the partitioning of the Ottoman Empire. The U.S. wanted a permanent peace as quickly as possible, with financial compensation for its military expenditure. However, after the American Senate rejected the Armenian mandate, its only hope was its inclusion in the treaty by the influential Greek prime minister, Eleftherios Venizelos. The treaty imposed a number of territorial losses on Turkey. It also had a number of provisions which applied to the territory, recognised as belonging to Turkey.
Financial restrictions
The Allies were to control the Empire's finances. The financial control extended to the approval or supervision of the national budget, financial laws and regulations, and total control over the Ottoman Bank. The Ottoman Public Debt Administration (instituted in 1881) was redesigned to include only British, French and Italian bond holders. The Ottoman debt problem dated back to the time of the Crimean War (1854–56), during which the Ottoman Empire had borrowed money from abroad, mainly from France. Also the capitulations of the Ottoman Empire, which had been abolished in 1914 by Talaat Pasha, were restored.
The Empire was required to grant freedom of transit to persons, goods, vessels, etc., passing through her territory, and goods in transit were to be free of all customs duties. Future developments of the tax system, the customs system, internal or external loans, import and export duties, or concessions could not be arranged without the consent of the financial commission of the Allied Powers. To forestall the economic re-penetration of Germany, Austria, Hungary, or Bulgaria the treaty demanded that the Empire liquidate the property of citizens of those countries in its territories. This public liquidation was to be turned over to the Reparations Commission. Property rights of the Baghdad Railway passed out of German control.
Military restrictions
The Ottoman Army was to be restricted to 50,700 men; the Ottoman Navy could only preserve seven sloops and six torpedo boats; and the Ottoman State was prohibited from obtaining an air force. The treaty included an inter-allied commission of control and organisation to supervise the execution of the military clauses.
