The Minister in Iran (Dreyfus) to the Secretary of State
[Received October 18—12:08 p.m.]
327. The political situation in Iran has suddenly deteriorated and position of Qavam Cabinet is precarious. The situation derives from [Page 156] strong calling for issue of 2 billion additional rials coupled with widespread dissatisfaction at British refusal to furnish wheat and general discontent at treatment accorded Iran as Allies [ally]. These matters were brought to fore by statement made to press by Sheridan,45 pertinent passages of which follow:
“I would like to emphasize that before leaving my country I was assured that the United Nations will not permit Iran to suffer through no fault of our [your?] own. Unfortunately Iran occupies a geographical position which makes it necessary for the United Nations to use your roads and railroads for your [our?] transport of war supplies to Russia. This has caused a complete disruption of your transport services and this as I said above is all due to absolutely no fault of the Iranian people. Every freedom loving individual in the world, yourselves included, must do everything they can to aid the destruction of the German menace.
Rest assured therefore that both the United States and Great Britain have a sincere desire to help you in every way possible but you must help yourselves up to the maximum limit of your own resources. As the months progress if we find that your own resources are insufficient then I assure you that you will have a sympathetic and helping hand from both Britain and America.”
British took exception to Sheridan’s statement since they felt he had no right to bind them to furnish wheat to Iran. Sheridan has assured me he will make no further statements of political nature without consulting me. Situation was further aggravated by Casey46 who, on a short visit to Tehran, offered to trade Iranians 5,000 tons of wheat (half for Iranian Government and half for British troops in Iran) in exchange for 25,000 rifles. Iranians refused on grounds that British have not yet paid for 100,000 rifles and 1,000 machine guns bought several months ago. Casey, because of this refusal and urged on by British Minister who takes stand that no wheat should be supplied Iran, then told Iranians British did not intend to furnish them any wheat and that “I know more about the shipping situation than Mr. Sheridan.”
Prime Minister was then in throes of facing a rebellious Majlis over question of issue of 2 billion additional rials in currency (see my No. 319, October 12.47 The amount was changed to 2 billion to allow 1 billion for Allied war needs and 1 billion for internal needs, principally wheat program which calls for huge subsidy in wheat price to endeavor to bring wheat out of hoarding). The Government and Majlis feel it is useless to make sacrifices for the Allies when the latter refused to furnish wheat or other commodities and when Allies take their potatoes, vegetables and cattle out of Iran. Qavam is discouraged [Page 157] and wishes resign. Majlis in fear inflation and starvation do not wish pass monetary bill.
Prime Minister has telegraphed Churchill48 and Shah telegraphed King asking for benevolent British cooperation in present acute situation.
Crux of situation is wheat. British maintain there is sufficient wheat in hoarding to take care Iran’s needs. I have consistently (see my No. 271, August 2649 and Department’s 277  August 2950) advised an open mind on wheat shipments until we can determine whether measures being taken will bring sufficient wheat to light. I recommend we await Sheridan’s judgment after he has had more time to study food situation. Iranians are at present one jump ahead bread shortage which here is tantamount to starvation. Sheridan has been able keep no more than 2 days’ supply wheat on hand in Tehran and is working desperately to bring in stocks from provinces; he is confident can obtain 35,000 tons in Azerbaijan and 15,000 tons in Khorassan if only he can obtain cooperation of Soviet railway and military authorities. My opinion is there will be wheat shortage within few months and we should keep in mind possible necessity of shipping some 50,000 tons.
Iranians seek promise from Allies their essential needs especially in wheat will be met before they commit themselves to further cooperation or issue of currency. If Qavam Cabinet resigns bill for additional currency must necessarily be tabled in which event Allies will be placed in difficult position of suspending war work or taking matters in own hands. I would recommend we give Iran Government guarantee we will undertake, on Sheridan’s statement that he is unable to uncover enough wheat to last till next harvest, to furnish deficit or at least much as we are able. This would I realize run counter to British policy in Iran. I have impression that British Legation is playing again game of divide and rule and may be endeavoring force out Qavam and obtain more suitable Quisling. It is rumored they favor Tadayyan for Prime Minister. At any rate British policy here seems to me to lack comprehension and vision.