890G.24/42½: Telegram
The Secretary of State to the Chargé in Iraq (Farrell)
138. Your 135, July 2, 1 p.m. A communication dated July 10 has been received from the Secretary of War,12 of which the following is a summary.
Begin Summary. Attention is called to the fact that all materials imported into Iraq by the Military Mission and the civilian agencies assisting it are subject to customs dues and that materials and supplies passing through Iraq are subject to transit dues. The matter involves shipments by the Army Quartermaster, District Engineers, General Motors, Douglas Aircraft, etc. It appears that the contract status of Pan American Airways and Douglas Aircraft is not known in Iraq. Douglas is providing assembly and maintenance services under a War Department contract. Pan American Airways-Africa Limited, a subsidiary of Pan American Airways, Incorporated, operates a transport service from the west coast of Africa to the Middle East, under War Department contract. Pan American Air Ferries, Incorporated, flight delivers Lend-Lease military aircraft over the same route. These operations are in part covered by contracts between the British Government and Pan American. The transport operations in Africa and the Middle East are under the control of the War Department and all charges for transportation are for the account of the United States. If the duties are paid by Pan American-Africa in performing actions required under the contract they fall upon the United States Government, which is consequently directly interested in the suspension of the duties and transit dues in the case of Pan American. It is desired to arrange for the admittance free of duty of materials and supplies consigned to the United States Government agencies, and the exemption from transit dues of all goods in transit for United States Government agencies on the declaration that they are imported for transshipment. End of Summary.
The Department is unable to understand the apparent desire of the Ministry of Justice, based on the advice of the British legal adviser, to negotiate a convention to serve as a legal basis for legislation to authorize customs franchise. In this connection it is noted that other countries, including Egypt, have found no difficulty under similar circumstances in reconciling a grant of customs franchise with existing legislation.
The situation respecting Pan American has been clarified by this Government’s action in taking the question of civil air rights in Africa and the Near East out of the hands of that organization and making the question the subject of diplomatic correspondence which in its present phase is being conducted with the British Government.13 That question therefore can have no bearing on the present matter.
[Page 350]This Government’s contributions both direct and indirect to the defense and security of the Near East, including Iraq, do not have the character of a commercial operation.
In view of all the circumstances, this Government is confident that the Iraqi authorities, on further consideration of the matter, will be prepared to grant the desired exemptions with retroactive effect.
You are requested to transmit the sense of the foregoing to the Foreign Minister.
Repeated to Embassy, London,14 which is being requested to approach the British authorities there with a view to supporting action by the British Ambassador at Baghdad.15