Mr. W. A. B. Iliff of
the British Delegation to Mr. John D.
Jernegan of the American Delegation
Moscow, 25 October,
Conference Document No. 28
Dear Jernegan: I enclose two copies of Draft
Proposals for a Financial Agreement under Article IV (2) of the
Anglo-Soviet-Persian Treaty of January 1942, with respect to the use by
the Allies of the Iranian State Railway.
The document has been prepared by the British Delegation as a basis for
discussion by the sub-Committee on Persia.
Copies have been sent to the Soviet Delegation.
British Proposal for Financial Agreement on Allied
Use of Iranian State Railways
The following proposals for a Financial Agreement, under Article IV
(2) of the Tripartite Treaty, covering the Allied use of the Iranian
State Railways, during the period of Treaty collaboration are put
forward by the British Legation, Tehran, for the consideration of
the Soviet and American authorities, and as a basis for
- The Allies should guarantee the Iranian State Railway an
annual net revenue (i.e. Gross Receipts less operating expenses) equivalent to the annual net
revenue in the year immediately preceding the Allied occupation,
namely 103 millions rials.
- The Traffic Rates to be charged by the Railway should be fixed
from time to time by a Combined Rates Tribunal, to be composed
of four persons, namely, a Persian, a Soviet, an American and a
British representative, appointed by their respective
- The Traffic Rates to be fixed from time to time should be no
higher and no lower than may be necessary to produce the annual
amount guaranteed by the Allies under 1 above.
- To provide the railway with the funds necessary to meet its
working expenses, and to enable it to pay the guaranteed net
revenue to the Persian Government in monthly installments, the
Allies should undertake to make monthly payments on account to
the Railway Administration equivalent to 80% or 90% of their
estimated traffic bills, and to pay their traffic bills in full
as soon as they are rendered by the railway.
- The Persian Government to agree that the monthly amounts
payable under 4 above shall be disposed of as follows:
- To the Persian Ministry of Finance: Rials 8.58
millions (being 1/12th of the annual guaranteed net
revenue of 103 million rials); and
- In so far as the balance remaining exceeds the amount
which the railway requires to finance its monthly cash
requirements for operating expenses, the excess should
be paid into a Suspense Account.
- British and Russian liabilities for freight carried up to date
should be discharged forthwith on the basis of 4 above, and the
proceeds dealt with as in 5 above.
- If in any month the amounts paid under 4 above were
insufficient to enable the railway (a) to
meet its operating expenses and (b) to
earn a net revenue of not less than 1/12th of the guaranteed
annual sum under 1 above, then the sum necessary to enable the
railway to do so should be transferred to the railway from the
Suspense Account. If the sums to the credit of the Suspense
Account were insufficient to meet this liability, the Allies
would pay into it, in proportions to be agreed between them, the
amount of the deficiency. The proportion might be the proportion
that Russian traffic bills bear to British traffic bills, at the
moment approximating 20/80.
- The Suspense Account should be operated under Allied
- The Allies should at this stage reserve full rights as to the
ultimate disposal of any capital assets of the railway provided
by them, or at their expense.
Moscow, 24 October,