891.51/559: Telegram
The Minister in Iran (Dreyfus) to the Secretary of State
[Received 10:43 p.m.]
223. Department’s 84, February 16. Millspaugh expresses opinion that Majlis may refuse to ratify two British-Iranian financial agreements because the proposed agreement with United States offers Iran more favorable terms with regard to (1) gold conversion and (2) a variable exchange rate. Ratification of financial agreement of May 26, 1942, and supplementary accord of January 25, 1943, is now being considered in Majlis. On other hand it should be pointed out that proposed financial accord with Soviet Union offers even less favorable than that with British.
British Legation is telegraphing Foreign Office suggesting that three courses appear to be open: 1, To adhere to present position of refusing to deliver gold until agreements are ratified. This might lead to deadlock since currency commission takes position that no more notes will be issued pending delivery of gold. 2, To deliver gold at once and allow ratification to lapse. It seems unlikely Iranians will refuse to deliver rials against sterling. 3, To permit situation to develop and be prepared to concede if necessary on two points of 100 percent gold conversion and variable exchange rate. British Legation prefers alternative 2 but is requesting Foreign Office views.