The Ambassador in Iran (Morris) to the Secretary of State

No. 93

Sir: I have the honor to refer to the informal comment by the Division of Middle Eastern Affairs on the Embassy’s despatch No. 37 of September 22, 1944 regarding Iran’s desire for compensation for asserted war damages. The Division asks whether the apparent reluctance of the Iranian Government to sign the proposed agreement covering presence of American troops in Iran may be attributed to a [Page 366] desire to improve Iran’s bargaining position with respect to the eventual presentation of Iranian claims.

The Embassy is definitely of the opinion that this consideration has been a major reason for Iranian unwillingness to sign the draft agreement in the form proposed by the American Government. The Department will recall that Article VI of the draft provides that the ultimate disposition of American installations in Iran shall be the subject of agreement between the two governments, such agreement to include the compensation to be paid to the United States. When the negotiation of the agreement in Tehran was suspended last December by the Iranian Government, it was made clear that objection to this clause by the Cabinet was a major reason. It is the Embassy’s understanding that the Iranian Government has consistently taken the view that Allied military installations left in Iran after the war should be turned over to Iran automatically and without compensation. This is, of course, borne out by the Foreign Minister’s note of September 25, 1944, a translation of which was forwarded with my despatch No. 56 of September 29. The Iranian authorities may have been encouraged in this attitude by certain informal discussions with local British representatives in which the British seem to have acted on the assumption that improvements made on the Trans-Iranian Railway would revert automatically to the Iranian Government. (I do not know, however, whether any definite proposal or agreement of this nature has been made by the British Government.)

There may be, of course, additional explanations for the failure of the Iranian Government to show a more active interest in the agreement. The new Majlis, which was inaugurated in February, has displayed comparatively little interest and has not been urging on the Prime Minister in the same fashion as the preceding legislature. Mr. Saed, therefore, may well have felt that other problems deserved his prior attention and that little could be gained through raising again an issue on which he (as Foreign Minister) had already suffered one defeat in the Cabinet, especially since the American command had become pretty well stabilized and had worked out reasonably satisfactory relations with the Iranian authorities and communities concerned.

With respect to the Division’s suggestion that the Persian Gulf Command might study the benefits resulting to Iran from the operations of the Command, it is understood that Colonel Stetson, Fiscal Director under General Connolly, is already making such a survey.

Respectfully yours,

Leland Morris