The British Ambassador ( Halifax ) to the Secretary of State


Ref: 131/8/44

His Majesty’s Ambassador presents his compliments to the Secretary of State, and has the honour to inform Mr. Hull that His Majesty’s Government are anxious to proceed as soon as possible to the conclusion of a financial agreement covering Allied use of the Persian railway system.

[Page 374]
Under Article 4(2) of the Anglo-Soviet-Persian treaty43 the Allied powers undertook to conclude such an agreement as soon as possible after the entry into force of the treaty. But owing to the new factor created by the transfer to the United States authorities of operational responsibility for the railway south of Teheran, two years have now elapsed since the signing of the treaty without appreciable progress towards a financial agreement about the railway.
From the practical point of view it has become urgently necessary to regularize the position as regards freight rates, payment of traffic bills, etc. The present lack of definition has led to considerable confusion besides provoking complaints from the Persian Government.
When the matter was raised at the Moscow conference44 the Soviet representatives said that it was a question for the experts of the three Governments at Teheran. Mr. Eden45 accordingly proposes to instruct His Majesty’s Minister shortly to concert with his Soviet and United States colleagues with a view to preparing an agreed draft as a basis for subsequent negotiation with the Persian Government. It is suggested that the draft should be based on the following main principles:—
The Allies to pay rail charges for freight and passengers at 50 per cent of the public tariff. No change in the public tariff without prior Allied agreement.
The Allies to guarantee a minimum annual revenue of 103,000,000 rials, the first year beginning 21st March 1942. The guarantee to be based on revenue for Persian year 1319,45a i.e. the year preceding Allied occupation. Any monthly excess revenue to be credited and monthly payments implementing guarantee charged to suspense. Payments to guarantee will be first charge on any credit balance. Any final balance to be divided on a basis to be subsequently negotiated. The whole agreement including guarantee provision to be determinable at three months’ notice.
The Persians to pay hire charges for moveable assets (rolling stock) loaned to their railways.
The Persians to pay for services of Allied military personnel loaned to railways.
The Persians to grant equal facilities for Allied acquisition of land as obtain for the Persian Government.
The Allies to reserve full rights regarding subsequent disposal of capital assets (it seems impossible to cover this point in the railway agreement in view of the major difficulties over other capital expenditure in Persia).
Lord Halifax is instructed to request that the United States representative at Teheran may be instructed to concert action in this matter with his British and Soviet colleagues. A similar communication is being addressed to the Soviet Government.
  1. Signed at Tehran, January 29, 1942, British and Foreign State Papers, vol. cxliv, p. 1017; for correspondence regarding interest of the United States, in this treaty, see Foreign Relations, 1942, vol. iv, pp. 263 ff.
  2. For correspondence regarding the Tripartite Conference of Foreign Ministers held at Moscow, October 18–November 1, 1943, see ibid., 1943, vol. i, pp. 513 ff.
  3. Anthony Eden, British Secretary of State for Foreign Affairs.
  4. i. e., 1940.