The Chargé in Iran ( Ford ) to the Secretary of State

No. 1070

Sir: I have the honor to refer to the approach which has been made to the Department by the British Embassy at Washington, as recorded in a memorandum of the Division of Middle Eastern Affairs dated July 27, 1944, looking toward payment by the United States of a share of the expenses incurred in transporting aid to the Soviet Union through Iran.

The Legation notes that the British Government has now raised this question, for the first time so far as I am aware, on a political level. A previous British proposal, in 1943, that the American Government should take over the financial responsibilities of the operation, was made to the American military authorities in Iran and was rejected by the War Department after only informal consultation with the Department. Neither the Department nor the Legation was brought directly into the negotiations.

In the present instance, it would seem that the decision to be taken depends largely upon general political and financial policy vis-à-vis the British Government. However, there are certain conditions peculiar to Iran which have a bearing on the matter and which it may be worth while to bring again to the Department’s attention:

None of the Allied powers operating in Iran has any definite agreement with the Iranian Government with respect to the costs chargeable to the various parties in connection with transportation of aid to Russia and supplies to their respective military forces in Iran.
The British Government, under pressure of circumstances, has been the only Allied agency to make substantial payments on account. The American Government has hitherto disclaimed responsibility, and the Soviet Government has, for one reason or another, failed to settle [Page 386] its accounts to any appreciable extent. For practical purposes, therefore, it may be said that the British Government is shouldering the greater part of the financial burden at present. It has been forced into this position, because, if money had not been forthcoming from some source, functioning of the railways would have been affected and political repercussions might have been expected as well.
In order to get out of this undesirable position, the British have taken the initiative in attempting the negotiation of an agreement which would fix the relative shares of the parties concerned and provide a procedure for the orderly payment of those shares in such a way as to ensure that the railways would at all times have adequate working funds. The agreement was also designed to fix, at reduced rates, the charges to be levied by the railways for the transport of Allied goods and to establish the rights of the several parties with respect to their contributions of supplies and permanent improvements. (See my despatches Nos. 869 and 946 of March 7 and May 16, 194466 for draft agreements put forward by the British Embassy at Tehran.)
It was proposed that the United States should be a party to this agreement, the others being Great Britain, the U.S.S.R. and Iran, but after consideration it was decided by the Department and the War Department, on recommendation of the Legation and American military authorities in Iran, that the disadvantages of participation would outweigh the advantages. Since we were not to pay the costs, it was not of direct interest to us to join in fixing those costs, and it was feared that the negotiation of the agreement might entail conflict with the Soviet Government from which we would have much to lose and little to gain. (See my telegram No. 350 of May 19, 1944.)
If, however, the United States Government should agree to share with the British and Soviet Governments the cost of the aid to Russia movement through Iran, I believe a different situation would present itself. We would then have a concrete interest in determining the amount of the costs to be paid and also in ensuring that our partners lived up to their financial obligations. It would seem undesirable to place ourselves in a position similar to that of the British, whereby we might be forced to pay more than our share merely to keep the line of supply functioning. In this respect, the draft proposal left with the Department by the British Embassy and Treasury representatives on July 2767 would appear inacceptable, since it would leave it to us to get reimbursement from the Soviet Government as best we could.
The Legation would suggest, therefore, that the Department consider the desirability of making any American financial commitment conditional upon the conclusion of an agreement with all four parties, United States, Britain, U.S.S.R. and Iran, regarding freight rates and other charges, the shares to be paid by each, and the procedure for determining the amounts of those shares and the manner of their payment.

The Department may wish to discuss this question with Major General Donald H. Connolly, Commanding, Persian Gulf Command, and Colonel John B. Stetson, fiscal adviser to General Connolly, both [Page 387] of whom are now in the United States and are expected to remain there for some five or six weeks.

Respectfully yours,

Richard Ford
  1. Neither printed.
  2. See footnote 62, p. 382.