891.51A/1017: Telegram

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

116. Foreign Minister Saed summoned me to long personal conference this afternoon regarding Millspaugh.73 Immediate cause was resignation rumored some days ago and confirmed today of General [Page 391] Shafai, Minister of Commerce and Industry.74 Saed stated categorically this resignation was essentially a protest by the Government against (1) Millspaugh’s tendency to regard Government arms factory as a commercial undertaking for money making purposes instead of a political instrument for implementing Iranian Soviet relations and (2) his insistence that Soviets pay for at least part of arms and munitions75 they have received before Millspaugh will approve payment of wages of munitions workers. Saed insisted this state of affairs could be tolerated no longer, that Millspaugh had taken his stand vis-à-vis the Soviets without having consulted Foreign Ministry regarding possible political considerations at issue, that in meddling in such affairs the Doctor was stepping outside realm economics and interfering in Iranian politics, and that in a long interview this morning with Millspaugh he had endeavored apparently without success to show Doctor error of his ways. Saed hoped that I too would see Millspaugh and insist that his position respecting operation of arms factory be forthwith abandoned, since 9,000 munitions workers unpaid for 2 months could only hurt both Government and Millspaugh without helping either financial position or Soviet relations.

I shall see Millspaugh tomorrow but pending possible directive from Department do not propose to do more than outline to him gist of Foreign Minister’s remarks, leaving to him responsibility of either maintaining or altering his stand. He is of course acting in good faith since he is merely seeking to protect Iran’s financial interests, but Saed has clearly indicated that any move tending to antagonize Soviets will not have support either of Shah or Iranian Government. Saed pointed out this afternoon that his country had lost heavily on virtually every contractual arrangement that had been entered into with Soviets, and he cited CQRS contracts, rice and piece goods agreements,76 et cetera but he stated emphatically that continued good relations with Soviet Union just at this time were worth many times the millions of tomans such relations had already cost Iran.

Remainder of my 2–hour session with Foreign Minister was devoted largely to general exposition by him of his unhappy conclusion that Millspaugh was making a dismal failure of his program in Iran. Saed was neither very original nor consistent in his statements and I gathered that he was voicing second-hand opinions which might well have been a composite of Iranian-British-Soviet thought. He [Page 392] repeatedly stressed that he had personally been responsible for bringing American advisers to Iran but that from the beginning he had felt that this country did not need their technical skill so much as for them to act as cushion between British-Soviet conflicting political interests. Virtually with his next breath Saed was expressing conviction that (1) Millspaugh’s mentality had remained exactly where it was 20 years ago,77 (2) Millspaugh refused to employ Iranians, many of whom were well qualified to do work for which high priced American amateurs were being brought to Iran, (3) he (Saed) had become extremely doubtful either of Millspaugh’s ability or of that of most of his staff, many of whom spent only few days or weeks in Iran before returning home in disgust, all at expense of Iranian people, and (4) while Millspaugh had been granted every demand he had made of Iran he had failed thus far to make as intructive [any constructive?] contribution toward betterment of conditions in this country.

This situation warrants the most careful attention but until political picture has been clarified in light of forthcoming convening of Majlis,78 now scheduled for next Saturday, I feel any immediate action on our part is unnecessary. Saed is an honest man, is essentially friendly, and it would be a pity if he should turn or be turned against our adviser program. Several times this afternoon I sensed in his unaccustomed forcefulness a rehearsal for premiership.

Ford
  1. Arthur C. Millspaugh, American Administrator General of Finances in the Iranian Government; the Millspaugh Financial Mission was composed of approximately 60 American experts, of whom each of about 15 senior members was charged with the management of an important segment of the Iranian economy.
  2. Brig. Gen. Ismail Shafai, an appointee of the Shah, Mohammad Reza Pahlavi, in the Cabinet reorganization of mid-December, 1943.
  3. For correspondence regarding interest of the United States in the Iranian-Soviet arms contract of January 23, 1943, see Foreign Relations, 1943, vol. iv, pp. 628 ff.
  4. For correspondence relating to interest of the United States in the Iranian-Soviet rice-cotton piece goods contract of November 2, 1943, see pp. 306 ff., passim.
  5. For correspondence regarding Dr. Millspaugh’s mission to assist in the administration of the finances of Persia, 1922–1927, see Foreign Relations, 1927, vol. iii, pp. 523 ff.
  6. The Iranian Parliament.