Office of the Historian

891.24/7–2345: Telegram

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

Tehran, July 23, 1945—9 a.m.
[Received 9:52 a.m.]

520. To Secretaries of State and Treasury and OANLC. From Murray, Glendinning and Stetson. Following comments are relative to status of negotiations on financial arrangements for disposal of surplus property and to sixth draft agreement64 dated 4 July forwarded to Field Commissioner.

Discussions with Iranians to date have proceeded on basis of principles laid down in Treasury’s letter of March 21 to General Connolly. These negotiations have been carried on through three changes of Govt. The present Govt has indicated assent in principle to our proposals and has requested formal presentation thereof for which it has been waiting for over a month. As life of this Govt is exceedingly precarious there is need for as rapid action as possible. Action is also required to prevent further depreciation on both movable and fixed assets and to reduce staff of Army personnel required for maintenance and security.

We are firmly of conviction that nature of agreement which can be successfully negotiated with Iranians and in general procedures to be adopted in handling surplus disposals in Iran must differ in form if not basically in substance from those for other areas. Extreme state of political instability existing in Iran, fact that issues involved in disposal of surplus property are at political forefront and competence and character of politicians with whom negotiations must be conducted all necessitate an approach to disposal problem differing from that required in other areas. It is our opinion that if interminable negotiations is [are] to be avoided formal text to be submitted to Iran Govt should conform to following requirements: [Page 571]

(a)
Agreement should be such as may be consummated by a formal exchange of notes between Embassy and Ministry of Foreign Affairs and not require formal reference to Majlis65 either as a whole or as to specific provisions of a controversial character.
(b)
Text should be expressed in simple language and be confined exclusively to minimum financial provisions.
(c)
Technical provisions should be such as may be readily understood by Iranian officials who have a minimum comprehension of both American legal formalities and of financial and foreign exchange matters. If above are not followed in drafting of text it is our opinion that negotiations are likely to follow the pattern of negotiations for American treaty rights of occupation in Iran which were carried on for some three years without consummation of an agreement66 and for a Lend-Lease agreement which have been in process for almost two years.67

Furthermore we believe it should be recognized frankly that techniques and procedures of sales and relationship of the Field Commissioner vis-à-vis Iran Government will have to be worked out pragmatically as problems arise and cannot be neatly outlined in an all-inclusive agreement to be negotiated with Iran Govt as might be done successfully in other areas. Apart from basic question of terms of financial settlement most questions of procedure can be handled more successfully with Iran Govt on an informal basis rather than on basis of a formal written agreement.

Moreover in spite of apparently favorable attitude of Govt we believe that chances of obtaining an agreement in immediate future may well depend upon limiting understanding to an interim financial agreement committing Iran Govt only to principle of converting rial proceeds of surplus sales into dollars as was envisaged in Treasury’s letter.

[Here follow comments on draft of July 4 and on status of negotiations with the Iranian Government.] [Murray, Glendinning, Stetson.]

Murray
  1. This refers to the sixth of a series of draft agreements to govern financial and other aspects of surplus property sales to Iran. Discussions by the State and Treasury Departments and the Office of the Army-Navy Liquidation Commissioner continued and on August 8 the terms agreed to by the three agencies were sent to Colonel Stetson for formal presentation to the Iranian Government (telegram Warx 46890, 800.24/8–845).↩
  2. The Iranian Parliament.↩
  3. For previous documentation on this subject, see Foreign Relations, 1942, vol. iv, pp. 311 ff., passim; ibid., 1943, vol. iv, pp. 435 ff.; and ibid., 1944, vol. v, pp. 355 ff.↩
  4. For information on the proposed Lend-Lease agreement with Iran, see bracketed note, ibid., 1943, vol. iv, p. 600.↩