Foreign Relations of the United States: Diplomatic Papers, 1945, The Near East and Africa, Volume VIII

Tehran Post Files: 824—Foreign Liquidation Commission

The American Ambassador in Iran (Murray) to the Iranian Minister for Foreign Affairs (Sepahbodi)

No. 110

[Tehran,] September 1, 1945.

Excellency: I have the honor to quote below the text of an arrangement on financial terms to apply to the disposal of surplus property of the Government of the United States in Iran, which text is submitted for the formal approval of and acceptance by the Imperial Government of Iran:

“Certain property surplus to military needs belonging to the United States Government and located in Iran will become available in the near future for disposition as surplus. It is proposed that sales of such surplus property shall be made by the United States Government subject to the following financial terms and conditions:

• “1. All payments by the Imperial Government of Iran or its Nationals, other than such payments as may be made in United States dollars by Iranian Nationals in accordance with Iranian foreign exchange regulations, shall be made in Iranian rials.
• “2. Rial proceeds of the sales of surplus property shall be deposited in a special account designated ‘Treasurer of the United States’ to be opened by the United States Government with the Bank Melli Iran. No interest shall be paid by the Bank Melli Iran on the deposit of rial proceeds of sales of surplus property.
• “3. Pending the ultimate conversion of rials into dollars, as provided in Paragraph 4, unconverted rial proceeds from the sale of surplus property may be utilized for all expenditures of the United States Government in Iran except the purchase of goods for export, unless such purchase of goods for export shall be authorized by the appropriate Iranian authorities.
• “4. The Imperial Government of Iran will, to the extent that unexpended rials are held by the United States, convert such unexpended rials into dollars, at the official selling rate for dollars in Iran in effect at the dates of sale of surpluses, according to the following schedule: Three years from September 1, 1945, one-third of the then unexpended rials shall be converted into dollars; five years from September 1, 1945, one-half of the then unexpended rials shall be converted into dollars; seven years from September 1, 1945, the balance of all unexpended rials shall be converted into dollars. The Imperial Government of Iran does not obligate itself to convert into dollars rial proceeds from the sale of those categories of surplus property enumerated in Annex 1⁷³ to the present arrangement.
• “5. The Imperial Government of Iran, through the Foreign Exchange Commission and the Bank Melli Iran, will assume the direct responsibility for effecting the conversion of rials acquired from the sales of surplus property into United States dollars as provided in Paragraph 4.
• “6. In the event the Imperial Government of Iran removes exchange controls on current international transactions and makes dollars freely available for transactions other than the transfer of capital, the status of any unconverted rial balances will be reconsidered by the two Governments with a view to relaxing the restrictions on the use and conversion of such balances as provided in any agreement then in force.
• “7. The United States Government shall not be required to pay any customs, duties, or other charges as seller of surplus property. The Iranian Government shall assess only regular customs, duties, or other charges against the purchasers of surplus property.”

Accept, Excellency, the renewed assurance of my highest consideration.⁷⁴

Wallace Murray

73. Not printed; it enumerated approximately 90 commodities.
74. An undated marginal notation by the Counselor of Embassy in Iran (Ward) states that this note was not delivered. In telegram 700, September 7, 1945, Tehran reported that the agreement on conversion of rial proceeds from sales of surplus property was approved by the Iranian Council of Ministers on September 1 and that an exchange of notes formalizing the agreement was to be exchanged the next day. However, at a meeting on September 4, the Iranian negotiators insisted on eliminating conversion of rial proceeds from sales of installations and other fixed assets, whereupon the Embassy declined to exchange notes. Tehran noted that “indications are amply evident that Iranian Government intends fight tooth and nail to impose claim that all Allied (United States and British at least) immovable surplus property in Iran is to pass gratis to it upon evacuation of Allied troops.” (800.24/9–745)