888.10/10–650: Telegram
The Acting Secretary of State to the Embassy in Iran
615. Board of Directors Eximbank authorized estab credit $25 million in favor Iran Govt to finance US purchases of equipment, materials and technical services to be used for agricultural, highway, electric power and other development projects in Iran to be approved by the Bank.1 Bank’s commitment is made on two gen conditions, that (a) exec and legislative branches of Iran Govt take necessary steps to authorize borrowing of funds and make provision for dol repayments and attendant rial expenditures on projects, and (b) plans for implementation of projects be worked out to mutual satisfaction of Iran Govt and Eximbank. Credit wld be repayable over period of 12 years beginning approx three years after disbursements under credit. Interest will be payable semi-annually at rate of 3½.% per annum. Board of Directors of Bank suggests necessity that Iran Govt designate financial and technical reps with auth to work out with Bank here details of credit agreement and plans of implementing projects. Foregoing may be conveyed by you to Iran Govt. Dept not yet received Brit answer conversion question, expected momentarily, and believes [Page 605] unwise at this juncture inform Brit reps decision grant loan already taken as such info might prejudice favorable reply.2 Fol FYI and informal use at ur discretion. In requiring Iran Govt action on authorizing credit and giving assurance of dol repayment and rial expenditures Bank has in mind that Majlis shld authorize borrowing of funds, make provision in annual budget for sums sufficient to cover dol service on loan and rial expenditures, institute any necessary exchange restrictions for recapturing dols by Govt and Iran Govt shld make overtures to Brit Govt for sterling dol conversion which might be necessary to service loan in event other dols available to Iran Govt not sufficient. Suggestion that Iran Govt designate financial and technical reps to work with Bank here not to be construed as meaning Bank will not consult Emb and Dept on proper procedures for implementing credit but rather to facilitate Bank’s working out and preparing necessary loan agreement. Might be that Taqi Nasr wld be appropriate financial man and possible OCI personnel wld be most satis technical reps. Bank wld appreciate being advised who Iran financial and technical reps will be before names are made public. If credit conditions acceptable to Iran Govt Bank wld issue press release here simultaneously with release in Iran. Upon word from your Bank will cable proposed text of release.
- According to a memorandum of a telephone conversation, dated October 6, not printed, Secretary Acheson had talked with Herbert Gaston, President of the Export-Import Bank, during the day and expressed “his feeling of a need for speedy action on the part of the Bank on the loan to Iran.”Gaston had said that “he would relay to the other members of the Board what Mr. Acheson had said and they would be glad to see what they could do.” (888.10/10–650)↩
- On October 7 Embassy London was informed along lines similar to these about the loan and instructed to obtain, “if at all possible”, a reply from the British concerning the question of convertibility before the loan was announced. (Telegram 1812, not printed; 888.10/10–750)↩