the facts, which are far from clear, and to endeavor to arrive at a mutually agreeable solution. Mr. Murray agreed that it would be useful to set up a committee to seek out the facts. He stated that we here in the Department would give the question our consideration and get in touch with Mr. Wright at a later date. 891.77/7-2944 Memorandum of Telephone Conversation, by Mr. Harold B. Minor of the Division of Middle Eastern Affairs [WASHINGTON,] July 29, 1944. I telephoned Major Patton of the Foreign Fiscal Affairs Branch of the War Department concerning the approach made to the Department by the British Embassy on the subject of American participation in the Allied-Iranian Railway Agreement and the desire of the British Government to have the United States assume responsibility for freight bills for movement of lend-lease goods on the Iranian railways. Major Patton said that the United States formally took over operation of the southern section of the Iranian railways in April 1943, at British request. Negotiations were conducted in Tehran between the Persian Gulf Command, represented by Colonel Stetson, and the British. Colonel Stetson visited the United States during the discussions to consult with the War Department. The British did not approach the War Department direct but only through the Persian Gulf Command. The War Department decided, after considering the matter for some time, not to agree to the British request to assume financial responsibility for the Iranian Railway. This decision was communicated to the Persian Gulf Command, which informed the British. The matter never reached the Combined Chiefs of Staff and the directive 6 under which our forces operate the railways contains no provision as to payment of the bills. Major Patton declared that the financial arrangements now in force in Iran are muddled. The War Department is willing to pay for movement of supplies used by our forces but has not been doing so since its claims to the railways for maintenance goods furnished have not been met. The British are responsible for payment of all freight bills other than those for the use of our forces. They have not met these in full but have made payments on account in order to keep the railways operating. The railway is unable to pay the Americans for 63 No. 109/1 of September 22, 1942, of the Combined Chiefs of Staff, issued simultaneously to the Persian Gulf Service Command and the Persia and Iraq Force (Paiforce). maintenance equipment because of lack of funds. The British have had also to assume responsibility for payment of freight bills for the Russian section of the railway. Major Patton was of the opinion that any change in the present arrangement must be taken up with the Combined Chiefs of Staff, since the Iranian Railways are operated under the directive of that group. He thought that the British approach should therefore be to the Combined Chiefs of Staff. He said he would like to discuss the question with other officers in the War Department after which he would telephone me.64 891.77/8-944 Memorandum of Telephone Conversation, by Mr. Harold B. Minor of the Division of Middle Eastern Affairs [WASHINGTON,] August 9, 1944. Lieutenant-Colonel Pforzheimer 65 called personally today to follow up the telephone conversations I have held with Major Patton concerning the British desire to have this Government assume financial responsibility for the movement of American lend-lease goods through Iran. Colonel Pforzheimer said he was authorized to say the following as coming from General Richards, Budget Officer of the War Department. "In the absence of any change in Combined Staff Directive 109/1, which governs operation of the Iranian Railways, the War Department must continue to hold that the British are responsible financially for the movement of goods through Iran. It is true that the directive does not mention financial responsibility but it has been well understood that this was and continues to be a responsibility of the British Government. Any British desire for a change in the existing situation should be broached directly to the Combined Chiefs of Staff." Colonel Pforzheimer said that the British have made a number of informal approaches to the War Department on this subject, through both civilian and military channels. None of these had materialized since the British had apparently been reluctant to broach the subject formally to the Combined Chiefs of Staff. He added that the feeling in the War Department is that the British should bear financial responsibility for the railways since our part has been merely to help them, at their request, with the operation of a specific war project. Mr. Minor and Major Patton had a second telephone conversation regarding this subject on August 9. 65 Lt. Col. Carl H. Pforzheimer, of the Budget Division, War Department General Staff. 891.77/8-1144 Memorandum of Telephone Conversation, by the Chief of the Division of Middle Eastern Affairs (Allen) [WASHINGTON,] August 11, 1944. Subject: Financial Responsibility for Operation of Iranian Railways. I telephoned Mr. Wright to inform him that, after conversations with the War Department, it was suggested that the British Embassy be informed that its approach on this subject should be made directly to the Combined Chiefs of Staff. 891.77/8-1744 No. 1070 The Chargé in Iran (Ford) to the Secretary of State TEHRAN, August 17, 1944. [Received August 29.] 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: 1. 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. 2. 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 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. 3. 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, 1944 66 for draft agreements put forward by the British Embassy at Tehran.) 4. 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.) 5. 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 27 67 would appear inacceptable, since it would leave it to us to get reimbursement from the Soviet Government as best we could. 6. 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 66 Neither printed. 67 See footnote 62, p. 382. of whom are now in the United States and are expected to remain there for some five or six weeks. Respectfully yours, RICHARD FORD 891.77/10-1144 The Counselor of the British Embassy (Wright) to the Director of the Office of Near Eastern and African Affairs (Murray) Ref. 131/46/44 WASHINGTON, October 11, 1944. DEAR WALLACE MURRAY: Since Mr. Lee and I first raised with you some weeks ago the question of the incidence of freight charges in respect of lend-lease goods to Russia carried on the Persian railways, we have been endeavouring to obtain certain additional information from London in the hope of clarifying the position. There has, too, been an informal meeting between Mr. Goschen, of the United Kingdom Treasury Delegation, and Mr. Landis,es together with a number of representatives of F.E.A.69 At the conclusion of that meeting it was agreed that the matter could now most appropriately be carried forward by the communication to the State Department of a memorandum setting out the general view taken by the United Kingdom Government of this matter. Accordingly I enclose a copy of such a memorandum. We shall, of course, be happy to discuss this further with you should you wish to do so. I enclose copies of this letter and of the memorandum in case you wish to send them to Mr. Denby 70 of F.E.A. and to General Richards of the War Department. Yours ever, MICHAEL WRIGHT [Annex-Memorandum] INCIDENCE OF COST OF TRANSPORTING GOODS ON THE PERSIAN RAILWAYS 1. The Persian railways have been operated under Allied control since the early days of the Allied entry into that country, but hitherto there has been no formal agreement with the Russian Government governing the Allied use of the railway. It is now hoped to conclude such an agreement on a tripartite basis (i.e. between the United Kingdom, Russia and Persia) in pursuance of Article 4(ii) of the Anglo-Soviet-Persian Treaty of January 1942. It is understood that 68 James M. Landis, Director of American Economic Operations in the Middle East. 69 Foreign Economic Administration. 70 Charles Denby, Director, General Areas Branch, Foreign Economic Administration. |