Coll 28/21 ‘Persia; Azerbaijan; Persia-Russian & Persia-Turkish Frontier.’ [‎421r] (841/845)

THIS DOCUMENT 18 THE PROPERTY OF HIS BRITANNIC MAJESTY’S GOVERNMENT
PERSIA.
CONFIDENTIAL.
June 10, 1930.
Section 7.
£
/y
E 3032/1734/34]
No. 1.
Sir R. Clive to Mr. A. Henderson.—(Received June 10.)
(No. 241.)
Gulhek, June 3, 1930.
IN my despatch No. 147 of the 5th April I had the honour to report that Perso-
Soviet relations were tending to deteriorate. In my telegram No. 134 of the 31st May;
I stated that the Minister of Court had complained to me bitterly of the attitude
of the Soviet Government, more especially in regard to their commercial policy. No
progress whatever had been made, he said, in the negotiations for a commercial
treaty to replace the treaty which had lapsed last October, and the Soviet authorities
had not even replied to the counter-draft which had been sent them in January.
There was one point in the Persian proposals which he knew it would be very difficult
for the Soviet Government to agree to, but which was of vital importance to the
Persians. While the Persian Government could not object to the Soviet system of
trading only through Government agencies, however much they might dislike it,
they were not going to allow these trade agencies in Persia to deal direct with the
consumer, eliminating the Persian merchant altogether. Apart from purely com
mercial considerations, this would mean simply opening the door to commercial
propaganda. He had discussed this question with the merchants and they were
prepared for the Government to go to any extreme rather than agree to this. What
were the Russian products which Persia especially required ? They were sugar,
mineral oil and cotton goods. Sugar could be obtained elsewhere from Belgium,
France, or the Dutch Indies, although it would cost them about a penny a pound
more. The Anglo-Persian Oil Company could increase their sales organisation in
Persia and could supply all the oil that was required. England. Italy and other
countries could furnish all the requirements in cotton goods.
2. Russian imports were not therefore vital to Persia, although he did not
deny that, if Russia closed her frontiers to Persian goods, the northern provinces
would suffer. He hoped much from the opening of the Rowanduz road with Iraq
and. for the first time, admitted that the Duzdap Railway would be likely to become
an increasingly valuable trade artery to India. He argued, however, that Russia
definitely needed Persian cotton and. to a lesser extent, rice, hides and wool. He
admitted that she could dispense with Persian dried fruits altogether and new
markets would have to be found for fruit. .
3. But the present system could not continue, Russia was getting all she wanted
from Persia and sending in return increasing quantities ot goods of third-rate
importance, such as porcelain, ironware, &c., which Persia could easily do without.
4. The Government had accordingly decided to introduce legislation whereby
Persia would, in future, only import from countries with which she had no com
mercial treaty goods to a value not greater than the value of the goods she exported
to th&t country. He £iclcl6(i thfit tins could in no crsg nffcct Grcnt Britain, &S fill tho
Persian oil went there. I asked if the Government had weighed the consequences
of such a policy. He said thev had and that His Majesty was entirely in favour of
it If drastic action was not taken now they would be forced to take it in a year s
time when the position would be worse. His Nlajesty desired peace and good
relations with every country, but not at the expense of Persia’s dignity and honour.
5. I cannot help feeling that Persia is pursuing a rash and dangerous policy,
both in the sphere of trade and economics. No one can foretell—least of all the
Minister of Court himself—whither Persia is being led by her Exchange Control
Law her Gold Standard Law, two useless ends of a railway which has already cost
her some £4 million sterling, and the prospect of a trade war with her most powerful
neighbour and best customer, Soviet Russia.
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