Ext 5001/41 'PERSIA – INTERNAL (Miscellaneous despatches).' [‎22r] (43/248)

55. The Persian commercial company talks a lot but has done nothing.
No more has been heard of the rumoured Russo-Persian company. The Russian
so-called official services between Tehran and Meshed are well filled with Persian
commercial traffic as are those to Pahlevi and Tabriz, which, however, appear
to be running less regularly than last summer.
56. The Americans claim to have applied to the Persian Government for
ghts to operate an official commercial service between Bagdad and Tehran to
supplement and gradually replace the military services of the United States Air
Transport Corps. The French military line continues to carry civilians and
has been detected in some dubious practices about visas. The three British
Overseas Airways Corporation services a week to Bagdad, Lydda and Cairo are
well filled with official load and private travellers can seldom be accommodated.
Finance.
57. The budget results for the Persian year 1323 (21st March, 1944—
20th March, 1945) showed a surplus on the ordinary budget of 81 million rials and
a deficit on the commercial budget of 543 million rials, making a net deficit of
462 million rials. The total deficit in 1322 was 1,052 million rials. These not
unsatisfactory results were due mainly to the efforts of Dr. Millspaugh and his
mission. The future prospects now that Dr. Millspaugh has gone are uncertain,
especially as the first item on the financial programme of any Government will
now be the revision of the income tax law.
58. The Persian Government, following the fall in the London price of
gold announced on the 9th June, duly applied for the adjustment of their sterling
Balances under article 8 of the Financial Agreement. They were informed by
His Majesty’s Embassy that none of the other Governments with whom His
Majesty’s Government have similar payments agreements have asked for a
similar adjustment, the change in price being the result of the reduction in
insurance and transport costs to the United States; but that His Majesty’s
Government were prepared to adjust their balances if the Persian Government
considered it was right to ask for this adjustment.
59. The scarcity of dollars led in June to the National Bank refusing to
open dollar credits for goods ordered from the United States. Following "this
action the Foreign Trade Control Division and the Middle East Supply Centre,
Tehran, stopped issuing licences for American goods pending arrangements for
the proper utilisation of Persia’s dollar resources. Hitherto, the Persian
Government have taken no steps to gain possession of dollars in private hands
nor to obtain control of the dollars accruing from current exports to the United
States. The price of dollars on the free market rose to rials fifty (compared with
the official rate of rials thirty-two).
Economic Situation.
60. ihe Economic Organisation set up to take over the economic depart
ments of the Government set up by Dr. Millspaugh, functioned rather better
than was at first expected, thanks mainly to the legacy of organisation and routine
left by the Americans and to the continued presence of many members of the
Millspaugh Mission. For all its shortcomings the Economic Organisation was
able to maintain the essential economic services in operation at a time when
Cabinet crises would have paralysed these departments had the Economic
Organisation not existed. The British cereals and transport teams also
continued to function. The future of both the Americans and the British in
the economic departments is, however, uncertain, and it is unlikely that they
will remain much longer. Corruption and confusion in the issue of import
licences increased considerably during the quarter, the tendency being for obscure
firms to get licences at the expense of the established importers. The British,
United States and Indian Trade representatives have now intervened jointlv
to try and effect an improvement in this situation.
61. Markets showed no spectacular movements in spite of the end of the war
in Europe. It was greeted on the whole without enthusiasm by the merchants,
who have had a profitable war and see the days of big profits receding. Exports
of carpets, gum and skins to the United States were stimulated by the high
premium on dollars. The sale of gold was discontinued by the National Bank on
the 22nd May; but the market remained quite active and a steady export to Iran
and Syria continued until late in the quarter.