Coll 29/104 'Appointment of an Indian to the Tehran Legation (First Secretary or Trade Commissioner)' [‎101r] (201/243)

Ii.DXA Ol’i I J-..
C'o')
iGonomic & Cverceas T.
Secretary of State
Government of India, External Affaire Uepartnent,
>eo mber, 1940.
ti m#
No. £• & Q, 24210/40
My telegram No.3372 of 28th dune regarding trade relatione]
. ith Iran,
2 . Further consideration has been given to the question of
trade rith Iran and also with Iraq in the light of the increasing
influence which Germany is obtaining in both countries. It is
important from the strategic point of view that neither Iran nor
Iraq, particularly the latter at this juncture, should throw
themselves politically into the >• rms of the Axis. e are not in a
position at present to counter tMs Incasing Germ 3 .il iitfluence by military
measures and it is therefore necessary to examine t e possibility ^
of a political demonstration in the economic field. To this end it
has been decided that.the United Kingdom Commercial Corporation
should extend their activities to Iran and Iraq with a view to
organising on the one hand increased iritieh purchases of the
products of these countries, and thus reduce the danger of their
believing that they are dependent on the Axis and Russia for their
markets, and on the other hand increased supplies of British roods,^
jnd thus take advantage of the difficulty which Ge.rman exporters
experience in delivering goods to the Middle Last.
3. The obstacles in the path of this policy are consider le,
particularly in Iran. Germany has been able to obtain a great hold
over the Iranian export trade and has already built up substantial
agencies for the sale of their own exports. Moreover, the
inability of the United Kingdom to supply Iran /.ith military
equipment, locomotives and steel rails, to which the Iranian
Government attach importance, has prejudiced the atmosphere. The
fact that India also cannot now after all supply steel rails, may
have a further unfortunate effect if the Iranians have to* any extent]
been counting on them. Consequently, it would be necessary for
the United Kin. dom Commercial Corporation to move cautiously to
begin with. As the Iranian Government are unlikely to i elcome
the sale of Iranian produce for sterling unless there is a
likelihood of their being able to use the sterling thus acquired
for the purchase of their import reouirsments, the success of the
Corporation in buying Iranian goods is likely to be proportion ite
to their ability to deliver f rom Lmpire sources ^ods/MeiL.Iran ;ants.
ihis is also true, although possibly to a less serious extent, in
Iraq. Consequently, if they are to succeed, the Corportation Till
require the fullest possible backing .vhich the supply position allov.
from His M jesty’s Governnent and other Impire Governments,
particularly t e Government of India.
4. A copy is enclosed of the minutes of a meeting of a
Committee which has been formed to consider this question. This
document sets out the position in a summary and provisional 7 ay as
regards the principal articles exported by Iran and Iraq and as
regards the articles which Iran and Iraq wish to import. Copies
are also enclosed of telegrams which have been sent to His Majesty’s
Representatives in Tehran and Baghdad. I would be glad if the
Government/