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448. On the question of our claim to most-favoured-nation treatment, the
Minister of Court proved equally uncompromising, making light of the argument
that British interests could not be treated in exactly the same fashion as the
Russian by suggesting that all His Majesty’s Government had to do to remedy
the situation was to follow the Russian and Persian examples by monopolising
the trade of the United Kingdom.
449. His Highness, on this occasion as on many others, propounded TNo'
favourite idea that groups of importers and exporters should be formed in each
country interested in Persian trade to take up Persian import quotas on a large
scale, in which case they would be granted all manner of advantages, not
excluding monopolistic rights—as was proved when Dr. Friedlieb came to
negotiate with Teymourtache (paragraphs 462-465)—the advantages to Persia
being manifold : these foreign associations, by guaranteeing imports, would
ipso facto guarantee that they would be legitimately imported and not smuggled
into the country; they would at the same time guarantee exports to an equivalent
value, and powerful foreign interests could be relied upon to bring their financial
resources and technical skill to bear on the improvement and development of the
Persian export trade.
450. The absurd lengths to which his Highness was prepared to go in
support of this idee fixe was clearly indicated when he suggested to the American
Minister in March that the United States might apply for that part of the
cotton piece-goods quota (45 per cent.) which the Russians had not already got.
Mr. Hart’s reply, to the effect that this proposition seemed to him entirely
uneconomic, confirmed the statement made to Teymourtache by the commercial
secretary at His Majesty’s Legation, that he could not expect British firms to
guarantee imports of any article in which the Russians were interested—and that
applied to the great majority of our imports—owing to the well-known Russian
readiness to undercut their competitors at any price, even if the other major
difficulty of guaranteeing exports (again in competition with the Russians) could
be overcome.
Amendments to the Trade Monopoly Law.
451. Mr. Hoare found the Minister of Court in a more conciliatory mood on
the 12th April, when his Highness stated that he could now see his way to have
import licences issued more quickly, and it was to this point that British firms
had always attached the most importance. At the end of the month the Council
of Ministers issued a decree to the effect that the import quotas for the second
economic year (opening on the 22nd June, 1932) should be quarterly instead of
half-yearly, four periods being fixed during which applications for the following
quarter would be entertained. Import licences would also be issued within
twenty days of the expiration of each one of these periods. This arrangement,
however, proved of short duration (see paragraph 457 below).
452. The Foreign Trade Monopoly (Amendment) Act was passed by the
Majlis on the 10th July. Its main object was to incorporate in a simpler form
the former laws and regulations which it superseded, but this particular aim has
been defeated by certain obscurities, and the failure of the authorities to publish
the regulations which were to interpret the law, where needed, and complement it.
453. Certain new features, however, appear. The basic principle is to
ensure the true balance of trade and of exchange operations by making the
payment of imports dependent not on customs valuations, which proved grossly
misleading in the past, but on the actual prices obtained from exports. Thus,
under article 8 (b), applications for import licences will only be accepted if
supported by export certificates “ of which the exchange undertaking has been
fulfilled,” equal to the amount of the application; while article 7 (1) stipulates
that exchange bought on the open market will not be accepted for the purpose.
Soviet organisations, being dispensed from this dual obligation of submitting
export certificates and “ sale of exchange certificates,” scored once more.
454. It is true that article 8 (/) foresees the acceptance of a bank guarantee
as an alternative—in deference, presumably, to the wish expressed by His
Majesty’s Legation—but in the absence of special regulations the system has not
been put into force. It offers such unpremeditated advantages that it clearly