Coll 28/67 ‘Persia. Annual Reports, 1932–’ [‎91v] (182/644)

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published after his departure stating that: Concernant les questions
commerciales et economiques, M. Karakhan a donne des promesses, but that
detailed discussions had been left to the Soviet trade representative and the
Persian Department of Commerce.
530. About the middle of November it became apparent that the situation
was improving, as Soviet trading establishments again began to make purchases
and rumours were current of negotiations for extensive purchases of rice m Gilan.
Finally, on the 10th December it was announced that notes had been exchanged
between M. Bahman, Director of the Department of Commerce, and the Soviet
trade representative. Details of the notes were not given at the time, but it
subsequently transpired that they provided for a mutual renunciation of claims.
The Soviets were to purchase the available rice crops, paying 8 rials a pood for
last year’s and 9 rials for this year’s crop, and the Persians undertook to purchase
annually from the Soviet Union 40,000 tons of sugar for consumption m the
northern provinces whilst reserving liberty to obtain their sugar requirements
for the south from other sources. Information has also been received to the
effect that the Persians have secured appreciable reductions on transit rates across
the U.S.S.R., and also the useful concession by the latter country to pay cash
for purchases made in Persia. It is evident that the agreement is only a partial
one, and the Foreign Minister announced in the Majlis on the 17th December
that negotiations were continuing in respect of economic and political questions
still outstanding.
531. The causes of this dispute were outlined in last year’s annual report,
and, in brief, lie in Persia’s desire to balance her trade with the Soviet I nion.
The immediate result has been to curtail Persia’s exports to the Soviet Union
almost to vanishing point and to reduce considerably her imports from that
country. Both in amount and in proportion to total trade Persia was the loser,
as Soviet retaliation for the Persian boycott was very severe. It is not improbable
that any final agreement reached between the two countries will produce some
sort of formula for an approximate balancing of trade, but it seems unlikely that
the Soviets will now agree to the proposal for a centralised office in 4 ehran to
regulate all trading transactions. Persia has learnt once again how dependent
she is on the Soviet Union economically, and how expensive it is to quarrel with
her. But in the process she has also discovered new markets for some of her
products, alternative routes for some of her imports and exports, and has taken
certain definite steps, in the creation and expansion of her sugar-producing and
cotton industries, to reduce her dependence on the Soviet Union. Further
progress along these lines seems likely in the future, perhaps together with an
effort to establish more satisfactory economic relations with her Soviet neighbour.
Japanese Trading Activities.
532. Profiting by the Russo-Persian dispute, the Japanese intensified their
efforts to increase their sales on the Persian market, and achieved a considerable
amount of success. The preliminary customs statistics for the year ended June
1933 show a very large increase in imports of Japanese piece-goods, and
Japanese cotton yarn made very serious inroads into imports of Indian yarn.
The Japanese competition was made more effective by their willingness to take
Persian goods in exchange, and a large proportion of the Persian cotton crop
was purchased for Japan. Wool, dried fruits and red oxide were also bought
for Japanese account, and there was talk of a project for exporting Persian salt
in quantity to Japan. Considerable attention is being devoted to trade with the
southern ports, where United Kingdom and German interests have previously
been dominant. Japanese ships made frequent visits to Gulf ports and Japanese
agents were appointed there. Enquiries were made in Basra as to the feasibility
of a regular service of Japanese ships to that port, whence both the Iraq and
Persian markets could be served, but it is not known yet whether it was decided
that the service would be profitable.
533. Customs statistics are not yet available to show the progress made by
the Japanese during the latter half of last year, but it is believed to have been
considerable. No longer confining themselves to cotton piece-goods and yarn, all
kinds of commodities are now being offered. Cement reported to be of good
quality is being delivered at the southern ports at prices which defy competition.
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