Coll 28/67 ‘Persia. Annual Reports, 1932–’ [‎251r] (501/644)

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8. Fears of a possible Russian invasion have naturally been current ever
since the outbreak of war. The occupation of Poland, another neighbour of
Russia, and the attack on Finland have caused great anxiety, and there have been
frequent reports of Russian troop concentrations on the Azerbaijan and
Turkestan frontiers. No absolute confirmation of these reports has been received,
and it seems likely that the Soviet Government have adopted the German policy
of a whispering campaign, through agents in the bazaars, as a means of working
upon Persian nerves, and of preparing the ground for a campaign of blackmail
to be followed, if necessary, by the use of force, if and when they consider such
tactics expedient.
9. Diplomatic relations with France, which were broken off at the end of
1938 owing to the Shah’s displeasure at some punning references in one of the
less reputable French newspapers, were resumed in February after an exchange
of telegrams in which the Shah received an apology from the French President,
and, in accepting it, administered a rebuke. The French Minister, who was ill
when relations were broken off, never left Tehran, and the breach made less actual
difference than might have been expected. The reason for the resumption of
relations was that arrangements had ben made for the Crown Prince to travel
through Syria on his way to Egypt, and if the breach with France had not been
healed it would have been necessary either to make other arrangements or for the
Crown Prince to pass through Syria without receiving the usual honours from the
French authorities.
10. An improvement in relations with the United States was marked by
the appointment of Mr. Louis B. Dreyfus, jun., as United States Minister at
Tehran, and M. Shayesteh asCjranian Minister in Washington. M. Shayesteh
has left for Washington, but Mr. Dreyfus has not yet left his previous post.
11. A treaty of friendship of the usual type was signed by the Minister
for Foreign Affairs and the Japanese Minister. It is said that this treaty is to be
followed by a commercial agreement, but nothing has as yet materialised.
12. The disappearance of Czecho-Slovakia was a severe blow to the Shah.
In pursuance of his policy of attempting to buy armaments only from small States
which were not in a position to exert undue influence upon Iran, the army has
been equipped almost entirely by Skoda and Brno and by the Swedish firm of
Bofors. The dissolution of Czecho-Slovakia and the taking over of the Skoda
works by Krupps, therefore, made the Shah even more dependent on Germany
than before, and that in a sphere in which he had previously taken good care to
preserve his independence.
13. The opening of the new session of the Majlis on the 26th October
provided the one major political surprise of the year. It was then announced that
M. Jam. the President of the Council, had been appointed Minister of Court,
and that Dr. Matin Daftary, the youthful Minister of Justice, had been appointed
to succeed him. At the same time it was announced that General Amir Khosrovi,
the governor of the National Bank, had been appointed Minister of Finance in
place of M. Bader. The appointment of M. Jam as Minister of Court fills a
post which has been vacant since the fall of Teymourtache, but is likely in the
present case to be one of honour rather than great influence. The elimination of
M. Bader is of interest since he was generally regarded as the most pro-German
member of the Government.
14. The deterioration in the financial position of Iran during the year
was reflected in the steady fall of the rial on the Black Bourse from 140 to 175 to
the £ sterlng despite artificial measures to restrict its fall. No attempt was made
to balance the budget and for the first time since 1928-29 a deficit was revealed,
which was larger than the total expenditure in that year, amounting as it did
to 683,385.287 rials. Much of the expenditure provided for was in respect of
roads and communications, and work has continued on the railway lines from
Tehran to Tabriz and from Tehran to Meshed. The latter has now been completed
as far as Semnan, the Garmsar-Semnan sector being officially opened in June.
15. The Government’s shortage of money found expression in an inspired
press campaign directed against the Anglo-Iranian Oil Company, who were
accused of deliberately restricting production and thereby cheating the Iranian
Government of the royalties which they were entitled to expect in ever-increasing
measure. This campaign caused the company many sleepless nights and in June
Lord Cadman flew out in order to explain the position to the Shah in person.
The discussions covered such questions as the delimitation of the new area for