Coll 28/65 ‘Persia. Perso-Soviet Commercial Relations.’ [‎197r] (394/482)

INDIA
J
THIS DOCUMENT IS tAe PROPERTY OF HIS BRITANNIC MAJESTY’S GOVERNMENT .
August 29, 19^3. O
PF.RSIA.
^.CONFIDENTIAL.
[E 5038/21/34]
No. 1.
(No. 391.)
Sir,
Gulhek, August 12, 1933.
WITH reference to my despatch No . 270 of the 3rd June I have the honour
to report that the boycott in Persia of Soviet institutions and goods is being
called off. Ettela’at of the 3rd August announced that, at a meeting of the
Association of Tehran Merchants, a resolution was passed to the effect that,
“ guided by the advice of the Imperial Government, which has given us reason to
hope for a settlement of existing difficulties,” the association had decided to
resume trading operations with Soviet commercial establishments.
2. A further report in Iran of the 11th August states that the Persian
Trading Corporation has decided to open negotiations with Soviet institutions
for the sale and purchase of goods. The same report adds that the acting Soviet
trade representative has stated that, in consequence of the interruption in trading
relations between the two countries, no provision had been made by the Soviet
Government for import quotas for Persian goods, and that he must now go to
Moscow, accompanied by other Soviet trading representatives in Persia, to
discuss the fixing of the quantities of these quotas. Merchants report that no
supplies of Soviet goods are in hand at Persian customs depots other than
textiles and a certain amount of iron goods, but it is understood that arrangements
will soon be made for normal exchange of goods between the two countries. In
the meantime the list of Persian import quotas, which has now been published in
the vernacular press, contains provision for Soviet import quotas.
3. The above seems to mark the inglorious end of another long struggle
with the Soviet Union in an attempt to secure more advantageous terms and an
improved trading balance for Persia. For months the welkin has rung with the
cries of Persian merchants either singly or in chambers of commerce or associations I
of merchants, protesting that it was either impossible or highly unpatriotic to j
have any dealings with Soviet trading establishments in Persia, The very
unanimity of these protests in a country where public opinion is unformed and
the standard of education among the trading community is low made them
suspect, and it was from the first obvious that they were directly inspired by
Government circles in Tehran and even ordered by the Shah himself. Some
grievances against Soviet trading methods undoubtedly existed and will probably
continue to exist, but the main complaint was that of the Persian Government,
which was annoyed at the failure of its efforts to achieve an approximately
balanced trade with the Soviet Union.
4. The reaction of the Soviet Government to the boycott was, as is usually
the case, immediate and decisive. Orders for Persian produce ceased, and transit
rates on the Soviet route so vital to Persian trade were raised to prohibitive
levels. As the struggle continued the Soviets decided to reduce, and in some
cases even to liquidate, their trading establishments in Persia, and in recent
months almost the sole exports from Persia to the Soviet Union have been the
personnel and equipment of these establishments. There can be no doubt that,
whatever the merits of the case may have been, the Soviet position has been
much the stronger.
5. No details have yet been published of any new agreement that may have
been arrived at between the respective Governments, but there is no doubt that the j
Soviet Government had insisted on the prior calling off of the boycott as a prelude f
to official negotiations. The result of resumed trade between the two countries
will undoubtedly benefit northern Persia, but it is doubtful whether their failure
to impose terms on the Soviet Union will have sweetened the disposition of the
Persian Government towards their powerful northern neighbour.
6. I am sending copies of this despatch to the Department of Overseas
Trade (No. O.T. (B) 161), the Foreign Secretary to the Government of India,
and to His Majesty’s Charge d’Affaires at Bagdad (No. 68).
I have, &c.
V. A. L. MALLET.
[887 ff—1]