Ext 5001/41 'PERSIA – INTERNAL (Miscellaneous despatches).' [‎10r] (19/248)

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His mission has been reinforced by two more American officers, hurther progress
would appear to be limited by Colonel Schwarzkopf s failure to realise that,
however efficient his direction at the centre may be, constant inspection of his
provincial posts is equally necessary. Most striking is the contrast between the
improvements effected in Tehran and the constant reports from consular posts as
to the sloth and corruption of the provincial detachments. Nevertheless the
success of the gendarmerie at Gunbad-i-Kabus (paragraph 47 above) in stopping
the deserters "from the Meshed garrison might well be claimed by Colonel
Schwarzkopf as a sign of improvement in the force.
Persian Police.
52. There is nothing to add to previous reviews save that, if possible,
efficiency has declined still further. The force is useless and nothing but a
complete overhaul by a foreign police mission can alter it. Colonel Schwarzkopf
states that he has been approached unofficially to ascertain his readiness to accept
the direction of the police in addition to the gendarmerie. He replied that he did
not think the United States Government would consent to supplying the number
of military officers required or that the Persian Government could afford to
pay them.
Persian Air Force.
53. During the quarter there has been much discussion of proposals to
expand and modernise the Persian air force by substantial purchases of British
equipment, mainly Hurricane aircraft, and by reviving in some form the
connexion between the force and Hawker—Siddeley aircraft which existed up to
1942. With the help of the R.A.F. and of a representative sent out by Hawkers
for the purpose, a fairly comprehensive plan was worked out which is believed
to have been approved by all concerned up to the point of facing the appropriate
committee of the Majlis, wffiere the inability of the Minister of War to answer
elementary questions on it has caused a postponement which may well be fatal.
54. "With these developments in the offing, morale in the air force has
improved, though it will hardly be able to stand the shock of a collapse of these
hopes. Some keenness has been aroused during September by the return of
airfields and the attempt, albeit a rather poor attempt, to maintain the signals
and meteorological services on which the R.A.F. have taught them to lean.
Meanwhile, almost entirely as the result of the efforts of the officers recently
returned from the United Kingdom, there has been by Persian standards a
notable improvement in flying training. Other training remains hardly
perceptible.
Finance.
55. The Persian Government have formally submitted a request that the
gold payment due to them under the Financial Agreement shall be placed at their
disposal in Ottawa. The Government’s sterling holdings fell from £18,600.000
to £14,900,000 during the quarter. The stock of gold held in Tehran by His
Majesty’s Government was transferred to Cairo at the end of September.
56. The free market price of sovereigns rose during the quarter from
683 rials on the 1st July to 716 rials on the 30th September. The sale of gold
by the National Bank was resumed on the 23rd July. The market was fairly easy
during the period, the chief demand being for export to Iraq.
57. The free market rate for the dollar rose to 68 rials as compared with
the official rate of 32 rials. Sterling commanded a small premium varying from
146 to 142 rials as against the official rate of 130-75 rials.
Exchange Control.
58. It was announced in August that the Minister of Finance had appointed
an Exchange Control Commission to consider a reimposition of exchange control
regulations and to draw up revised regulations. As a temporary measure, the
Exchange Control Commission has authorised banks to grant sterling exchange
freely against imports on production of the necessary documents and to open
documentary credits. Facilities have also been given in regard to limited personal
remittances to the sterling area. Owing to their shortage of dollars the Persian
authorities are imposing severe restrictions on the opening of dollar credits, and
most of the private trade with the United States is at present conducted on the
basis of black market dollars which command a premium of over 100 per cent.
It is possible that the Exchange Control Commission may recommend a reversion