Coll 28/67 ‘Persia. Annual Reports, 1932–’ [‎59r] (117/644)

17
buying and selling agency An office of the East India Company and, later, of the British Raj, headed by an agent. which alone should deal with the Soviet organisations.
There was even talk in March of the denunciation of the commercial treaty, which
was technically valid for three years. But although they made desperate efforts
to dispose of the Caspian rice-crop through the ports of the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. , and
to find other markets, notably in Japan, for their cotton, it became apparent as
^ the months passed that Persia was the principal sufferer from the embargo, which
would eventually have to be withdrawn unconditionally. The Soviet Government,
for their part, showed that they were ready for a lengthy struggle by closing or
reducing the staffs of their trading organisations in the north, thereby continuing
a process which had already begun, largely on account of Japanese competition,
in the south.
86. On the 20th March the Soviet Ambassador, M. Petrovski, who had only
recently returned from sick-leave and would probably have remained in Tehran
had a settlement of the deadlock been in sight, left to take up a new appointment
in Vienna. His successor, M. Pastoukhoff, arrived some three months later and
presented his letters to the Shah on the 6th July. M. Pastoukhoff’s arrival
evidently gave the Persian Government a shadow of an excuse for making the
first move, and on the 3rd August it was announced that the Association of
Tehran Merchants, acting on the advice of the Government, who had “given
them reason to hope for a settlement of existing difficulties,” had decided to
resume trade with the Soviet Union. This example was followed elsewhere
throughout the country. The Persian Government were doubtless impelled to
this decision by the knowledge that the Caspian Provinces were on the brink of
ruin, but the Soviet authorities showed no haste to come to the rescue, the trade
representative explaining that on account of the embargo no provision had been
made for purchases from Persia in the current year’s plans, and that he would
have to go to Moscow to see whether quotas could be secured.
87. Soon afterwards, however, it became known that M. Karakhan, the
Assistant Commissar for Foreign Affairs, would shortly come to Tehran on a
visit, and the Persian Government may have hoped that their difficulties were
at an end. If so, they must have had a rude awakening. The visit took place
between the 29th September and the 7th October. It may have been a social
success, and the Persians certainly tried to make it so, but its tangible results
were meagre in the extreme, even allowing for a present of tanks and other
weapons of war which M. Karakhan brought with him. In fact, the official
communiqueTssued at the end of the visit could find nothing more encouraging
to say than that commercial, economic, frontier and other matters had been
discussed and that M. Karakhan had made “ certain promises,” which only meant,
it appeared, that he had promised to consider the Persian requests when he
returned to Moscow. The Persian press subsequently denied indignantly that
one of the matters under discussion had been a 10 million dollar loan from the
Soviet Union to Persia.
88. Nevertheless, negotiations continued in Tehran, and on the 10th December
an exchange of notes took place between the Director-General of Commerce and the
Soviet trade representative. These notes will probably not be published, and only
the briefest account of them has been given to the Majlis and the press. According
to a statement made in the Majlis, both Governments have agreed to abandon their
mutual claims and pretensions and have settled the questions of the Persian
rice-crop and the quantities of goods to be exchanged, the Soviet Government
having undertaken to purchase the 1932 crop at 8 rials a pood and the 1933 crop
at 9 rials. The Persian Government have also agreed to purchase annually
40,000 tons of sugar from the Soviet Union. Conversations are proceeding
regarding other political and economic questions. According to the treaty section
of the Ministry for Foreign Affairs, the notes modify the commercial provisions
of the treaty of 1931.
89. The outcome of this trial of strength can only have increased the anti-
Soviet sentiments of the Shah and his advisers. The voice of the Soviet Govern
ment was heeded when the tone was sufficiently imperious—when, for instance, it
threatened to prevent the delivery at Bandar Shah of rails for the northern section
of the railway, unless all rails, for the north and the south alike, were purchased
from the Soviet Union. But in other respects it may be said that Soviet influence
not 52] c