Coll 28/110 ‘Persia. Economic & Financial Assistance by H.M.G.’ [‎29r] (57/79)

Please see the note at EXT. 7431/43, flagged.
'He have now received a further telegram from the Government
of India on the subject of financial assistance to Persia.
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The circumstances in which repetition to India of
P.0, telegram No. 1042 was delayed are explained in the draft
letter to the P.0, below.
As regards paragraph 2 of the Government of India*s
telegram, I think it is admitted on all sides that the
immediate need of the Persian Government is for rials rather
than for sterling or other foreign exchange. I understand
from the Treasury, however, that the Persian Goverrarent can
obtain the rials needed to carry on their administration by
selling some of their surplus sterling to the Imperial Bank
of Iran, who will give them rials in return. If this is so,
the Government of India* s argument that the Persians are not
in a position to inport very much really runs counter to their
own case; since this restriction on inports should leave the
Persian Government with more sterling with which to buy
rials.
In view of this and of the other considerations
set out in the note at EXT. 7431/41, it is proposed to do
no more than ask the P.0, (a) to bear the Government of
India* s views in mind when the time comes to implement the
treaty and (b) to let us have their views on both the Government
of India's telegrams on this subject together. A draft
for this purpose follows.
Secretary, E.&.O. Departn^enti
For'any observations
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