Report to I. V. Stalin on Soviet-Iranian Financial Negotiations

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Top Secret

to Cde. I. V. STALIN

The negotiations with representatives of the Iranian government about settlement of mutual financial claims which were begun on 10 December 1950 are described as follows.

Trying to speed up the conclusion of the commission's work, in June of this year the Iranians submitted a proposal to begin drawing up a final protocol with a description of the results of the commission's work in order for this protocol to be sent to the governments to continue negotiations diplomatically.

The Soviet delegation rejected this Iranian proposal as premature, referring to the incompleteness of the commission's work. At our suggestion in July the commissions began a second reexamination of the claims of the sides which has been mainly concluded at the present time. The Iranian side made no significant additional concessions.

As a result of the discussion the claims of the sides were determined as follows.

In the guidelines for the negotiations the list of Soviet claims against Iran comprised 783,100,000 rials ($24,200,000) and the amount of Iranian claims against the Soviet Union were set at 1,444,000,000 rials ($44,800,000).

The guidelines permitted the Soviet side to accept Iranians claims for settlement of 840,400,000 rials ($26,000,000) on condition that the Iranian side recognized the above claims of the Soviet Union against Iran. Thus, in accordance with the instructions there was the possibility of winding up a balance of mutual claims of 57,400,000 rials ($1,800,000) in favor of Iran. However, at the start of the negotiations the Iranian side sharply increased the amount of their claims and declared claims of 8,435,000,000 rials ($261,500,000).

[Stamp at the

bottom of the first page:

"Secretariat of V. M. Molotov

29 September 1951

Incoming Nº M-13898s"]

In the course of the negotiations the Iranian side withdrew a number of claims completely or partially and at the present time the Iranian side sets the amount of its claims against the Soviet Union at 1,785,000,000 rials ($55,300,000).

Stating claims at the start of the negotiations in the amount of 783,100,000 rials ($24,200,000) the Soviet side had reduced this amount by 1,600,000 rials by the end of the negotiations in accordance with the instructions given it.

Thus, as a result of the negotiations the Soviet side has asserted the amount of 781,400,000 rials against the Iranian claims of 1,785,000,000 rials.

In the course of the negotiations the Soviet commission found it possible to accept claims of 835,000,000 rials ($25,900,000) in a final settlement of mutual claims, including 685,200,000 rials ($21,200,000) as the remainder of the USSR State Bank debt to the National Bank of Iran under the 18 March 1943 payments agreement, representing the value of 11.2 tons of gold and $8,600,000.

The Iranians only accepted our claims amounting to 138,000,000 rials ($4,200,000), rejecting completely claims regarding the Soviet-Iranian Oil Company of 316,100,000 rials and our capital investments in Iran of 327,300,000 rials.

In these conditions, when the Iranian side accepts claims of the Soviet Union in extremely minimal amounts (a total of $4,200,000) the preparation of a final Protocol regarding the results of the negotiations indicating in it the claims accepted by the sides would mean recognition by the Soviet Side of Iranian claims of $25,900,000 without reciprocal recognition of the claims of the Soviet side by the Iranian side.

The proposal about preparation of a Protocol regarding the results of the negotiations contradicts the guidelines given the Soviet commission concerning the conduct of the negotiations.

Considering the above, the Ministry of Foreign Affairs, the USSR Ministry of Finance, and the Ministry of Foreign Trade consider the proposal of Cdes. Sadchikov and Chechulin about preparation of a final Protocol regarding the results of the work of the commission to be unacceptable.

Instructions ought to be given the commission to reject the proposal to prepare a final Protocol.

In accordance with the above we submit draft instructions to Cdes. Sadchikov, Chechulin, and Kuznetsov and also a memo concerning the claims.

A draft VKP(b) CC decree is attached.

It has been coordinated with Cde. V. M. Molotov.

Please examine [it].

     A. VYSHINSKY

A. ZVEREV

M. MEN'SHIKOV

29 September 1951

  Nº 611-VK

Authenticated: [illegible signature]

Copies were distributed

to Cdes. Molotov

            Malenkov

            Beria

            Mikoyan

            Kaganovich

            Bulganin

            Khrushchev

            Suslov

[handwritten: copy Nº 3]