Report to I. V. Stalin, Settling Mutual Financial Claims with Iran

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Top Secret

to Cde. I. V. STALIN

[Handwriting across the top and slightly off the reproduced page: "To Cde. Molotov. I think that [he] might give these instructions himself, for they correspond to the guidelines which have been adopted". A. [Mikoyan]. 28 December. I suggest additional instructions. M"]

In a telegram of 8 July Cde. Sadchikov, the Soviet Ambassador in Iran; Cde. Chechulin, the Chairman of the Soviet commission to settle mutual financial claims with Iran; and Cde. Kuznetsov, the Soviet Trade Representative in Iran, reported the preliminary results of the work of the Joint Soviet-Iranian Commission to examine mutual financial claims. The Soviet claims have been completely examined. From the total amount of the claims we presented of 783,000,000 rials the Iranian side agreed to allow 138,000,000 rials of our claims.

Agreement was not achieved for our main claim, for the oil agreement in the amount of 316,000,000 rials. Our claim for the capital investments made in Iran during the war was allowed only partially, in the amount of 86,700,000 rials, of the total amount of 414,000,000 rials.

The examination of Iranian claims has also been basically concluded. Of the total amount of Iranian claims of 9,000,000,000 [SIC, 9000 mln.] rials the Soviet delegation agreed to allow 148,000,000 rials (against 165,500,000 rials permitted by the directives regarding the respective claims).

The main Iranian claim under the 1943 payment agreement for the amount of 685,000,000 rials (11.8 tons of gold and $8,600,000) remained unsettled.

In the process both sides stated that their agreement to allow individual claims is dependent on settlement of the entire set of mutual claims.

[Stamp at the

bottom of the first page:

"Secretariat of V. M. Molotov

28 July 1951

Incoming Nº M-9873s"]

Cdes. Sadchikov, Chechulin, and Kuznetsov think that in the present political situation in Iran there exist difficulties for the settlement for the main Soviet claim against Iran regarding oil and the main Iranian claim against the USSR, the transfer to Iran of the gold in kind [v nature]. They have consequently made the following suggestions:

1. Recess the work of the Joint Soviet-Iranian Commission after the conclusion of its examination of the remaining Iranian claims which have not been discussed under the pretext of the need for the Soviet delegation to travel to Moscow to report to its government.

2. Document the results of the examination of the mutual claims in a bilateral protocol signed by the chairmen of the Soviet and Iranian delegations.

The USSR MFA and MVT consider these suggestions unacceptable. The MFA and MVT proceed here from the position that in the present political situation in Iran when the Iranian government is completely occupied with nationalizing the oil industry (the AINK [the Anglo-Iranian Oil Company]) and the dispute with Britain, any proposal by us about a recess of the Soviet-Iranian negotiations would be used by the British and the Americans, first, for purposes hostile to the Soviet Union and, second, to exert even stronger pressure on the Iranian government in order to force it to abandon implementation of the law about nationalization of the oil industry. Moreover, such a proposal by us might cause a reaction among the Iranian public unfavorable to the USSR.

The USSR MFA and MVT think that the negotiations with the Iranians to settle the mutual financial claims ought to be continued and that initiative should not be displayed regarding their recess.

A draft VKP(b) CC Decree is attached.

Please examine [it].

[signature] A. Men'shikov        

[signature] A. Gromyko

12 July 1951

Nº 47-gi

Authenticated: [illegible signature]

Copies were distributed to

Cdes.    Molotov

           Malenkov

           Beria

           Mikoyan

           Kaganovich

           Bulganin

           Khrushchev