Memorandum, State Department Summary of Telegrams

the THE SECRETARY OF STATE WASHINGTON DECLASSIFIED E.O. 12065, Sec. 3-402 August 20, 1951 State Dept. Guidelines, March 6, 1982 By DEB NLT, Date 9-5-85 E C R E F SUMMARY OF TELEGRAMS FRANCE In recent conversations with an officer of our Paris Embassy several French Foreign Office Officials have raised the question of the French attitude toward recognition of Communist China and its entry into the United Nations. There was no indication that the Foreign Office would favor either of these two courses, but, says our Embassy, there is such desperate casting around for a solution in Indochina that, if the Kaesong talks should succeed, there would be considerable support in French political circles for negotiations to settle all Far East problems in the hope that somehow a solution for the seemingly never-ending Indochina question might be found in this context. The Embassy says that it finds no illusions on this score among Foreign Office officials, but political pressures among all except the Gaullists might well build up along these lines. IRAN The long-pending Export-Import Bank loan to Iran, which the Iranian Parliament has ratified after many months of delay, has latterly come to have political connotations which did not exist at the time it was first offered. The British object strenuously to our extending the loan at this time, feeling that it would encourage the Iranians to take a more intransigent stand in the oil negotiations and that it would be interpreted by the Iranians (and the British public) as a token of our partiality to Iran in the dispute. The Department, however, wishes to avoid the implication of any consideration being given to withdrawing the loan or to delaying tactics, and we have instructed Ambassador Grady to pursue the matter in a normal manner. However, we are equally anxious that the Iranians, especially Mosadeq and other government leaders, should clearly understand that, even if the authority in the present Iranian legislation is in acceptable form, this does not mean that funds will become available immediately, even if no delays are involved in signing. We are aware of the danger of the loan being over-played in Iran with respect to its present financial difficulties, and this danger is obviously enhanced by the loan's usefulness as a political instrument in the present controversy with the British. We have instructed Ambassador Grady to make it clear that the capital improvement projects contemplated in the loan will not in the short run alleviate the present foreign exchange of rial shortages. R