Subsidy for Persia

A British chronology of the war records under 28 September 1915 that the governments of Great Britain and Russia accepted the request of the government of Persia for a monthly subsidy. Neutral Persia was sinking in debt and its treasury was empty. The government in Tehran, headed by Mostowfi ol-Mamalek, who had taken office in August, was looking for money wherever it could. For London and Petrograd financial aid was a way of keeping Tehran from going over to the Central Powers.

Money instead of a loan

According to the Encyclopaedia Iranica the aid began in October 1915 and took the form of a so-called moratorium. Great Britain and Russia suspended the collection of interest on the old loans Persia had taken from them before the war, and allowed the government to use the customs revenues hitherto earmarked for their repayment. This was a deliberate device. A direct loan would have required the consent of the Persian parliament, the Majlis, where opponents of the Entente predominated. The moratorium made it possible to bypass the deputies. This arrangement lasted until May 1917.

The aid was not disinterested. The powers which under the agreement of 1907 had divided Persia into spheres of influence were paying for goodwill towards the allies. Iranica writes that this allowed them to impose their will on the government in Tehran, and that successive cabinets throughout the war had to obtain the approval of the British and Russian ministers.

A country on the brink

In the autumn of 1915 the Entente had reason for concern. German and Turkish missions were active in Persia, and German agents were gathering armed volunteers in Isfahan and other towns. In the south the British were occupying Bushehr and were still beating off tribal attacks, and some officers of the Persian gendarmerie openly sympathised with Germany. Mostowfi himself was playing a double game: while accepting aid from the Entente, he was at the same time negotiating with the Germans the terms on which Persia might enter the war on their side.

The money did not resolve the crisis. In November the Russians decided to march on Tehran, and the opponents of the Entente in the Majlis, together with the German diplomats, left for Qom. Yet for the rest of the war the subsidy from the joint purse of London and Petrograd became one of the main instruments with which the two powers kept Persia in check.