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                            PART III
 
     In considering the present status of relations between Iran
 
and the United States it must be remembered that although American 
 
troops have been here more than a year their presence has not yet 
 
been officially recognized by the Iranian Government. Many Iranian 
 
officials believe that American troops are in Iran on the invitation 
 
and for the purpose of serving as an instrumentality of Britain. 
 
For a year or more we have had under negotiation with Iran a treaty 
 
wherein Iran would recognize the presence of American troops as an 
 
American operation. The ineffective presentation of the treaty has 
 
not been helpful to American prestige with the Iranians.
 
       It is the responsibility of the State Department to effect the 
 
consummation of the treaty. The necessity for promptness in the 
 
negotiation of this agreement was pointed out by me in my report 
 
to you of May 13, 1943. I have not personally participated in any 
 
of the treaty conferences with the Iranians.
 
       I think it important that we understand that since our troops 
 
entered Iran on the invitation of the British without advance 
 
notice to the Government of Iran, it was natural for the Iranians 
 
to look upon us as a British instrumentality. In addition to this 
 
The United Kingdom Commercial Corporation which was first engaged 
 
in preclusive purchasing in Iran has since been selling American
 
lend lease supplies to civilians and to the Government of Iran.
 
Largely through our lend lease supplies, paid for by the American  
 
taxpayer, the United Kingdom Commercial Corporation has been attempt-
 
ing and, to a considerable degree, succeeding in establishing a
 
complete trade monopoly in Iran. The United Kingdom Commercial