Foreign Relations of the United States, 1955–1957, Arab-Israeli Dispute, 1957, Volume XVII

374. Memorandum of a Conversation, Department of State, Washington, September 23, 1957¹

Washington, September 23, 1957

SUBJECT

• Blocked Egyptian Assets

PARTICIPANTS

• Mr. Robert Anderson, Secretary of the Treasury
• Mr. Randolph Burgess, Under Secretary of the Treasury
• The Secretary
• Mr. Douglas Dillon, W
• Mr. Stuart W. Rockwell, NE

Mr. Anderson and Mr. Burgess called upon the Secretary to discuss the matter of the blocked Egyptian funds in the light of the presence in this country of the Egyptian Minister of Finance,² and the possibility that the Minister, in the meeting of the International Monetary Fund, might raise this matter.³ Mr. Anderson said that he felt that continued blocking of Egyptian funds was doing no financial harm to Egypt.⁴ He realized, of course, that there were important political considerations involved, but he wondered how far the Secretary thought it might be possible to go in encouraging Mr. Kaissouni regarding the possibility of unfreezing the Egyptian assets.

The Secretary said that he did not see much possibility of this. In New York recently the United States and United Kingdom had agreed to make no change in their economic measures affecting Egypt until they could see their way more clearly regarding the Syrian problem. The Secretary felt the original reasons for blocking the Egyptian funds remained valid. Furthermore, despite their agreement to do so, the Egyptians have made no move to reach a settlement with the Suez Canal Company.

Mr. Anderson said that he felt we were in a weak legal position regarding that portion of the blocked funds ($16 million), which represented the reserves of the Egyptian National Bank. Mr. Burgess remarked that in addition we were in a technical violation in that we had not notified the Monetary Fund of our blocking action. Mr. Anderson believed that it was not good for the United States to remain indefinitely in a tenuous legal position on this matter. The Secretary said that he appreciated these considerations but that it was a very bad time from the political point of view to release the Egyptian assets. He asked that Mr. Anderson, in his conversations with Mr. Kaissouni, say nothing which might expose us to fresh charges of bad faith.

1. Source: Department of State, NEA/IAI Files: Lot 69 D 488, Suez Canal, Blocked Assets and Fiscal Control 1957. Confidential. Drafted by Rockwell.
2. Dr. Abdelmoneim El-Kaissouni.
3. The 12th annual meeting of the Boards of Governors of the International Monetary Fund and of the International Bank for Reconstruction and Development was held in Washington September 23–27.
4. On September 13, Kalijarvi forwarded to Dillon a paper, prepared in the Office of International Financial and Development Affairs, which concluded that the blocking of Egyptian assets in the United States had had little effect on the Egyptian economy. The paper also maintained that the British and French blocking measures had had a greater effect than U.S. measures because they had included restrictions on receipts from current transactions. (Department of State, NEA/IAI Files: Lot 69 D 488, Suez Canal. Blocked Assets and Fiscal Control 1957)