The Minister in Egypt (Jardine) to the Secretary of State

No. 599

Sir: I have the honor to refer to my previous despatches on the subject of the approval by the Egyptian Government of the construction of the Gebel Awlia Dam in the Sudan and to transmit herewith the translation of an article appearing in Al Ahram (independent)7 according to which the Egyptian Government had agreed in 1925 to grant the contract for the construction of the Dam to a British company.

According to the same article, in 1929, nine British companies were chosen to make tenders eventually for the contract and these companies were invited by the Egyptian Government at that time to send representatives to the Sudan to study the proposal.

I have had confirmed to me by a high Egyptian Government official the foregoing statements. It appears that in 1925 the Cabinet which consented to the request of the Sudan Government that the work of construction of the Dam be confined to a British company was that of Ziwar Pasha, while in 1929 the Liberal-Constitutional Cabinet of Mohamed Mahmoud Pasha, who at that time favored the project, consented to the arrangement for the limitation of consideration of tenders for the construction of the Dam to nine British companies, of which only seven have decided to submit bids.

There is enclosed a copy of a confidential decision of the Egyptian Council of Ministers of June 22, 1932,7 from which it appears that on that date the Council of Ministers formally approved the previous decision taken in 1929 to limit the adjudication for the Dam to seven of the British firms who had been commissioned by the Government to send representatives to the Sudan to examine the project. It will be observed that the names of the seven British firms are specifically mentioned in the enclosed decision.

Despite the discrimination made by the Egyptian Government in the present case in favor of British firms I am by no means of the opinion that such action warrants a protest on our part. British firms by long tradition have undertaken practically all recent major irrigation works in Egypt and the Sudan and the Egyptian Government may well [Page 846] claim legitimately that the special experience and knowledge gained by such firms should entitle them to special consideration, even in the absence of the special position held politically by Great Britain in Egypt and the Sudan and the peculiar and as yet undefined relations existing between the Sudan and Egypt.

It is only by reason of special and adventitious circumstances that American firms may hope to participate at any time in major irrigation construction works in Egypt and the Sudan and a particularly promising opportunity to that end was lost in 1930. In that year, following the suicide of Sir John Griffiths and the failure of his firm to fulfill the contract awarded it for the second heightening of the Assuan Dam strenuous efforts were put forward by the Commercial Attaché to interest American firms in participating in the new tenders called for by the Government. One American firm, Ulen and Company, went so far as to send a representative to Egypt but declined to make a bid for the reason that there was no financing involved on which the firm might have derived the substantial share of profits it is understood to obtain generally from public works enterprises, as also by reason of the refusal of the Government to consider a contract on a cost-plus basis. At that time, in view of the failure of Sir John Griffiths to fulfill his contract, there was a conjunction of circumstances which favored American participation in the work. In view of the special circumstances attending the present contemplated award (see in particular my despatches Nos. 398 and 505 of February 9 and June 7, 1932, respectively9) I cannot feel that any useful purpose would be served by any exception which we might feel inclined to take to the evident intention of the Egyptian Government to give the contract for the construction of the Gebel Awlia Dam to a British firm.

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Respectfully yours,

W. M. Jardine
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