884.6461 Tsana Dam/386

The Minister in Ethiopia (Southard) to the Secretary of State

No. 1125

Sir: I have the honor to report that the Legation received on January 22nd, 1933, from the American Legation in Cairo, a telegram which we interpreted to state that the Anglo-Egyptian arrangements whereby the Egyptian Government would do the initial financing of the Tsana Dam construction in Ethiopia had been upset by newspaper publicity, and that the Egyptians had accordingly withdrawn from the arrangement whereby they had agreed to put up the money to enable early construction on the dam to begin.

The above telegram further indicated that the coming conference here would now, on the basis of the development in Cairo, be restricted to asking permission for a further survey of the dam project and could not, under the circumstances, proceed with concluding with the Ethiopians final arrangements for the actual construction of the dam as had been originally planned for this meeting.

My colleague at Cairo indicated that he was both cabling and writing to the Department on this subject.

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On January twenty-second my British colleague came to see me to ask what I had heard from Cairo and to inform me that he had a long cable from the British Residency at Cairo on the subject of the change of plan as to Egyptian financing of the dam. His telegram was on the same general topics of the above indicated message which this Legation had from our Legation in Cairo, but was much more elaborate and detailed. From his recital to me of its contents I understood, in brief, that the Sudan Government had arranged that the Egyptian Government would finance the Tsana Dam and would receive back a share of the investment from the Sudan Government when the latter began to receive water and should be in a better position to make payments. Upon conclusion of this arrangement it appears that the Egyptian officials concerned decided to issue a news bulletin to the public press. The resulting publicity brought, I understand, a storm of protest from a section of the Egyptian public motivated, presumably, more by political antagonism than by other reasons. In the face of this protest, my British colleague stated, the Anglo-Egyptian financial arrangement was called off by the Egyptians.

This development will, he states, prevent the British and Egyptian representatives to the conference here from proposing a final construction contract to the Ethiopians, there being for the present no way of financing the work. My British colleague stated, however, that the British and Egyptian delegates would be authorized to ask Ethiopian permission to have a further survey carried out by the White Engineering Corporation, the Egyptian Government to meet the estimated cost of US$130,000.00. Request for such permission will, we assume, be the main item of business for the conference which we expect to convene sometime during the first part of February and for which the American, British and Egyptian representatives are expected to arrive here within the next ten days.

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Respectfully yours,

Addison E. Southard