765.84/2653½

Memorandum by the Chief of the Division of Near Eastern Affairs ( Murray ) to the Secretary of State

The attached two telegrams, 86 of November 2, 1 p.m. and 87 of November 3, noon, from Cairo, reporting Egypt’s intention to participate in League sanctions against Italy, raise a very complicated question affecting our rights in Egypt under the Capitulations and requiring a decision from us in the near future.

Egypt is not a member of the League of Nations and hence is not in a position to invoke League authority for the imposition of sanctions against Italy.

Furthermore, under the Capitulations still in force in Egypt foreigners in Egypt of European or American nationality enjoy, with a few negligible exceptions, exemption from Egyptian law and jurisdiction in certain important respects and Egypt would consequently appear to be without authority under a strict interpretation of the Capitulations to embark upon a system of sanctions against Italy, one of the principal capitulatory powers, unless steps are taken by the Egyptian Government under the guidance of the British Government designed to overcome this obstacle.

Consideration was apparently given some time ago to the possibility of “abolishing” Italian capitulatory rights in Egypt in order to meet the situation. That the Italians feared such a step is clear from a [Page 589] conversation which took place on October 22 between the Italian Ambassador and Mr. Phillips.28

It would now appear, however, from Mr. Childs’ attached telegram No. 86 of November 2, that the decision of the Egyptian Government to cooperate with the League in the imposition of sanctions against Italy may also affect the capitulatory rights in Egypt of other Powers, including the United States. If this proves to be the case we shall, in the light of all the circumstances, have to decide whether or not it is in the interest of this Government to insist upon the full exercise of our capitulatory rights in Egypt.

To put the matter concretely, we shall probably have to make a decision under the following possible circumstances: We know that General Motors has already made large shipments of automotive products to Italian East Africa and may possibly be tempted to continue this lucrative trade which has been carried on through Egypt. If Egypt cooperates with the League in the imposition of sanctions affecting exports to Italy or her colonies and consequently endeavors to prevent shipment by American agents of automotive products to East Africa, those agents could, under capitulatory practice, insist that the American Legation in Cairo take the necessary steps with the Egyptian Government in order to stop its interference with the capitulatory rights of American nationals. Mr. Childs expresses the opinion that, in view of the President’s warning to American citizens about business transactions with the belligerents, the Department might be justified in authorizing American diplomatic and consular officers in Egypt to refrain from asserting capitulatory rights on behalf of American citizens in Egypt engaged in trade with Italy or Ethiopia should such rights be temporarily affected by Egypt’s application of economic sanctions against Italy.

We are conferring with the Legal Adviser’s Office on this phase of the matter and shall be prepared shortly to submit recommendations to you in the premises.

Wallace Murray
  1. See memorandum by the Under Secretary of State, p. 850.