Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 2

745W.00/11–2552: Telegram

No. 1034
The Ambassador in the United Kingdom (Gifford) to the Department of State¹

secret

London, November 25, 1952—7 p.m.
[Received 7:11 p.m.]

2970. In course conversation on Egypt today, Emb off reverted to indications of deterioration in internal position Naguib regime as compelling reason for earlier and fuller support. (Embtel 2919 Nov 22)² Emb off found FonOff appreciative problems involved. Official to whom we spoke expressed awareness Naguib’s need for some political triumph and thought settlement Sudan issue would help him. Official somewhat apprehensive, however, that Naguib had so impaired his flexibility as result public statement which made subsequent Robertson’s conversation with him, that necessary give and take in negotiations lacking on Egyptian side. Official govt asked Naguib’s assurances prior Robertson conversation that Sudan proposals not immutable, with hardened attitude reflected in latter conversation with Stevenson. UK prepared be as flexible as possible in negotiations, but could not grant everything Naguib desired.

Reverting to present indications of instability in Naguib regime, FonOff official felt most of these were economic in cause. While appreciating long range desirability of arms aid for Egypt, he questioned whether in Egypt’s present financial condition it made much sense to be talking in terms of substantial arms program for which Egypt would have to pay when she was having difficulty in paying for essential imports. He indicated FonOff is beginning give urgent attention to possibility economic assistance for Egypt, including, we gather, possibility HMG using its influence with raw cotton commission re resumption purchases. (This was told us in great confidence and with usual caveats re commercial difficulties involved as outlined Embtel 2793 Nov 14.)³ He also mentioned possibility further sterling releases to Egypt which would permit govt purchase cotton and hold it for future sale. He admitted, however, that this did not get at heart of economic problem, which is essentially how to get cotton moving again in world trade channels. Extent to which UK would help in any program of economic assistance to Egypt is obviously limited by its own economic and financial position and he would welcome any thoughts which we might have on how effective program could be gotten under way. This, it seemed to him, was matter of first priority. Once economy back on its feet, discussion of substantial arms program would have more reality.

Emb off said he was sure Dept would welcome examination this subject. He knew we were already giving considerable thought to question of economic aid and, as memo dated November 18 which Dept had handed Brit Emb Wash indicated, we were awaiting paper from military Junta on subject. He pointed out, however, that even if US were in position undertake program of economic aid in Egypt, prolonged negotiations would probably be necessary. He mentioned Syria as case in point. Meanwhile, to help buttress Naguib regime and to provide evidence of western support, it might be necessary give Egypt assistance in arms procurement. FonOff official admitted this might be necessary, but felt it should be on very limited scale if for no other reason than its effect on Egypt economic and financial situation.

Comment: It seems logical that, in view of mounting indications of deterioriation in situation, primary emphasis on aid to Egypt should be on economic side. While emphasis on military aid is undoubtedly psychologically important it appears, in effect, one putting cart before horse. Emb would welcome Dept’s and Cairo’s thinking on this subject.

Gifford

1. Repeated to Cairo as telegram 157.
2. Ambassador Gifford reported in telegram 2919, Nov. 22, not printed, that an Embassy representative had advanced the argument at the Foreign Office that the deteriorating domestic position of the Naguib regime was a compelling reason to exert every effort to reach an early agreement on the Sudan. Foreign Office officials were aware of the situation but were unable to move quickly because of Eden’s absence in New York. Therefore, the Foreign Office would be unable to give Stevenson guidance by Nov. 24 on the points which had arisen in his conversation with Naguib on Nov. 20. (745W.00/11–2252)
3. Not printed.