661.74/2–1354: Telegram

No. 1283
The Ambassador in Egypt (Caffery) to the Department of State1


909. News of Egyptian-Russian contacts re economic assistance (Deptel 922)2 was revealed by Salah Salim in reply to question at press conference (mytel 902). Salim had previously given lengthy, rather moderate statement dealing with political and economic affairs in which no specific reference to USSR was made. (Embdesp 1930, February 12).3GOE’s failure to “ballyhoo” news of Soviet offer bears out report (myreftel) that Egyptians suspicious and looking for “hooks”. . . .

While there are many factors mitigating against Egyptian acceptance of Soviet aid, GOE decision will depend on whole complex of considerations. Acceptance under certain conditions of serious Soviet offer cannot be ruled out as possibility, although RCC would undoubtedly prefer to deal with the West.

Naguib regime is committed to High Aswan Dam or equivalent Nile development scheme and if Western sources of aid remain closed to Egypt, RCC’s need to show results could overcome present reluctance to get involved with USSR. Fact that Egyptians will [Page 2217] probably try to use Russian offer as bargaining weapon vis-à-vis US and UK is, moreover, no grounds for assuming they will do nothing more if such tactics fail to produce results they desire.

It would appear unwise for us to give any public hint of concern over reports of Soviet offer. Only effective counter-action open to US is to convince London that prompt settlement of Anglo-Egyptian dispute is imperative. If domestic British political considerations continue to make settlement impossible, US should move with unilateral aid before situation develops to point where such action on our part appears to be direct result of Soviet “competition”.4

  1. Repeated to London as telegram 300, to Berlin as telegram 7, and to Moscow as telegram 3.
  2. The Department in telegram 922, Feb. 12, not printed, requested the Embassy to evaluate the significance of the Egyptian announcement of negotiations with the Soviets for large-scale economic assistance. (661.74/2–1254)
  3. Not printed.
  4. In telegram 3507 from London, Feb. 15, not printed, the Embassy in London reported that the Foreign Office had no particular comment regarding the Egyptian-Russian negotiations except that the British thought it to be a maneuver designed to get the United States to put pressure on the United Kingdom with regard to the Suez base talks. (461.7431/2–1554)