Foreign Relations of the United States, 1955–1957, Arab-Israeli Dispute, 1955, Volume XIV

193. Telegram From the Embassy in Egypt to the Department of State¹

Cairo,August 15, 1955—2 p.m.

233. There follows a series of three messages which should be considered together. This message contains account my conversation last evening with Nasser re sale military equipment. Second contains analysis of situation here as reported to me by Ahmed Hussein after lengthy conversations with Nasser.² Last message will contain such recommendations as I have for consideration of Department.³

In order insure there be no lack of understanding I let Nasser read appropriate portions Deptel 244⁴ as amended by niact 256.⁵ Supplemented text by saying I personally greatly pleased by Washington decision this matter and hoped it would disprove once and for all charge of his military that it impossible purchase weapons from US. Expanded in some detail as to wisdom military personnel discussing matters such as items, availability, shipping, maintenance, spare part situation, etc. Told him also I felt there were items on list which he would find it unnecessary to purchase as many of the TO and E items for US units probably would be found unnecessary or duplication of what was already on hand. Explained that prices given were lowest possible for US in view of its own regulations and practices with other friendly nations.

Nasser took no exception to information he read or my supplementary remarks. He said he thoroughly understood it in his interest that matters I had mentioned be handled by military personnel. For reasons which became immediately obvious he did not object to phased program as I had anticipated.Nasser said he had just gone through GOE financial situation again with Minister of Finance⁶ and his dollar position was really far worse than he had realized. He stated they now had a balance of $28 million. (This checks roughly our information. Last report available to Embassy was $34.4 million and Egypt has been losing from $2 million to $4 million per month.) He had asked Minister of Finance to re-study this situation and give him recommendation as to how much could be spent for military equipment.Nasser said I must realize this was very difficult problem for them and inquired whether we could find some way to let him finance these purchases with Egyptian pounds. I stated I not hopeful that such arrangement could be made. As far as I aware we had not used this practice for any other nation and was certain we would not like precedent to be set.Nasser said could understand this but after all we no longer selling equipment many places and would I please try. After considerable discussion I agreed consult Department. Matter as left that he also would go again into his own financial situation and we would have further talk later.

Byroade

1. Source: Department of State, Central Files, 774.56/8–1555. Secret; Priority. Received at 2:59 p.m. Passed to London and Paris.
2. Infra.
3. Byroade stated in telegram 235 from Cairo, August 15, that he believed the Soviet Union was intervening in the Near East on the Arab side of the Arab-Israeli dispute, in part by its offer to furnish Egypt with military equipment. He recommended that if the United States hoped to dissuade Nasser from accepting this proposal and Soviet offers of economic development assistance, it should “try to meet Nasser’s request for purchase of some military equipment for Egyptian pounds.” (Department of State, Central Files, 474.118/8–1555)
4. See footnote 2, Document 182.
5. Not printed. (Department of State, Central Files, 774.56/8–855)
6. Abdel Moneim Kaissouny.