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

360. Telegram From the Department of State to the Delegation at the Foreign Ministers Meetings in Geneva¹

Washington,October 26, 1955—10:56 p.m.

Tosec 41. Re Department’s Tosec 27,² 28 and 29.³ When Secretary Humphrey and I met Makins re Aswan dam today we pointed out that US Government fully shared apprehensions of UK re Soviet activities in Middle East but we had serious reservations re any approach to Aswan project except through IBRD, for reasons stated in reftels.Makins said London was afraid delay might result in Russia’s undertaking tremendous project halfway down in Africa and that chief advantage of consortium was that it was ready to sign. I pointed out that if US,UK and IBRD worked together energetically, we might give Nasser a sufficiently encouraging letter of intent to prevent his signing with USSR.

Humphrey emphasized that we could not rush into project of this magnitude. He said IBRD would lend $200 million on project but only on condition that US and UK would put up additional $200 million in grant aid. Moreover, he thought US and UK should be prepared to underwrite entire project if necessary, once we started. Egyptian contribution in local currency, approximately $900 million, amounting to perhaps $75 million per year, might be stopped at any time and we would then be faced with alternative of putting in additional money or of withdrawing and allowing Russians to pick up where we left off. Total liability of US and UK might reach one billion dollars, and we should be prepared for project to cost us at least $300 million each. Since US now holds about one billion dollars worth of surplus cotton, Congress would be highly skeptical of proposal to put that much money into Egypt, much of which would result in additional cotton production there. We would be flying directly into face of our whole agricultural program in US. I added that US public would have difficulty understanding large additional US commitment to Egypt at present, particularly if we rushed into project in which no US firms were participating. In view of all these considerations, we saw no possibility of producing money for consortium deal and were convinced that only possibility of progress was through IBRD.

While Makins naturally made no commitment it was my impression he fully realized practical impossibility of implementing Eden proposal. On other hand he appeared to share our feeling that if preliminary agreement could be reached between US,UK and IBRD, a satisfactory approach could be made to Egyptians in reasonably near future.

In view of circumstances outlined Tosec 29,Makins appeared to agree that best location for further discussions was in Washington, especially because Egyptian Finance Minister expected arrive here in about two weeks.Makins stated he would recommend London that three-way conversations be held between UK, US and IBRD soonest possible.⁴

Hoover

1. Source: Department of State, Central Files, 396.1–GE/10–2655. Secret. Drafted by Allen and approved by Macomber, who initialed for Hoover. Repeated to London, Paris, and Cairo.
2. Tosec 27 to Paris, October 25, informed Dulles that he could expect to receive two messages concerning the Aswan Dam that would provide him with talking points for his conversations with Macmillan. (Ibid., 396.1–PA/10–2555)
3. Documents 354 and 355.
4. Makins informed Hoover the following day, October 27, that he had informed the Foreign Office of the recommendation that further exploratory talks take place in Washington. (Department of State, Secretary’s Memoranda of Conversation, Lot 64 D 199)