Foreign Relations of the United States, 1955–1957, Arab-Israeli Dispute, January 1–July 26, 1956, Volume XV

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

Cairo, February 23, 1956—midnight.

1667. This is message no. 3 referred to Embtel 1664.²Begin verbatim text.

The most probable explanation of the Egyptian attitude to the aides-mémoire is as follows. They do not want to appear to be begging the British and American Governments for money. They may regard the use of the phrase “initial grant” and omission of the mention of subsequent grants as being a rather firmer commitment than the wording of paragraph 2 of the aide-mémoire.³ In any case they would not like a document containing promise to consider future aid “in the light of conditions then existing et cetera” which might be interpreted as a condition of good political and economic behavior. They would wish as far as possible to subscribe only to conditions required by the bank and not to repeat their undertakings to the two governments. They would not wish to appear that project was being fathered by the two governments and therefore not entirely their own.

2. I think that considerations such as the above which are understandable enough in the present atmosphere here are sufficient to account for the Egyptian Government’s proposals. Paragraph 2 of the aides-mémoire provided that the further support should be given by the British and American Governments in cooperation with the Government of Egypt, the Bank and other member governments of the bank. This would probably not have prevented the possibility of grants-in-aid from the Communist Governments, but its omission would undoubtedly make it easier for the Egyptian Government to accept such grants in aid for the high dam should Communist governments offer them for political reasons. I cannot entirely exclude the possibility that something of this sort is in mind.

3. I recommend that we should accept one of the alternatives proposed by the Egyptian Government subject to suitable wording preferably the first IEA grant to the Egyptian Government. I believe however that we should not do so until we have examined carefully with bank the methods which can be adopted to prevent Communist participation in high dam either by tied grants or by lower tenders for contracts to be financed from Egyptian funds. The briefer exchange of letters without reference to the stages will perhaps make it possible for the bank to ensure that no portion of the work is exclusively financed by funds not provided by the bank or approved governments and to exclude Communist tenders but I am not clear on this point. Mister Black has no doubt been giving thought to this question since I raised it with him. I do not think that we shall get anything better by direct negotiations between governments on this question than an oral understanding the value of which may not survive the whole period of the dam’s construction and I believe that the responsibility for excluding the Communists must rest with the bank. I think that they may have a better chance of working out something with the Egyptian Government, if necessary, which will safeguard our requirements on this.

4. My following telegram⁴ contains a draft of an exchange of letters based generally on the Vice President’s detailed comments on the aides-mémoire. End verbatim text.

Byroade

1. Source: Department of State, Central Files, 874.2614/2–2356. Confidential; Priority. Received at 757 a.m., February 24.
2. See footnote 2, Document 121.
3. Presumably paragraph 2 was the same as paragraph 2 of the U.S. aide-mémoire; see telegram 1282, vol. XIV, p. 868.
4. Infra.