442. Memorandum of a Conversation, Department of State, Washington, July 11, 19561


  • Aswan High Dam; Military Assistance to Iraq


  • Mr. Ronald Bailey, Counselor, British Embassy
  • Mr. Willie Morris, First Secretary, British Embassy
  • Mr. William C. Burdett, NE

Mr. Bailey left the attached memorandum analyzing the present situation in Egypt and possible courses of action with respect to the Aswan Dam. The memorandum requests the Secretary’s views.

Mr. Bailey remarked upon the similarity between the Foreign Office observations and those of the Department conveyed to him yesterday.2 I said that Ambassador Byroade had just reported that Egyptian Ambassador Hussein was expected to leave Cairo for [Page 812] Washington on July 13 and had been charged by Nasser with discussions principally on the Aswan Dam. Ambassador Byroade indicated that the Egyptians were prepared to suggest agreement on the basis of our December 1955 offer.3 I commented that it would probably be necessary to give Ambassador Hussein some reply next week and that we would be in touch with the British on the matter shortly.

With respect to the British suggestion for a Nile Development Board which is essentially similar to the US proposal for a riparian conference, I informed the British representatives that Ambassador 1 Pinkerton thought the Sudan would not be attracted by the idea. The Ambassador is of the opinion that the Sudanese think they can obtain a better deal by negotiating directly with the Egyptians and that involvement of other countries will result in a reduction of the total amount of water allotted to them. Ambassador Pinkerton also doubts that the Egyptians and Sudanese will finally resolve the question of a division of Nile waters in less than a year. Mr. Morris said that should a Soviet-Egyptian deal on the Aswan Dam materialize, it would set a bad precedent for the Sudanese and would immediately expose the Sudan to Soviet penetration.

Mr. Morris stated that the Crown Prince of Iraq4 recently had urged an increase in the supply of weapons by the West. The Crown Prince thought that the flow of Soviet Bloc armaments on a large scale to Egypt was having a particularly bad effect among junior officers. Mr. Morris asked that the US do everything possible to speed up a final decision with respect to additional offshore procurement in the UK. I explained that the appropriations legislation had not yet been passed and that in view of the prospective deep cuts it would probably be some time before we were able to arrive at definite decisions.

[Page 813]


Memorandum From the British Embassy to the Department of State5


Although Shepilov left Cairo without any announcement about Russian aid for the High Dam, evidence continues to mount that Nasser may shortly accept a Russian offer in some form. He may, before setting out for Moscow, ask us point blank where we stand. We must therefore consider what line we are to take.

Since we and the United States Government made our offer of a grant in November [December?], our political assessment of Nasser’s position has become more unfavourable. One of our main reasons for making the offer was to help him limit the Czech arms deal to what he called a “once and for all” transaction and keep other Communist technicians out of Egypt. This hope has been progressively contradicted by events. Moreover Nasser is already enmeshed in the Russian net (though he himself may not realise how much). This involvement is economic as well as political. Politically Nasser continues to work against Western interests, for all his fair words; and seems in particular to be developing sinister ideas about acquiring some control of oil in other Arab countries. We have therefore been considering whether it is in our interest economically or politically to maintain our offer of a grant to build this dam for Nasser now.
The arguments for continuing our offer are substantial. We must draw a distinction between Nasser with his pro-Soviet policy, and the people of Egypt for whose long term interests a dam is essential. Egypt remains the most influential Arab country, and in the long run we want a friendly Egypt. If we now withdraw our offer, or leave Nasser a case for arguing that we have done so, we shall risk a serious propaganda defeat in the Middle East and Russia will be able to pose as a humanitarian benefactor who attaches no political strings. In any case we are substantially committed to a specific and detailed offer.
On the other hand apart from the major political considerations in para 2 above, there are substantial reasons for not maintaining our offer of a grant. Economically it would land the United [Page 814] Kingdom with a large open-ended agreement against limited resources which we might find on further examination could be used to greater general advantage in other ways. Nasser has devoted a substantially greater share of his economic resources to building up armaments and has run into other financial difficulties of a more serious kind than we foresaw when the scheme was drawn up, and is paying for imports from the Communist bloc by selling to them increasing quantities of cotton on which he must rely for the major part of the foreign exchange necessary to finance his share of the dam. Moreover we have to suffer the serious disadvantage of doing more for a regime whose actions are consistently hostile than for our friends.
There are several possible courses, the most important of which are set out below.
We might take the initiative and make public our withdrawal This would encourage friendly governments in the Middle East; and force Nasser either to turn to Russia, thus making unmistakably plain his Russian connections, or go without his dam. It might also encourage the opposition to Nasser of elements in Egypt who do not wish to quarrel with the West. Against this we should be revealing prematurely our confirmed hostility to Nasser, and not only risk an intensification of his anti-Western activities (from which the United Kingdom would be the first and most severe sufferer), but also shake the confidence of many Egyptians and other Arabs in our good intentions towards them, and prejudice our chances of reverting to our offer with a more friendly Government.
We could toughen up our financial terms. This might also give Nasser grounds for claiming that we were never serious, and give him a pretext for turning to the Russians.
We might do nothing, but continue to let our offer languish. This gives us no adequate reply if he asks us point blank what our position is, or offers to clinch the deal on the basis of our offers.
We might make a specific proposition to Nasser: asking him what side he is on, and what evidence he can give us of the value of his reply. This is unlikely to produce realistic results.
We could try a new approach. We could say that the present scheme is too exclusively focussed on Egypt’s needs: that we want a wider scheme bringing in a lot of other affected states. We are prepared to go on with the scheme on this wider basis, with a Nile Development Board and equal opportunities of access by the Sudanese and others to the capital available, so that Egypt does not scoop the pool on Nile development. This would be a difficult charge for Nasser to answer without seriously upsetting the Sudan. Unless some additional arguments were adduced this would however expose us to a charge of breach of faith.
We see considerable merit in the last idea which is in line with the thoughts put forward by the American Minister on June 1 [Page 815] when he asked for our views on the proposal to call a conference of riparian states.6
We should much value Mr. Dulles’ views, especially on para. 5(e) above.7
  1. Source: Department of State, Central Files, 874.2614/7–1156. Top Secret. Drafted by Burdett.
  2. See Document 438.
  3. See telegram 1282, vol. XIV, p. 868.
  4. Amir Abdul Ilah.
  5. Top Secret. Not attached to the source text but filed separately in Department of State, Central Files, 874.2614/7–1056.
  6. See Document 384.
  7. See Document 454.