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

467. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Allen) to the Secretary of State¹

Washington, July 17, 1956.

SUBJECT

• Aswan High Dam

Discussion:

Ambassador Hussein is now expected in Washington July 17, and we anticipate that he will seek an appointment with you shortly.

Apart from the technical difficulties of mustering sufficient funds and domestic political considerations, we do not believe the West should proceed with the Aswan High Dam as now conceived in the absence of a change in Egyptian policies. Our quarrel with Egypt is not that it is following a “neutral” course in declining to align itself with either the East or West but that for reasons largely irrelevant to the East-West struggle, Nasser is pursuing policies in the Near East opposed to reasonable U.S. objectives and supporting Soviet objectives. Nasser is not guided appreciably by “cold war” considerations but by his own vision of “Egypt’s destiny”. His pamphlet entitled “The Philosophy of the Revolution” envisages Egyptian preponderance first in the Arab world, next in Africa and then in the Moslem world as a whole, with Nasser as “the man on horseback”. The East-West contest only provides him with opportunities to extract the maximum from each side. He has already turned to the USSR with respect to arms. He is negotiating with the Soviets on the Aswan Dam and will undoubtedly do so on other matters, regardless of whether or not we extend assistance. To achieve his own objective Nasser is demonstrating a naive readiness to collaborate with the USSR in undermining the Western position. The West will be the loser if Nasser achieves his ambitions and may be vitally damaged if the USSR succeeds in using Egypt to establish itself in the area.

Although the measures so far taken by the United States have not brought into existence a common ground upon which an accommodation may be reached with Nasser, we believe that an accentuation of Western pressures offers the best prospects of bringing home to him and to the Egyptian people the fallacy of hoping to play off the West against the USSR. There are some grounds for hope that the process may be accelerated by disillusionment over what may actually be obtained from the USSR.

We believe it is desirable to withdraw the December offer clearly, but also to leave open the possibility of assistance at a later time in some major development, not necessarily the Aswan Dam as now conceived, which would make available large additional quantities of water for irrigation. The population pressures in Egypt are such that some such enterprise is essential for Egypt’s survival. Unless the West holds out hopes of eventual assistance Egypt would be compelled to accept a Soviet offer almost regardless of the terms. Prior to supporting the Aswan Dam we suggested in 1953, but Egypt rejected, a survey of the Nile Valley as a whole. Tentatively we see possibilities in a series of works of moderate size scattered among the major users of Nile waters. The program would be designed to avoid excessive financial commitments to any one project, while making available the necessary amount of water for irrigation and avoiding an excessive long-term financial burden upon the Egyptian people. The first step could be an engineering and economic survey by the IBRD, perhaps financed by U.S. grant funds.

The Dam has become symbolic of the Western attitude towards Egypt. Therefore, we should not underestimate the strength of Nasser’s reaction to a withdrawal of the December 1955 offer. We anticipate that at least he will try to make a deal with the Soviets, although we cannot be sure of the USSR response or that Nasser will accept any offer made. An analysis of his possible reactions is attached (Tab B).

In the short term at least, the problem of the Dam dwarfs other types of economic assistance which we might extend to Egypt. Offers of other types of aid are unlikely to have an appreciable public impact now or to mitigate Nasser’s reaction to a withdrawal of the offer on the Dam. The situation with respect to economic aid is outlined in Tab C.²

The public interest in the matter and the knowledge that Ambassador Hussein is returning principally to discuss the Dam make it inevitable that our action will become public. Therefore our statement to Hussein should be prepared in the light of its effects on the Egyptian people, the other countries of the area, and the U.S. Congress and public, as well as on Nasser. Since the press will be waiting for Ambassador Hussein when he leaves your office, it may be desirable to issue a press statement at that time. A draft is attached for your consideration (Tab A).²

Recommendations:

1. That in speaking to Ambassador Hussein you:

a. Clearly withdraw the December offer on the Aswan Dam.

b. Hold out prospects for eventual Western aid in water development to meet Egypt’s acute need for more arable land.

c. Advise Hussein the U.S. is prepared to consider other types of economic assistance in the interim, but that such assistance will depend upon whether Egypt ceases to engage in acts inimical to interests of the West.

d. State to Hussein that we anticipate the discussion will inevitably become public, therefore we have prepared the attached press release (Tab A). You may wish to give the Ambassador a copy.

2. If you approve this approach, we will prepare an appropriate memorandum for discussion with the President³ before the final decision is made.

[Tab B]

EGYPTIAN REACTIONS TO WITHDRAWAL OF OFFER ON ASWAN HIGH DAM⁴

The most likely consequences of United States withdrawal of its offer on the Aswan High Dam may be summarized as follows:

1. Nasser will be sorely tempted to launch a campaign of “broken promises” against the U.S. If some faint ray of hope of getting the dam is left for him, this may temper the Egyptian fury.

2. He will approach the Soviets, but in a weaker position than ever before, having let it be known he wished to do the dam with the West and having been rejected. The Soviets are thus in a position to demand the complete economic collaboration of Egypt as their price.

3. Nasser may initially refuse the Aswan High Dam from the Soviets on these terms, but will continue creeping economic collaboration possibly by means of a program to build factories in Egypt, using Soviet capital goods and technicians.

4. Nasser’s position in Egypt will be considerably, but not irreparably, damaged. It will not suffer from this cause in the rest of the Arab world with the exception of Iraq.

5. Reaction in Iraq, Turkey, Iran, Pakistan and the Sudan will be good.

6. Nasser will explore any possibility of doing the dam with any combination of other countries.

Nasser is symbolically tied to the promise of the Aswan High Dam for the Egyptian people. It was to have been the fulfillment of “the Revolution” in the economic sphere and a counterweight in economic development to the arms transaction with the Soviets.

Nasser’s reaction to a U.S. withdrawal of its offer will be sharp with cries of “broken promises” and “betrayal” coming from the Egyptian propaganda organs. If the announcement of U.S. withdrawal leaves a small possibility of going ahead with the Aswan High Dam at some time in the future, it is conceivable that Nasser might cover up to save face. In any case, he is likely to step up anti-western activities in Saudi Arabia and Libya, adding to them a marked anti-U.S. note centering on Wheelus Field in Libya and the Dhahran Airfield in Saudi Arabia. The Suez Canal problem and Middle East oil will also be considered as fertile fields for Egyptian action against us.

Nasser will consult with the Soviets on their offer. This “offer” has been more celebrated by the Egyptian propaganda organs than by the Soviets and has been employed in a typical Egyptian fashion to frighten the West into making a swift and favorable arrangement on the project. The Soviets have apparently made an offer on the dam, but its exact conditions are not known… . reports inform us that during his recent visit to Cairo Shepilov offered, in addition to the Aswan High Dam: (a) to purchase the entire Egyptian cotton crop; and (b) to engage in a program of industrialization by which Egypt will quickly gain new factories, including a mill for rolling steel and fabricating steel shapes. If Egypt were willing to turn its entire cotton crop to the Soviet bloc, the Soviets would doubtless attempt to build the dam and to assist in industrialization. If, however, Egyptian-Soviet collaboration is to continue to be partial and creeping, there are reasons for believing the Soviets prefer the industrialization and the proletariat it creates to the strengthening of a land-holding peasantry. Soviet technicians in the urban factory centers of Cairo and Alexandria would be more effective at subversion than a similar number working in the comparative wilderness at Aswan. A part of the Arab cry of imperialism against the West, including U.S. aid programs, is that the West desires to keep the Arab world in agricultural pursuits and prepare it for joint exploitation by the West and industrialized Israel.

Thus, the Soviet posture after Egypt had been turned down by the West might well be to offer the Aswan High Dam and industrial projects if Egypt is ready to go the whole way symbolized by the sale of the entire cotton crop. The industrial projects could be offered in any case. The Soviets will no longer need to attempt to pre-empt the project and can demand the full price of exclusive economic relations. Nasser might decline, at least initially.

Internally this would be a blow to his prestige. He has been assuring the Egyptians, and the world, that he can gain the favors of both the West and the Soviets without suffering the domination of either. The Egyptian discernment of his failure to deliver would be expressed more in cynicism about Nasser than in immediate plots against him. The situation would present a temptation to him to whip up the war fever against Israel to an increased pitch as a means of making disappointment on the Aswan High Dam more nearly tolerable.

Failure to carry through on the Aswan High Dam would not hurt Nasser significantly with the other Arab states, where his leadership rests on Arab unity around an anti-Israeli principle rather than on economic development. The Sudan would be just as happy if the Aswan High Dam were not built. Lebanon and Jordan would feel their U.S. aid more secure with the Aswan High Dam off. Syria would prefer for Egypt to devote its energies to the ESS Pact and anti-Israel activities rather than economic development in Egypt. Saudi Arabia probably does not care whether Egypt builds the Aswan High Dam or not. Iraq will be able to point to its own development projects and contrast the Egyptian failure to get started on the Aswan High Dam. Iraq, Turkey and Iran will receive the U.S. decision with great satisfaction.

While trying to decide whether to abandon themselves to the Soviets as the price for the dam, the Egyptians may try a number of alternatives. They may try to persuade the IBRD to extend a loan without U.S.–U.K. grant participation. They may try to persuade other western nations, notably West Germany and Italy, to give them assistance. Germany could probably make a serious offer.

1. Source: Department of State, S/S–NEA Files: Lot 61 D 417, Omega #9. Top Secret. Drafted by Burdett on July 16. The source text contains no information to indicate that Allen sent it to the Secretary.
2. Not printed.
2. Not printed.
3. No record of such a memorandum has been found.
4. Secret. Drafted by Geren on July 16.