469. Memorandum of a Conversation, Department of State, Washington, July 18, 19561
SUBJECT
- Aswan High Dam
PARTICIPANTS
- Mr. Ronald Bailey, Counselor, British Embassy
- Mr. Willie Morris, First Secretary British Embassy
- Mr. William M. Rountree, NEA
- Mr. William C. Burdett, NE
Mr. Bailey stated that the British Ambassador had intended to provide the Secretary the latest British views on the Aswan Dam. Selwyn Lloyd had asked the Cabinet to consider the matter but because of the press of other business a definite Cabinet decision had not been arrived at. However, Selwyn Lloyd wished the Department to know that the message previously given the Department,2 quoted below, still represented British thinking:
“I am inclined to think that we shall have to tell the Egyptians that in the six months since the Aides-Mémoire were drafted we and the Americans have become even more worried at the apparent trend of Egyptian financial policy. We believe for example that the Egyptians contemplate Russian financial aid for other projects than the Dam and we know from the activities of the Egyptian Quartermaster-General in this country that they are thinking in terms of setting up a vehicles industry, to say nothing of the shipyard at Alexandria and continued purchase of arms. In other words, they are not giving the Dam the priority which was assumed in the draft Aides-Mémoire.”
Mr. Bailey added that the British were very conscious of the importance of the decision and the possibility that Nasser might turn to the USSR. They were increasingly doubtful about Egypt’s ability to carry the project financially. Mr. Bailey said that a heavy drain was occurring on Egypt’s sterling balances, despite large releases of blocked sterling.
Mr. Rountree said that we had not yet reached a final decision. However, our present thinking was in line with that of the British.