Office of the Historian

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

Cairo, February 2, 1956—4 p.m.

1471. Reference Embtel 1450.2 Black’s meetings with GOE officials yesterday took hopeful turn which is believed due largely to conviction of Hassan Ibrahim and others close to Nasser that Black count [can?] not be persuaded undertake loan agreement now. (Kaissouni admitted to Black he had hammered away for loan agreement in order to convince others, mainly Hassan Ibrahim, Black’s position firm. Elaborate stenographic notes taken and probably reviewed by Nasser. Black’s irritation at these meetings genuine as he was not privy to Kaissouni’s strategy and resultant sharp discussions apparently convinced Ibrahim and through him Nasser.) At meeting last evening, Kaissouni and colleagues told Black that GOE would postpone starting main project until after Nile waters settlement; would require, in accordance with principles Bank, appropriate competition in awarding contracts, and desired Bank commitment (approved by board) in form exchange letters.3 GOE letter to Bank to cover, [Page 130] unilaterally, substance conditions now contained draft letter intent presented Kaissouni in Washington4 and to request working out loan agreement after Nile waters settlement. Bank’s reply, probably brief, would concur. GOE promise to produce draft its letter for discussion Friday.5

Kaissouni has told Trevelyan in private conversation GOE letter would state intention conduct financial policy, in particular extent external credits, in such way as not affect its capacity to repay loan, but GOE could not agree to anything specifically giving Bank right veto GOE decisions in this field. Bank’s position could be safeguarded by making signature loan contract conditional on GOE carrying out its intention. Loan contract itself could provide for stopping loan disbursements if Bank not satisfied GOE continuing to carry out its intentions.

Trevelyan raised with Kaissouni question Soviet-Bloc competition. Latter replied this not yet fully discussed with Nasser and his colleagues, and could probably not be made a specific point in exchange of letters, but thought letting of one contract to Western consortium for whole project might provide solution. Later, Black told Trevelyan Bank’s practice is to limit construction to firms belonging to member countries or to countries from which Bank borrowed money. Black has received request from Sudan Government, delivered by Sudanese Chargé here, to come Khartoum to discuss Sudan projects. Black has replied could not do so for two reasons: (1) not enough time and (2) Sudan not member of Bank and therefore he could not discuss even projects, not to mention loans (nevertheless, invitation repeated, and Black again declined).6 Black mission feels this also hopeful development. If Sudanese counting on Bank for assistance for Roseires Dam, they may be prepared take reasonable position regarding Nile waters settlement.

Hart
  1. Source: Department of State, Central Files, 874.2614/2–256. Secret; Priority. Received at 1:33 p.m. Repeated to London, Paris, and Khartoum.↩
  2. Document 59.↩
  3. The Egyptian draft texts of the proposed letters which Prime Minister Nasser and Eugene Black were to exchange were given to Black and transmitted to the International Bank for Reconstruction and Development and to the Department of State on February 4. (Telegram 1494 from Cairo; Department of State, Central Files, 874.2614/2–456)↩
  4. See footnote 2, Document 1.↩
  5. February 3.↩
  6. Further information regarding the Sudan’s invitation and Black’s refusal is in telegram 1523 from Cairo, February 7; Department of State, Central Files, 398.14/ 2–756 and in despatch 845 from Cairo, February 8; ibid., 398.14/2–856.↩