Foreign Relations of the United States, 1955–1957, Suez Crisis, July 26–December 31, 1956, Volume XVI

159. Memorandum of a Conversation, Department of State, Washington, September 1, 1956¹

Washington, September 1, 1956

SUBJECT

• Representations from King Saud on Suez

PARTICIPANTS

• Sheikh Abdullah Al-Khayyal, Ambassador of Saudi Arabia
• Azzam Pasha, Representative of Saudi Arabia
• Mr. William M. Rountree, Assistant Secretary, NEA
• Mr. Fraser Wilkins, Director, NE

The Saudi Arabian Ambassador called on Mr. Rountree this afternoon accompanied by Azzam Pasha. The Ambassador said that he had a private and special message from King Saud for the United States Government. In response to Mr. Rountree’s question, the Ambassador said that the message was for the President and other U.S. Government officials. He handed Mr. Rountree a copy of the message, which is attached.

After reading the message, Mr. Rountree said that we understood that Yusuf Yassin was presently in Cairo and had had conversations with President Nasser and was urging a peaceful solution. Mr. Rountree continued that the President and the Secretary had, from the beginning, urged that the Suez dispute be settled peacefully. The Committee of Five, on which the U.S. was represented, was presently in Cairo and we were much encouraged by its progress. We understood that discussions between President Nasser and the Committee of Five would commence on September 3.

Mr. Rountree then turned to King Saud’s message and said he wished to make a few preliminary comments. He said that the military steps which had been taken by the U.K. and France were on their own initiative and that the U.S. had not been consulted in advance.

Azzam said that in addition to the Ambassador’s comments he had been instructed by the King to go into this question with the U.S. Government. Azzam pointed out that in addition to the British and French measures, the United States had blocked assets of the Suez Canal Company and the Government of Egypt. He believed that the British and French measures were completely unjustified in that the British and French held funds far in excess of possible compensation to the stockholders of the Suez Canal Company. He said that the U.K. had the equivalent of $300 million and the equivalent of $150 million in excess. Since these funds were available for compensation, why had it been necessary for the U.S. to take action?

Mr. Rountree explained that the question should be looked at in proper perspective. On July 26 President Nasser had made a speech regarding the Suez Canal in which he had said that nationalization was retaliation. The U.S. licensing had been undertaken against this background. The situation was confused and we wished to be certain that funds were paid to the proper persons or companies. The British and French were saying that the steps which they had taken were precautionary. It was Mr. Rountree’s personal view that there was little if anything the U.S. could do to halt these steps. There would in any event be no possibility on grounds of time because the discussions between the Committee of Five and the Government of Egypt were beginning the week of September 3.

Mr. Rountree said that he would immediately convey King Saud’s message to the Acting Secretary who would pass it to the President. It would be given the most careful consideration. He would be in touch with him regarding the response of the U.S. Government.

Azzam then turned to the question of funds of the Egyptian National Bank which were blocked in the United States. He said that these funds totalled $30 million, of which $15 million were now needed by the Egyptian depositors. Azzam thought that if the U.S. Government was able to release the $15 million that it would improve the atmosphere.

Mr. Rountree replied that it had been necessary to place the assets of the Suez Canal Company and the Government of Egypt under license until the situation had been clarified. These assets were substantial. We had many legal and monetary problems regarding them. The question arose as to who owned them. It was for these reasons only that the balances had been placed under licensing until the situation had been clarified. Mr. Rountree noted, however, that current transactions could take place under general license.

Azzam pressed that the United States release all funds which had been blocked. He said that because Nasser made a mistake on July 26, there was no reason for the United States to make a mistake by blocking. He said that the U.S. had no connection with the Suez Canal Company and that in any event the British had twice as many funds as they needed for compensation. Furthermore, it was King Saud’s opinion that the release of funds in the United States would help.

Mr. Rountree commented on Azzam’s statement regarding U.S. licensing, that our action was not in the same category as Nasser’s nationalization of the Suez Canal Company. Our action had been precautionary pending clarification of the situation. Mr. Rountree continued that the U.S. placed great value on the views of King Saud and would give them the most careful consideration. Mr. Rountree hoped to be in touch with the Ambassador and Azzam shortly.

[Attachment]

Message From King Saud to President Eisenhower

The United States Government is aware that our efforts have been devoted to work out a peaceful settlement in the dispute over the Suez Canal.

We believe that the United State is adopting the same policy to achieve such a settlement. We fully realize the difficulties that we all must face in order to accomplish this; but our good intentions and willingness, equally shared by the United States, will no doubt enable us to overcome all the difficulties involved.

We asked the American representatives who visited us here lately whether the United States could use every possible effort to end the military and economic measures taken against Egypt; they in turn assured us that they would use their best endeavours to bring this about.

Our own efforts have contributed greatly in bringing about the decision of the Egyptian Government to meet the Menzies Committee; and to a certain extent succeeded in appeasing press and radio publications.

We hope that the United States will be able to take the necessary steps to release frozen Egyptian assets and at the same time continue working out its peaceful solution. Such an action, if taken under present circumstances will no doubt have its favorable effect in the Arab World as well as paving the way for negotiations to reach a peaceful solution.

We hope that the American Government will make every possible effort to stop such economic and military measures in order to create the necessary peaceful atmosphere during negotiations.

1. Source: Department of State, NEA Files: Lot 58 D 722, Saudi Arabia—General. Confidential. Drafted by Wilkins on September 5.