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

185. Memorandum of a Conversation, Department of State¹

Washington, September 7, 1956, 11:30 a.m.

SUBJECT

• British and French Proposal on the Suez Question

PARTICIPANTS

• The Secretary Mr. J. E. Coulson, Chargé, British Embassy
• Miss Barbara Salt, Counselor, British Embassy
• Mr. Jacques Vimont, Chargé, French Embassy
• Mr. Francis O. Wilcox, IO
• Mr. John M. Raymond, L
• Mr. William M. Rountree, NEA
• Mr. Fraser Wilkins, NE

The British Chargé said that he had been instructed to concert his present approach to the Secretary with the French Chargé;. They wished to ascertain the Secretary’s views regarding the various papers on Suez which the British Chargé had sent to the Secretary earlier that morning.² Mr. Coulson’s telegram from London indicated the British wished to make an early announcement that they intended to refer the Suez question to the Security Council. London hoped that the US, UK and France would be able to reach agreement before going to the SC. Mr. Coulson thought there might be some difference of views.

The Secretary said that he had just received the papers which the British Chargé had forwarded to him. He had had no opportunity to exchange views with his associates. He would, however, be willing to give his initial reaction. He believed that under the steps proposed in the British papers they were moving too rapidly to the SC, that a case had not been prepared, that there were elements in the situation which urged speed but that there was no point in going to the SC without an adequate case. One might have the votes in the SC to force the issue but we were reluctant so to act.

The Secretary said that the parties to the Convention of 1888 had rights which he believed Egypt was prepared to challenge. The first step was to formulate those rights which we could legitimately claim and to exercise those rights. If Egypt should challenge those rights there would be a basis on which we could go to the SC. As of today we have by presenting the 5-power proposal to Egypt merely requested it to make a new treaty. We recognize that the new treaty involves an alteration of the present situation but we said that no ultimatum was being given to Egypt and that it was free to accept or reject the new treaty. It appeared that Egypt was going to reject it. We should then seek to exercise our rights in two ways: 1) We should arrange for pilots of our own choosing qualified to take ships through the Suez Canal; 2) there was no provision for the payment of profits to Egypt which was a matter for negotiation. The concept did not mean that we should not reimburse Egypt but there was no basis under the treaty of 1888 for reimbursement. If there were a right to make a profit it was not established by the treaty. If Egypt should insist upon a profit we would have a violation of the treaty of 1888. The Secretary added there were perhaps other rights under the treaty of 1888 as follows: There was a right to make a pattern of traffic; there was a right to keep the Canal open. It seemed to the Secretary that we could challenge Egypt on the right to choose pilots and on the right not to pay profits to Egypt on reasonably sound grounds. It was important that we develop a real case otherwise we would, in effect, be using the SC to impose on Egypt a new treaty in the form of the 18-power proposal. The Secretary was concerned regarding a concept under which a certain number of nations could use the SC for such purposes. If it were accepted a certain number of nations might go to the SC and attempt to impose a treaty on the U.S. with respect to the Panama Canal. This was, he said, a novel concept.

The British Chargé interjected that the proposed British draft of a SC resolution was not worded to this effect. The Secretary thought the resolution was pretty close and Mr. Coulson accepted the Secretary’s point.

The Secretary also raised the question of whether or not the Egyptian nationalization of the Suez Canal Company represented a threat to the peace or whether it was this action in the context of other events. He believed most people would say the threat to the peace arose from the military preparations of other governments. Mr. Coulson replied that the UK was concerned that some other country would refer the Suez dispute to the SC. Pearson of Canada and Spaak of Belgium had said in the North Atlantic Council meeting that it should be referred to the SC. The Secretary noted that the Secretary-General of the UN also might refer it to the SC but perhaps not in a way we would approve. Mr. Coulson stressed that the UK wished to retain the initiative if the talks in Cairo broke down. Mr. Rountree said that we did not yet have definite word that the talks had broken down and that there probably would be another meeting in Cairo.

The Secretary said that he did not wish to speak hastily in this matter; he wanted to give the question careful thought. However, it would be difficult to go along with the British and French proposal.

Mr. Wilcox said that there seemed to be two courses in the SC, either action with respect to a threat to the peace or with regard to negotiation. It seemed to him that neither would be a move in Egypt’s direction. Mr. Coulson thought that the essence of the British-French proposal would be to stand fast. He asked the Secretary whether they could count on U.S. co-sponsorship or support.

The Secretary said that perhaps he had spoken too soon. He had not had an opportunity to give his considered judgment to the British-French proposal. He had had no chance to talk with his associates. He could say, however, that his initial reaction was that there should be appreciable changes in the proposal before he could say we would co-sponsor or support it. He thought we would be in trouble in the SC unless we could demonstrate we had rights which were threatened by Egypt. We either had rights or we did not. If we wished to impose a new treaty it was a weak case. If we had rights what were they? Do we agree we can go through the Canal with pilots of our own choosing? Do we agree that we can collect tolls? On the other hand, if Egypt had these rights why were we debating the matter? The Secretary thought that we did have these rights and that if we formulated them Egypt would probably defy them. During the London Conference we had proceeded on the theory that Nasser would negotiate but it now appeared that Egypt was turning us down. A new situation would thus be created under the 1888 treaty. Egypt had in effect thrown away its chance to a profit which was not stipulated under the treaty of 1888.

The Secretary believed that our next step was to clarify our own thinking which had thus far not been concerted in any way. If we now went to the SC we would be in an awkward position. We should have some regard for public opinion and prepare a strong case. We might technically have votes but we needed a meritorious case which, the Secretary believed, could be developed. Time was, of course, needed and he asked how much we had.

Mr. Coulson said that Egypt might take the Suez dispute to the SC on Monday, September 10. The Secretary said unless there were evidence to this effect he doubted Egypt would do it. Mr. Wilcox said there had been a report that Egypt might do so. Mr. Coulson thought that the uncertainty of the matter was the dilemma we faced. He asked how we should conclude the present discussion. Could he say the Secretary had misgivings regarding the British-French proposal. The Secretary said he would not want his reaction expressed more strongly than that. He said he would immediately study the British papers and would meet with the British and French Chargés later that afternoon for more considered views.

The French Chargé said that the French Ambassador-designate, Herve Alphand, was arriving today. The Secretary said that although he had not presented his credentials he would be pleased to receive him.

The British Chargé said he had another question which he wished to raise. It was the question of payment of transit dues. The British proposed that a number of countries concert their action to deny transit dues to Egypt. Until now most countries had been able to make payment in London or Paris or in fact anywhere they pleased, including Egypt. The British would like general agreement to deny payment to Egypt before referring the Suez dispute to the SC. The Secretary said he supposed this action would lead to Egyptian denial of passage through the Suez Canal which in turn would lead to a stringency of oil in the UK and Western Europe. Mr. Coulson said the British had some slack in oil stocks in UK and in Western Europe. There would be some delay in stopping all oil shipments from the Near East.

The Secretary said that we could take measures to increase oil production in the US but we needed some notice. We could not turn the oil production on and off. Mr. Coulson said that notice had been given in the sense that various committees consisting of British and American members had been discussing this subject. Mr. Rountree said it had been discussed at a technical level.

The Secretary agreed that thought had been given to transport of oil by tankers around the Cape and through Near Eastern pipelines. There was a possibility of additional production. However, one could not go into such developments lightly without planning. Mr. Coulson agreed that it would be a long-term plan. The Secretary said that as he had indicated in London the economic consequences of oil denial would hit the UK first and France next. In addition, the financial implications were great. He said that he wanted to be sure that the British and French accepted the economic consequences which might flow from initiating the proposed action, starting with denial of payment of transit dues.

Mr. Coulson replied that the economic consequences to which the Secretary referred were another reason why users of the Canal should band together to make certain that the oil tankers could go through the Canal.

The Secretary observed that it would be preferable to place transit dues in a separate fund for the Canal itself and for Egypt. Mr. Coulson thought that was the proposal but he had no details. The Secretary recalled that while in London it had been desired to go on paying to the old Company. If this procedure were now changed it would open up the question of the freezing of the assets of the Government of Egypt. If we changed the licensing procedure in the U.S. it would weaken our case concerning the assets frozen which total approximately $100 million of which $48 million were in the name of the Canal Company and approximately $60 million in the name of the Government of Egypt.

Mr. Rountree observed that if we changed the present arrangement the basic elements of the British plan would be affected. He believed that it would be preferable to enumerate our rights rather than to come out against nationalization. We would have to say what we were going to do with the payment of transit dues. Mr. Coulson said he would see whether he had more technical information on this subject.

The Secretary thought we needed more information. Did we know whether Soviet pilots would be employed by Egypt? We should adhere to our rights under the treaty of 1888. Those rights did not belong to Egypt. What in effect was the legal situation? It did not seem to him that we had given any thought or reached any agreement on the present situation. In such circumstances he thought it reckless for us to go to the SC. Nasser himself had said that the users of the Canal were protected by the 1888 treaty. This was an admission by him of the rights to which we should adhere.

1. Source: Department of State, Central Files, 974.7301/9–756. Secret. Drafted by Wilkins. The time of the meeting is from Dulles’ Appointment Book. (Princeton University Library, Dulles Papers)
2. Supra.