199. Memorandum of a Conversation Between the French Ambassador-Designate (Alphand) and the Secretary of State, Secretary Dulles’ Residence1

SUBJECT

  • Suez Canal

Ambassador Designate Alphand called on the Secretary on Sunday evening at the latter’s home after requesting an urgent appointment to discuss the Suez situation. Mr. Alphand said Messrs. Mollet and Pineau were probably going to London tomorrow (September 10). He said the French Government felt that the Secretary’s idea of [Page 456]informing the Security Council of the Suez situation, rather than asking Security Council action and proposing a resolution, was a good one. The British had prepared a draft letter and his impression was that the French would accept the draft with perhaps some minor changes. He thought both the French and the British would sign it. Mr. Alphand commented that Secretary Dulles’ ideas concerning the manner in which the item should be brought to the attention of the Security Council were very good and constructive.

Continuing, Mr. Alphand said that he must cable tonight to Paris further information concerning the Secretary’s plan for a “shadow authority” to handle transit of the Canal. He said the French Government was favorably impressed with the general idea and wished a further elaboration of it.

The Secretary commented that we should not assume that because Egypt had nationalized the Suez Canal Company all rights of the company would go back to Egypt. It seemed to him that the rights would revert to the users of the Canal. He saw no reason why the pilots employed by the Canal Company should be lost since we would have the right to use them ourselves. Egypt could not with justification say that the pilots were not qualified since they have been taking ships through the Canal for many years. If we proceed along the lines suggested for an association of Canal users and offer to provide pilots to take our ships through, Egypt would be the offender if it should object.

Mr. Alphand inquired as to how far the Secretary had gone in preparing the details of a plan. The Secretary responded that we had given considerable thought to the matter and had made some progress in outlining details of how the plan might operate. He could not provide an outline at the time but said he would endeavor to hand one to Mr. Alphand the following day.

Mr. Alphand observed that there would be an interim between the rejection by Egypt of the 18-Nation proposal and the establishment of the “shadow authority”. If we should do nothing immediately following the Egyptian rejection of negotiations, it would appear throughout the world that the Western Powers had suffered a defeat. He inquired what could be done as an interim measure. He understood that it would take perhaps two weeks to put the new plan into operation. He wondered whether we could not soon make a statement regarding the “shadow authority” and also take immediate action to deny payments to Egypt of ships’ tolls. Emphasizing that his views with regard to these measures were personal, he inquired whether he could say that the Secretary agreed with them.

The Secretary said that in considering the denial to Egypt at this time of tolls, we must take into full account the implications. We have had studies made by oil experts who have come to the [Page 457]conclusion that it would be possible, if necessary, to eliminate all tanker traffic through the Canal and still meet European requirements by sending tankers around the Cape and supplementing Middle Eastern shipments with oil from the Western Hemisphere. However, this would create economic burdens for most of the European countries, although the principal burden would fall upon the British because of their foreign exchange condition. We would have to be prepared to face up to that situation. However, if an announcement were made 1) conveying our intention to create the user association, 2) making clear that this would involve payments of fees to this authority (while reimbursing Egypt for any out-of-pocket expenses which that country might incur in connection with services to the association) and 3) stating that we are prepared if need be to meet any resulting situation by not sending tankers through the Canal but by meeting European needs in other ways, this might be fully adequate for the situation. This would demonstrate that the Egyptians do not have a strangle-hold on the users of the Canal. In considering any action now taken which might cause a denial of the Canal to our ships, however, we must be certain that we appreciate fully the economic considerations.

Mr. Alphand said that the French foreign exchange position was, as in the case of the British, serious and wondered whether the French could not pay for Western Hemisphere oil with francs. The Secretary replied that the payment itself was of course a commercial matter and that any United States governmental relief would require an act of Congress, which was not now in session.

Mr. Alphand repeated his concern lest something be announced quickly if a bad impression throughout the world was to be avoided. The Secretary agreed and observed that Mr. Eden must say something to Parliament on Wednesday.

Mr. Alphand asked again whether we should not immediately boycott the Canal. The Secretary replied that that was mainly for the French and the British to decide. So far as we were concerned, we were prepared to cooperate in a new oil program if that should become necessary either as a result of Nasser’s action or as a means of bringing pressure upon Nasser. However, the British and French must decide whether they were prepared to accept the economic consequences.

Continuing, the Secretary discussed the extreme difficulties involved in military action, pointing out that the inauguration of hostilities might bring about a hopeless proposition. He realized the need to fight in certain circumstances as a last resort, but he thought that we must explore all alternatives. He fully agreed, however, that we could not afford to do nothing.

[Page 458]

Upon his departure, Mr. Alphand commented privately to the Secretary that the latter’s position was greatly misunderstood in France, where they had the impression that the Secretary did not wish to take any positive action because of the effect which it might have upon the forthcoming elections. The Secretary responded that in considering what should or should not be done in connection with this critical issue, he had never given any thought to the effect upon the elections. The position of the United States was to seek the solution which would be most effective in the circumstances.

  1. Source: Department of State, Central Files, 974.7301/9–956. Secret. Drafted by Rountree.