208. Memorandum of a Conversation, Department of State1

SUBJECT

  • Suez Canal

PARTICIPANTS

  • Sir Roger Makins, British Ambassador
  • Mr. J. E. Coulson, Minister, British Embassy
  • Secretary of the Treasury Humphrey
  • The Secretary
  • L—Mr. Phleger
  • EUR—Mr. Elbrick
  • NEAWilliam M. Rountree

(Mr. Flemming, Director, Office of Defense Mobilization, joined the group for the latter part of the discussion.)

Ambassador Makins said he had just received another important message from London. Mr. Lloyd had discussed with Messrs. Mollet and Pineau the Secretary’s document setting forth the Canal users association plan.2 They were all grateful to the Secretary for having provided this suggestion. They agreed in principle and were particularly anxious for American participation. They attached great importance to the payment of dues to the association by all participants, including the United States. On this basis they had decided not to bring the Suez matter before the Security Council. If the plan did not work, however, they would go to the Council without delay. They hoped the Secretary would agree to the statement which Mr. Eden proposed to make before Parliament and that he would say something along similar lines. The French proposed to make a statement comparable to Mr. Eden’s. Mr. Pineau and Mr. Lloyd had expressed the hope that they could meet urgently with Mr. Dulles to work out details of the plan, including arrangements for the participation of other countries. Finally, the British and French Foreign Ministers asked if Mr. Dulles would authorize the United States representative at the UN to join with the British and French in sending an informative letter to the Security Council, the text of which had been amended in accordance with suggestions earlier made by the Secretary.3

[Page 477]

The Secretary said he wanted to make it clear that he had never opposed taking the matter before the Security Council. He had felt it his duty to point out certain hazards and told the British and French that we could not commit ourselves to oppose any amendment which might be proposed on the question of the use of force. He now understood that the British and French had decided not to take the matter to the Security Council. He assumed that was an action taken by them on the basis of their own judgment and not under the assumption that he opposed any such action. The Ambassador said there could be no misunderstanding in this regard. The Secretary’s position had been set forth clearly in messages which he telegraphed to London yesterday.

The Secretary referred to the letter which Ambassador Makins handed him yesterday4 setting forth the position which Mr. Eden intended to take in his speech on Wednesday. He said that he had discussed this matter with the President and was now prepared to give to the Ambassador a paper (copy attached)5 on the American position which Mr. Eden might, if he liked, use in his speech. The Ambassador read the statement and said that it seemed to make the case clear. He was grateful for the Secretary’s assistance.

The Secretary said he should point out the main departures from the British draft. First, his statement brought in the fact that when the association collected dues, some equitable portion would go to Egypt. Second, he phrased the proposal to indicate that the organization of the Canal users would be proposed by those of the 18–Nations which wished to do so. Third, he had indicated in the last sentence that action should be taken through the UN, which he assumed the British in any event would want to do in the first instance, and otherwise as may be deemed appropriate to the circumstances.

The Secretary said he would inform the Ambassador as soon as possible as to whether we would be prepared to join in the informative letter to the UN. As to making a statement on the users association following Mr. Eden’s speech in Parliament, he said that [Page 478]he was holding a press conference on Thursday6 and thought that that would be an appropriate time to make his comments. The Ambassador agreed that this timing would be quite satisfactory. Regarding the proposed meeting with the British and French Foreign Ministers, the Secretary wished to consider the matter and said that he would let the Ambassador know later. He observed that one of the great dangers of the proposed association was that it might be entirely a Western organization, primarily in view of the fact that most of the vessels were owned by Western countries. He thought we should endeavor to bring in a few Asian countries. Perhaps the best approach would be to work for a nucleus of the organization consisting of the five nations on the Menzies Committee plus the British and French.

Regarding the payment of tolls to the association, the Secretary stated that we could undertake only to instruct vessels of US registry and not vessels owned by Americans but which flew foreign flags. He said he understood Secretary Humphrey would be prepared to amend the Treasury licensing procedure with respect to Egyptian assets in order to accomplish the objective of having American ships pay to the association. He would anticipate moving as rapidly as possible when the organization was established.

The Secretary said that the President had emphasized this morning that the broader aspects of the problem should be given urgent consideration. He thought we should think ahead in terms of achieving minimum dependency upon the Canal. However things might go, there was likely to be some stoppage in the Canal. If Nasser should accept the users association, all would be well, but that was perhaps over-optimistic. The Secretary thought there was an advantage in not formalizing things so that the plan would have to be accepted in a formal way by Nasser. By proceeding on a de facto basis, it might be conceivable that Nasser would allow the arrangements to proceed for a while. However, we must anticipate that Nasser will refuse to let the ships go through. The Secretary said that the President felt it important to avoid continuing dependency upon this single artery. Secretary Humphrey had observed that a cardinal rule of business was to avoid getting into a position where one is in a bottleneck with a hostile competitor’s hand on the bottle.

The Secretary turned to the question of the economic consequences upon Great Britain and France of the denial of passage of ships through the Canal. He said he had asked Secretary Humphrey to discuss the financial situation in this regard. Secretary Humphrey said he thought it might be possible to help in financing dollar purchases of oil on a temporary basis. However, the only avenue [Page 479]would appear to be the Export-Import Bank. Loans might be made to the UK and France for US purchases. He did not think other European countries would have urgent need for this type of dollar assistance. Such loans would probably be in the form of a line of credit. The terms of the loans and other details would have to be worked out.

The Secretary said he understood that Ambassador Makins was anxious at the moment to send telegrams to London. He thought it would be good if the Ambassador could meet later with Mr. Flemming to discuss the oil problem generally and possible long-term and short-term solutions. He emphasized his belief that we should have a program which would end once and for all our critical dependence upon the Suez Canal. It was arranged that Ambassador Makins and his colleagues would get together with Mr. Flemming later in the day.

[Attachment]

Draft Statement Prepared in the Department of State

Since the Government of Egypt is unwilling to negotiate an accord regarding the use of the Canal in accordance with the 1888 Convention, as proposed by the 18 nations at London, the United States believes that it is appropriate that the governments which derive for their vessels the right to the free use of the Suez Canal should associate themselves together for the collective enjoyment and exercise by their vessels of their rights. We do not believe that these rights can be safeguarded if each nation, much less if each ship, fends for itself. We believe that, under the circumstances, practical cooperation on the part of Egypt can only be effectively achieved if the users are organized so that they can deal jointly with Egypt and Egypt deal with them jointly.

Accordingly, if the United Kingdom alone or in association with others should propose a users’ association to be organized by the 18 sponsors of the London proposals, or such of them as were so disposed, and perhaps others, the United States would participate in such a users’ organization.

We assume that the users’ organization would exercise on behalf of the users the rights which are theirs under the 1888 Convention and seek such cooperation with Egypt as would achieve the results designed to be guaranteed by that Convention. In accordance with [Page 480]this principle the users’ association would, among other things, provide qualified pilots for the users’ ships; would receive the dues from ships passing through the Canal, which would be used to defray the expenses of the organization and to pay appropriate compensation to Egypt for its contribution to the maintenance of the Canal and the facilities of transit; and so far as practical arrange for the pattern of traffic of member vessels through the Canal.

It is our view that if the Egyptian Government sought to interfere with such operations of the users’ organization or refused to take the necessary measures for insuring the execution of the Convention of 1888, that would be a breach by Egypt of the Convention. In this event the parties to or beneficiaries of the Convention would be free to take steps to assure their rights through the United Nations or through other action appropriate to the circumstances.

  1. Source: Department of State, Central Files, 974.7301/9–1156. Secret; Suez Distribution. Drafted by Rountree. The time of the meeting is from Dulles’ Appointment Book. (Princeton University Library, Dulles Papers)
  2. See Document 198.
  3. A copy of the draft letter to President of the Security Council is in Department of State, Central Files, 974.7301/9–1156. A handwritten notation on the copy reads: “Left w. Secretary, by Makins 9/11/56 12:25 p.m.” The draft letter, to be circulated to members of the Security Council, affirmed among other points, that the British and French Governments considered that the Egyptian Government’s refusal to negotiate on the basis of the Eighteen-Power proposal “is an aggravation of the situation, which if allowed to continue, would constitute a manifest danger to peace and security.”
  4. Document 206.
  5. According to the record of the President’s Daily Appointments, Dulles met with Eisenhower at 10:32 the morning of September 10. (Eisenhower Library) The memorandum of their conversation prepared by Dulles, however, does not mention a discussion of the Suez situation. Attached to that memorandum of conversation is a memorandum, presumably by Dulles, which contains guidance on the Suez question, for use at the President’s press conference. Also attached is a copy of the paper handed to Makins at the 12:25 meeting. A marginal notation on this copy of the paper reads: “Taken to WH by Sec 9/11/56 10:45 a.m. cc to Makins 9/11/56—12:25 p.m.” (Ibid., Dulles Papers, Meetings with the President)
  6. September 13.