228. Telegram From the Embassy in the United Kingdom to the Department of State1
Secto 7. Tripartite afternoon meeting Sept 18 convened 1545.2 Delegations headed by Lloyd, Pineau and Secretary.
Meeting agreed that Secretary in presenting to Conference proposal for cooperative association of Suez Canal users (CASU) would mention that organization might be considered by Security Council as provisional measure to prevent aggravation of situation but would not suggest that proposal to form CASU be referred to Security Council. Secretary said he wished to listen to comments of other fifteen governments at Conference, but subject to this, if UK and France agreed, US prepared to proceed with formation of CASU.
Meeting agreed with Pineau suggestion that draft CASU declaration and statute3 should not be presented to Conference at start. Secretary pointed out that during discussion ideas would be advanced which could well be incorporated and that nations attending Conference would be given greater sense of participation if they were not confronted with formal document at outset.
Secretary suggested discussion of two matters going to heart of CASU plan: (1) whether ships of participating nations should be required to use CASU exclusively; (2) should payments to Egypt be made of sums collected by CASU; Lloyd added third question— membership in CASU.
Use of CASU facilities: Pineau saw no way to avoid exerting maximum pressure to assure that all ships use CASU services and pay dues to CASU. Lloyd thought that unless this was done CASU would not be of much use. Secretary said US could prohibit payment [Page 514] of dues directly to Egypt by amendment of Treasury regulations but had no right under existing legislation to direct US ships to pay CASU. He added practical effect of amendment of Treasury regulations would be payments to CASU. He said above applied only to US flag ships, not vessels under Panamanian or Liberian registry. He thought it might be possible to work out some voluntary agreement through shippers assn. Meeting concluded three countries would try to get all their ships to use CASU.
Payments to Egypt: Pineau said Egypt might be paid direct costs of any services rendered but should not be paid any “profit margin” derived from transit of vessels. Secretary pointed out practical difficulties arise in establishing costs. Lloyd inquired whether ships belonging to CASU members could use Egyptian services if CASU services unavailable.
Secretary emphasized that ability obtain cooperation from shippers would depend on policies followed by other major shipping nations. Shipping highly competitive business. If Nasser declined let ships pass in absence of payment, they would be obliged use Cape route, in which case competitors could offer cheaper services. Decision to withhold payments to Egypt should not be made lightly. Once decision taken it could not be reversed without severe loss of prestige and victory for Nasser. Secretary stressed need for allowing CASU great flexibility.
Lloyd suggested that in case CASU unable to provide needed services, it might be empowered make some arrangement with Egyptian Government. He agreed that administrator of CASU must have reasonable flexibility in determining how to get ships through Canal not excluding payments to Egypt. Secretary thought CASU might find it expedient make certain payments to Egypt. In principle it would pay Egypt as little as possible and would determine any payments made not by Egyptian demands but by its own interest. He thought serious problems would arise if all details debated at Conference. Participants would probably be divided. Difficulty could be overcome by giving flexibility to Executive Committee which would provide general guidance to Administrator.
Membership: Secretary pointed out supreme importance of composition Executive Committee. If membership in CASU opened to all comers, newcomers might obtain control of committee. Initial membership could consist of 18 nations attending Conference, thus including representatives from Asia, and in addition countries with specific interest in terms of tonnage or pattern of trade. Membership of the future would provide acceptable Executive Committee. Perhaps provision could be included prohibiting change in composition of Committee except by vote of majority both of members and users [Page 515] on basis of tonnage. Meeting agreed that statute setting up CASU should leave door open on question new members.
Secretary said he thought CASU could be set up effectively by executive action. Use of treaty form would require approval by US Congress, which not obtainable in time meet present emergency.
Lloyd raised matter of affiliates and Secretary suggested dropping concept. Lloyd said he had spoken to Spaak last week-end. He did not seem disturbed at omission of Belgium. Spaak stated he thought Belgium’s role should be to support CASU proposal in Security Council.
Secretary said CASU services should be available to all countries in order avoid any charge of discrimination in violation of Convention of 1888.
Meeting agreed that working group of experts should complete draft of CASU declaration and statute in light of discussion for further consideration by Ministers. Pineau said he was in general agreement with proposed US reply to Egypt’s note4 discussed during morning meeting. Lloyd who apparently had not read draft made no comment.
- Source: Department of State, Central Files, 974.7301/9–1856. Secret. Drafted by Burdett. Received at 8:25 p.m. Repeated to Paris.↩
- A memorandum of this conversation, prepared by the Delegation to the Second Suez Canal Conference, is ibid., Conference Files: Lot 62 D 181, CF 779.↩
- On September 14, Willie Morris of the British Embassy delivered to the Department of State two papers: a draft statute and a draft declaration for a Cooperative Association of Suez Canal Users (CASU). Morris also stated that the United Kingdom was making tentative arrangements for a meeting of experts in London on September 17 and asked whether any American experts would be able to attend. (Memorandum of conversation by Wilkins with attachments, September 14; ibid., Central Files, 974.7301/9–1456) Subsequently, British, French, and U.S. experts met on September 17 and again at 10 a.m. on September 18 to discuss and revise the British draft declaration. (Memorandum of conversation, prepared by the U.S. Delegation to the Second Suez Canal Conference, September 17; ibid., 974.7301/9–1756; Note of a Tripartite Meeting, prepared by the British Foreign Office, September 18, 10 a.m.; ibid., Conference Files: Lot 62 D 181, CF 772) At 5 p.m., September 18, the experts met to consider the draft statute. (Note of a Tripartite Meeting, prepared by the British Foreign Office, September 18, 5 p.m.; ibid.)↩
- See footnote 7, supra.↩