25. Telegram From the Embassy in the United Kingdom to the Department of State1

525. For Secretary and Undersecretary from Murphy. Paris eyes only Ambassador. At evening meeting 9:30 to 11 pm,2 it was consensus that the Arab-Israel problem should remain separate from the Canal issue.3

Pineau stressed urgency of arms for Israel. He thought that orders already placed should be filled but without publicity. Selwyn Lloyd indicated the British also intended to ship certain existing orders especially anti-aircraft material. I said that U.S. felt strongly that there should be no public reference at this stage to supplying of military equipment to Israel and this was agreed.

Pineau cautioned that we could not predict what the Russians would do and he felt that the longer we delayed action the stronger the Soviet reaction would be. He noted Egypt–USSR coordination foreign policy had not yet been completed but might be effected when Nasser visited Moscow. We noted that Nasser is reported as meeting with Kiselev July 29. Lloyd mentioned that during the B and K visit here4 he had tried to convince them of the dangers of Arab-Israel conflict, emphasizing this could start a world war. Russians, he said, initially seemed unconscious of this danger but he thought he had made a dent on them. Lloyd wondered if we should not indicate to the Soviets that they should play part in any UN specialized agency for operation of Canal but he questioned whether they should participate in suggested conference.

Pineau and I agreed our governments might not welcome their participation conference but there might be tactical advantages in invitation to Soviet Union and Egypt. I pointed out Russians are users of Canal and signatory 1888 Convention. Lloyd added we [Page 43]would not want give Soviets another platform for appeal to Arab world. I brought up question whether Egyptians should be included in proposed Canal consortium. Lloyd said yes but he doubted UK would wish invite Egyptians participate in proposed conference. I said it likely Egypt would refuse invitation, but there might be at least tactical advantage extending invitation to Egypt in any larger conference regarding future of Canal.5

Lloyd brought up attitude of Commonwealth members. Canada, and he thought South Africa, also would prefer some sort of UN solution. He would seek meeting of Baghdad pact ambassadors, including Pakistan, to ascertain their attitude. India was very disturbed over situation and Nehru appeared shocked by Nasser’s action. Ceylon Prime Minister6 likewise disturbed in view 80 percent trade was via Suez.

Lloyd then brought up question of freezing Canal Company assets outside Egypt. UK and France have issued orders controlling Company assets. Treasury official stated UK does not accept Egyptian nationalization law and Egyptian right control Company’s assets which are in UK and under UK control. Egypt has proven herself unreliable user of sterling and it difficult for UK allow Egypt use sterling to detriment UK. UK legal adviser said Egypt has no right exercise control over assets of company which are not physically in Egypt. I said U.S. had developed no position on freezing Egyptian assets. Lloyd urged that regardless of volume of Company assets in U.S. we should have position of solidarity with UK and France.

Lloyd referred to Egyptian order that all transit dues must be paid to Egypt’s account rather than Company’s. Question arose whether UK should advise shipowners make dues payable to Company accounts. In fact UK has not issued any instructions to owners re payment of dues. I asked whether advice by UK to shipowners that masters should use their judgment re paying tolls to Egypt would constitute legal acceptance validity of nationalization. Foreign Office legal adviser replied that if sterling is licensed for payment of dues by particular ship for specific passage this would tend to constitute acceptance. A course of conduct with knowledge of the circumstances would tend towards recognition. If general license given releasing certain amount of sterling to shipping companies without specifying purpose, this would not have such effect.

[Page 44]

Lloyd said he thought tolls question of prime importance. In reply my question he said he did not know attitude of Dutch and other Canal users. Pineau suggested that if we do decide to pay tolls to Egypt, we should do so “without prejudice”.7

Pineau raised question advisability boycotting Canal and/or Egypt. He said complete blockade of Egypt would be very serious as would boycotting Suez Canal. Pineau said it appeared impractical blockade though we could boycott it. Lloyd said if we believe situation will become serious enough to take any such actions, it would be advisable to get as much oil as possible through Canal in meantime.8 I asked whether economic blockade might be tantamount to act of war. Caccia said he thought Egypt could exist under economic blockade. Lloyd added he felt blockade would be subsidiary and would follow if military measures were taken.

Pineau raised question of personnel of Canal Company in Egypt and stated it difficult to advise such personnel disobey Egypt’s orders. Personnel could of course apply for permission to leave country, which Egypt would probably refuse. Lloyd asked if this would not in effect result in hindering operation of Canal and therefore constitute violation of Convention. Governments should not issue such orders to personnel though Company might do so.

Company, he said, has told employees that if they continue work they should do so under protest. I asked if non-Egyptian pilots are as essential to operation of Canal as some thought. Lloyd said operation of Canal could probably go on without them as masters were generally capable of navigating Canal without pilots. However, this was contrary rules of Company and there was question whether [Page 45]insurance companies would insure vessels under these circumstances.9

I asked if “dumping” cotton by U.S. would constitute useful economic action against Egypt. Lloyd felt such action inadvisable and mentioned it would be particularly resented by Sudan, Pakistan, and certain British colonies. I added Mexico and Peru would not be pleased either.

We agreed on press guidance (Embtel 52210) and adjourned.

Barbour
  1. Source: Department of State, Central Files, 974.7301/7–3056. Top Secret; Niact. Received at 9:27 a.m. Repeated to Paris.
  2. Reference is to the second tripartite meeting. Other accounts are in British Foreign Office, “Record of Meeting Held at 1, Carlton Gardens at 9:30 p.m. on July 29, 1956” and “London Tripartite Conversations”, pp. 1322. (Both ibid., Conference Files: Lot 62 D 181, CF 725 and 724, respectively) The latter document indicates the following attended: Murphy, Foster, Connors, Burdett, and Mak for the United States; Lloyd, Caccia, Ross, and Vallat for the United Kingdom; and Pineau, Chauvel, and Daridan for France.
  3. According to the British Foreign Office “Record”, Pineau stated on this point that “Israel would have to play a part if we had to take drastic measures in the future. The Arab-Israel problem should be kept separate from the immediate considerations, but the Israeli factor would inevitably arise later.”
  4. Reference is to the visit of Soviet leaders Bulganin and Khrushchev to Great Britain in April 1956.
  5. At this point, the British Foreign Office “Record” indicates: “M. Pineau mentioned that Nasser was expected to visit Moscow on August 12. The Foreign Secretary said that we should give further consideration to playing the Russians along and should not take action which would force them into Nasser’s camp from the beginning. Mr. Murphy, speaking personally, thought this was the view of his Government.”
  6. S.W.R.D. Bandaranaike.
  7. On the “payment of dues” question, the British Foreign Office “Record” reads:

    “The Foreign Secretary said that the Suez Canal Company had protected their own legal position by issuing orders that any payments should be made to their account. After a general discussion the Foreign Secretary said there appeared to be three alternatives: (a) Shipping to be redirected around the Cape of Good Hope, (b) Shipping to be kept waiting at both ends of the Canal, (c) Payment to be made without prejudice. No instructions had yet been given the United Kingdom ship owners.

    “Mr. Murphy said that United States ship owners normally paid their dues in Egypt. The United States authorities would probably be most reluctant to alter this practice, which was continuing up to this moment. He could not say whether it would be possible to attach any reservation to these payments. The Foreign Secretary said this was the most immediate decision which had to be taken. He would like to know whether the United States Government had accepted the legality of expropriation. Her Majesty’s Government had not accepted it as far as foreign assets were concerned. There were indications that other maritime nations were reserving their position. M. Pineau said that if dues were paid to the Egyptians, in order to keep traffic moving, they must be paid without prejudice. Sir Leslie Rowan stressed that we had a full legal right to give our ship owners any instructions we wished.”

  8. At this point, the British Foreign Office “Record” reads: “It was agreed that we did not yet wish to divert traffic round the Cape.”
  9. The British Foreign Office “Record” adds: “It was finally agreed that Working Parties should be set up to: (i) Submit ideas about a draft communiqué to be issued after the talks, (ii) To draft an invitation to a possible Conference of powers primarily interested in maintaining the freedom of navigation through the Canal, (iii) To consider further which countries should be invited to such a Conference. It was also agreed that the following subjects required further consideration: (i) The question of payment of dues, (ii) Whether fresh instructions should be sent to the employees of the Suez Canal Company.”
  10. Dated July 30, not printed. (Department of State, Central Files, 974.7301/10–3056)