268. Telegram From the Department of State to the Embassy in the United Kingdom1
2248. Please present a memorandum in the following sense to the Government to which you are accredited.
Begin verbatim text.
The United States is prepared, if desired by both the British and the French Governments, to amend the present Treasury license so as to make it unlawful for American flag vessels to pay Canal duties directly to Egypt but permitting payment into SCUA as their agent with discretionary authority to SCUA to pay over to the Egyptian Government as it deems appropriate. This is in accord with my letter of September 21 to Foreign Secretary Lloyd.2
However, it should be borne in mind:
- (a)
- The economic impact of this on Egypt will not be great because United States flag vessels transiting the Canal in 1955 amounted only to a little over 3 million net tons or about 2.7% of the total tonnage.
- (b)
- It is understood that concurrently with United States action British and French regulations would be changed to eliminate payment to the old Suez Canal Company in favor of payments to SCUA. Thus, the course of action outlined might bring about a situation which will require the detouring of British, French, United States and some other flag vessels and throw upon the Western European, and indeed some Asian, countries a considerable economic burden.
The United States wants to be sure before it acts on tolls as above indicated that this is desired by UK and France despite the economic consequences which might result. Also we should like to know just what the new UK, French regulations would prescribe.
It is assumed that any Egyptian action to bar the Canal under the conditions above outlined would apply equally to all ships paying tolls to SCUA as above outlined. If there should be discrimination practiced by Egypt against United States vessels under these conditions, that would create a new situation.
The United States would encourage vessels controlled by United States citizens though not of United States registry to adopt the procedure above outlined. But we cannot guarantee a favorable response which, in any event, to be effective would require cooperation [Page 585] or acquiescence from the countries of registry, for example, Panama and Liberia, and such cooperation and acquiescence is dubious. End verbatim text.
FYI We yesterday orally presented the foregoing considerations to British Ambassador and Mr. Macmillan and also to French Ambassador, telling them that we would present them in London and Paris.
Please request a prompt written reply as we desire to be ready to act as soon as SCUA is organized to receive payments of dues.
- Source: Department of State, Central Files, 974.7301/9–2656. Secret; Priority. Drafted by Dulles; cleared by Phleger, Rountree, and Elbrick; and approved by Dulles. Also sent to Paris.↩
- See Document 250.↩