30. Memorandum of a Conversation, Department of State, Washington, July 30, 1956, 4:45 p.m.1

SUBJECT

  • Economic Aspects of Suez Situation

PARTICIPANTS

  • Department of State
    • The Secretary
    • The Under Secretary
    • Mr. Prochnow
    • Mr. Rountree
    • Mr. Elbrick
    • Mr. Bliss
    • Mr. Kirk
  • Treasury
    • Secretary Humphrey
    • Mr. Overby
  • Commerce
    • Secretary Weeks
  • Interior
    • Secretary Seaton
    • Mr. Wormser
  • Defense
    • Asst. Secretary Gray
    • Admiral Burke
    • ODM—Dr. Flemming
    • CIA—Mr. Allen Dulles
    • ICA—Mr. Hollister

It was agreed that ODM and Interior should ask a few selected oil companies to meet with Government representatives to initiate planning of emergency measures to assure continued supply of oil to Western Europe in event the Suez Canal is closed.2 Messrs. Flemming [Page 54]and Seaton said they would request Mr. Brownell’s clearance for this action. They will also request a waiver of the requirement that ten days notice be given prior to initiation of such planning. This group will give urgent attention to the desired procedure for coordinating our planning with the UK. No publicity will be given to this planning for the present. The Department of State and ODM will consult if they feel, at some future time, that publicity might be desirable.

Mr. Hoover requested all Departments and agencies represented to take the necessary measures to be ready to take instant action against Egyptian interests in their own spheres of responsibility. He said we were not planning any action at the present time but that we wished to be able to move very rapidly if necessary.

Secretary Weeks said that the Department of Commerce would not grant any licenses for shipment of goods to Egypt without first examining them very carefully and conferring with the Department of State. He said the Department of Commerce would make a rapid study of measures the US could take to put economic pressure on Egypt. He said this study should be ready July 31.

Mr. Hollister said that ICA would make no further commitments for the payment of freight charges for goods shipped to Egypt under the CARE Program. He said that shipments under PL–480 were already stopped and would remain so. Mr. Hollister said ICA would make a study of the exact status of shipments under our aid program for Egypt. This study will include an estimate of what shipments could be held up without undue publicity.

Mr. Gray said that there were some $339,000 of items under the military aid program for Egypt which had not yet been shipped. He said delivery of these items had been suspended.

It was agreed that Commerce and Defense would set up a task force to study the status of tanker construction under NSC Directives. The task force will prepare a report on the number of tankers which have been built, which are presently under construction, and which we have plans to construct. The report will analyze the optimum size for such tankers and will make recommendations on the possibility of constructing a number of super tankers.

  1. Source: Department of State, Central Files, 974.7301/7–3056. Top Secret. Drafted by Kirk. A marginal notation by Kirk indicates that Hoover approved the memorandum on July 31. For additional documentation on petroleum planning and the Suez Canal, see volume X.
  2. Subsequent to this conversation, Hugh Stewart, Director of the Office of Oil and Gas of the Department of the Interior, acting in his capacity as Chairman of the Foreign Petroleum Supply Committee (FPSC) met with the industry representatives on the committee. At this meeting, the FPSC prepared a plan of action which called for the establishment of a Middle East Emergency Committee, composed of representatives of American petroleum companies engaged in foreign operations. In February 1957, the United States Senate held hearings on government and industry participation in emergency oil planning before and during the Suez Crisis. For additional information, see U.S. Congress, Senate, Joint Hearings before Subcommittees of the Committee on the Judiciary and the Committee on Interior and Insular Affairs, United States Senate, Eighty-Fifth Congress, First Session, Parts 1–4.