301. Report Prepared in the Executive Secretariat of the Department of State1
SUMMARY OF DEVELOPMENTS IN SUEZ SITUATION
Menon Seeking Compromise Solution
Our Chargé in New Delhi reports2 that Khrishna Menon will be in Cairo today and tomorrow, will go to London Sunday3 and stay until Tuesday to talk with Eden, and then possibly proceed to New York. Menon told our Chargé that his objective is to present a compromise plan to Nasser, attempt to secure his approval and then [Page 646] raise it with the British. The plan, based upon the Indian Government’s belief that Egypt “must not be unfettered” in the operation of the canal, is in three phases: 1) Operation—Egypt would set up a private corporation to run the canal with a link to some form of a users association; 2) Supervision—Egypt would associate itself with an international body to which complaints could be referred, and this body would carry out supervisory functions provided for in Article 8 of the 1888 agreement; 3) Policy—A high level international council would settle by agreement overall policy for canal transits including the establishment of tolls. In Menon’s opinion the best procedure for the Security Council would be to merely request Egypt on the one hand and the UK and France on the other to attempt to negotiate the issue and report back to the Council. The parties could then request “good services” from whatever other countries they desired. Menon said that if he had an interview with Secretary Dulles, it could be misinterpreted that the Government of India was attempting to complicate US relations with the UK. Nevertheless, if the Secretary asked to see Menon, he would be glad to go to Washington.
SCUA Developments
The SCUA Council unanimously adopted yesterday the committee resolutions on organization and financing and referred the reports of the finance and shipping committees to the Executive Group.4 In discussing the draft resolution on organization before its adoption, however, it was agreed that the question of new members (other than Ethiopia, Pakistan, and Japan) should be resolved at a later date. It was agreed informally that SCUA would continue to operate from London until a final decision on the headquarters site is taken by the Council. The task of choosing the Administrator was passed to the Executive Group, but the decision on the composition of the Group was deferred until today’s session. With one exception, the entire Council accepted an Executive Group membership of the US, UK, France, Norway, Italy and Iran with one seat left open for Ethiopia, Pakistan or some other country east of the canal. France, however, was insisting on a prior commitment from Italy that the dues for the transits of Italian ships would be paid to SCUA.
[Page 647]Possible Secret SC Meeting on Suez
In a conversation with Lloyd, Dixon, Alphand and Cornut-Gentille,5 Lodge stated he personally thought the chances of the British Security Council (SC) resolution receiving wider support would be enhanced if there were recourse to some conciliatory procedure before voting. He mentioned the possibility of bringing the Secretary General into the discussions, of creating a sub-committee of the SC, or of holding secret meetings of the SC. Both Lloyd and Alphand were opposed to the first two proposals. Lloyd said, however, he would be willing to have three or four days of secret meetings, but would rather not make a formal motion to that effect. Lodge pointed out that we should not let the initiative for any step of this kind slip to the USSR, with which the French indicated their agreement.
Egypt Rumored Seeking Private US Financing
Charles-Roux, President of the Suez Canal Company, has expressed concern to Dillon6 over reports that Badawi, head of the Egyptian canal authority, is coming to the US to discuss with American oil companies a plan for financing the needs of the authority. Dillon told him he knew nothing of any such matter and doubted if it were true, but agreed to ask for further information. In this connection, Hare has previously reported that the Egyptian Finance Minister told an American newsman that Badawi was coming to seek the views of American oil and shipping companies on steps required to maintain and develop the Canal. Hare inferred that the Canal users would not be asked for financial support.
British Delay Decision on Canal Toll Payments
Although we told the UK and France on September 26 that we are prepared to effect payments by American-flag vessels of canal dues directly to SCUA by making it unlawful for them to pay to Egypt, the British have not yet made a decision on the regulations it would be willing to prescribe. However, the working level in the British Foreign Office has told our Embassy in London7 that the British reply will probably be similar to that of the French, who have indicated their unwillingness to pay tolls to SCUA if it should appear that only one or two other nations were prepared to conform to this practice.
[Page 648]Canal Operation Difficulties Reported
Embassy Cairo has reported8 three or four groundings of vessels transiting the canal and a six-hour delay yesterday morning in the departure of the south-bound convoy. These incidents are not exceptional and are probably due to the assignment of several newly-trained pilots and the appearance of the October fogs. Separately, Embassy Stockholm has reported9 that many Swedish captains are so familiar with the canal that when they receive incorrect signals from shore, as is now happening, they disregard them and avoid accidents.
(Summary closed 12:15 p.m., October 5, 1956)
- Source: Eisenhower Library, Whitman File, International File. Top Secret; Eyes Only for Designated Recipient.↩
- Reported by Frederic Bartlett, Minister-Counselor, in telegram 843 from New Delhi, October 4, not printed. (Department of State, Central Files, 974.7301/10–456)↩
- October 7.↩
- Reported in telegram 1871 from London, October 4, not printed. (Department of State, Central Files, 974.7301/10–456) For text of the resolutions adopted on October 4, see United States Policy in the Middle East, September 1956–June 1957, pp. 104–108. The Embassy in London transmitted the reports of the finance and shipping committees to the Department in despatch 846, October 5, not printed. (Department of State, Central Files, 974.7301/10–556)↩
- Reported in telegram 299 from USUN, October 4, not printed. (Ibid., 974.7301/10–456)↩
- Reported in telegram 1610 from Paris, October 4, not printed. (Ibid.)↩
- Reported in telegram 1870 from London, October 4, not printed. (Ibid.)↩
- In telegram 993 from Cairo, October 4, not printed. (Ibid.)↩
- In telegram 402 from Stockholm, October 4, not printed. (Ibid.)↩