314. Report Prepared in the Executive Secretariat of the Department of State1
SUMMARY OF DEVELOPMENTS IN SUEZ SITUATION
Secretary’s Talk with Egyptian Foreign Minister
Egyptian Foreign Minister Fawzi told the Secretary on October 52 that he foresaw no great difficulty in solving the problem with respect to the principle of “freedom of navigation”, and arriving at a ceiling on Canal tolls. Fawzi continued that Egypt desired a peaceful solution and was prepared to recognize the rights of the user nations, and user participation to the extent compatible with Egypt’s legitimate interests. Fawzi indicated that the international financing phase of the future operation of the Canal might be a desirable place to introduce the international interests into Canal affairs.
Badawi Sets Forth Egyptian Views
A suggestion made during the course of the Dulles-Fawzi conversation resulted in a meeting the following day between the Department’s Legal Adviser, Mr. Phleger, and Helmi Badawi, head of the Egyptian Canal Authority.3 Phleger and Badawi agreed on the desirability of establishing the principles under which a solution of the problem might be achieved; the details could be negotiated at a later date. Badawi said that Egypt proposed a “TVA” type of operation to run the Canal. He indicated that an international agreement which Egypt could contemplate undertaking might be encompassed in a treaty containing: 1) undertakings concerning Freedom of Navigation; 2) provision for consultation with an international users group regarding improvements to the Canal; 3) the division of tolls into two parts by agreement—one part for improvements and the other for operations and a monetary return. With regard to this latter point, Badawi stated that no tolls would be raised except after consultation, but he refused to agree that tolls would not be raised except by agreement with an international body. Phleger pointed out to Badawi that such a treaty would merely reaffirm treaty engagements which were already binding on Egypt; no practical measures for protecting the rights of the users had been [Page 667] set forth. Badawi said that the primary assurance was that it was in Egypt’s interest that the Canal be used to the maximum possible extent.
In commenting on his conversation, Phleger said that it was apparent Badawi was not in a position to negotiate. Further, Badawi’s proposals may have been set forth to sound us out on the requirements of the situation.
US and UK Positions on Toll Payments
A conversation took place between the Secretary and Lloyd, with their advisers, on October 7.4 The Secretary stressed that there should be an immediate attempt to change the method of the payment so that SCUA can receive the toll payments. Lloyd said that this was not possible until a contractual arrangement had been reached with the old Suez Canal Company. When the British indicated that it would be two weeks before the UK Government could tell British shippers that they should pay to SCUA, the Secretary said that this was too long. Lloyd said an effort would be made to shorten the period. Phleger indicated that the uncertainty over the French attitude in this connection was disturbing. There was general agreement that the French should also cooperate in making arrangements to pay the tolls to SCUA.
[Here follow sections entitled, “Early SCUA Agreement with Company Seen Essential” (reported in telegram 1923 from London, October 8; Department of State, Central Files, 974.7301/10–856); and” Swedish Allegations Believed Incorrect” (reported in telegram 64 from Port Said, October 6; ibid., 974.7301/10–656).]
(Summary closed 12:45 p.m. October 9, 1956)
- Source: Eisenhower Library, Whitman File, International File. Top Secret; Eyes Only for Designated Recipient.↩
- The memorandum of the conversation, which began at 5:30 p.m., October 5, is in Department of State, Central Files, 974.7301/10–556.↩
- The memorandum of the conversation, which took place on October 6, is ibid., 975.7301/10–656.↩
- The memorandum of conversation is ibid., 974.7301/10–756. See footnote 1, Document 308, for a list of other topics discussed during this meeting.↩