34. Memorandum of a Conference With the President, White House, Washington, July 31, 1956, 9:45 a.m.1

OTHERS PRESENT

  • Secretary Dulles
  • Under Secretary Hoover
  • Mr. Phleger
  • Deputy Secretary Robertson
  • Assistant Secretary Gordon Gray
  • Admiral Burke
  • Secretary Humphrey
  • Mr. Allen Dulles
  • Colonel Goodpaster

Secretary Dulles, Mr. Hoover and Mr. Phleger had been with the President about fifteen minutes when the larger group came in. They and the President had read a message (London 550)2 which the President then had handed to the others to read. In essence it [Page 63]stated that the British had taken a firm, considered decision to “break Nasser” and to initiate hostilities at an early date for this purpose (estimating six weeks to be required for setting up the operation).

In opening the discussion, the President said he considered this to be a very unwise decision on their part. Military support from us would require Congressional action, and a request for such action on the basis of the British decision would not be well received. He felt that the British were out of date in thinking of this as a mode of action in the present circumstances. To take such action without having made a “counterproposal” to the Egyptian action would be an extremely serious matter for us. The Middle East oil would undoubtedly dry up, and Western hemisphere oil would have to be diverted to Europe, thus requiring controls to be instituted in the United States. He thought Secretary Dulles had better go to London at once and make clear how impossible it would be to obtain Congressional authorization for participation by the United States in these circumstances. (We must recognize that our participation would be essential if order and access to oil were to be restored).

The President asked Allen Dulles what he estimated the reaction to a British action of this kind would be in the Arab world. Mr. Dulles said that if the move were made now, i.e., without a conference or a counterproposal, the whole Arab world would unite in opposition in all likelihood. If, however, a conference were held, the situation might be considerably different, and the opposition be much less widespread and intense. Today action would arouse the whole Arab world. The President enlarged this to the whole Moslem world.

Secretary Dulles said that he thought there was better than an even chance that, if a conference were held by calling in all of the countries involved, unanimous backing for an international regime to operate the Canal could be obtained. If a proposal of this kind were made to the Arabs with world backing (including Asian backing which seems reasonable to expect) it would then be possible to take armed action if it became necessary with a good chance of retaining a large measure of world support. The British seem to have dropped the idea of a conference in favor of an ultimatum, and want us to join in a communiqué, which is designed to cause a breach. Mr. Allen Dulles suggested that Nasser might not come to the conference, but Secretary Dulles thought that if the conference is one of signatories to the Treaty he probably would come.

Secretary Humphrey asked, with regard to the British proposal, what end was in sight—what the final situation might be toward which they would be working. Secretary Dulles said it could only be a return to the situation in the Canal Zone that had existed a few [Page 64]years ago in which terrorist attacks by the Egyptians were unceasing, with nearly 90,000 British troops present there. Secretary Humphrey said it looked as though they were simply trying to reverse the trend away from colonialism, and turn the clock back fifty years. It did not seem that the action could lead to a solution in the area.

Secretary Dulles referred to the proposed communiqué for the meetings currently in progress in London and stressed the lack of any mention of a conference in the British draft.3 It appeared that they wished to associate the United States with the first phase of their operations, with the result of tending to commit us to their whole course of action or leave us in the position of letting them down. He thought that unless the British are ready to have a genuine conference, we should not take the first step with them, i.e., joining in the communiqué they propose. He read off the U.S. proposed text for the communiqué.4

In response to a question, Admiral Burke said the JCS are of the view that Nasser must be broken. They thought this should be accomplished with economic and political means. If, however, these are tried and prove insufficient, the United Kingdom should then used armed force, and we should declare ourselves in support of their action. (He did not indicate the U.S. should participate with armed force.) The President felt that it was wrong to give undue stress to Nasser himself. He felt Nasser embodies the emotional demands of the people of the area for independence and for “slapping the white Man down.” He said we must consider what the end could be. It might well be to array the world from Dakar to the Philippine Islands against us. Admiral Burke said the suggestion is to search for and try to develop means of splitting off Egypt from other Arab and Moslem groups. If Nasser retains power, he will spread his influence progressively, to the detriment of the West through the Middle East. The President recalled that we have been trying to find means of doing just this for several months.

Secretary Dulles thought we could make Nasser disgorge what he has seized, and agree to internationalize the Canal. He recognized that this action would not serve the French and British interests in the Middle East and Africa so dramatically, and understood why, in their circumstances, they felt a bolder action was necessary. Such did not necessarily represent our interest, however. Secretary Humphrey cited, as a danger in negotiation, that we might be pressed into the position of agreeing to finance the building of the Aswan Dam in return for Nasser’s giving up the Canal. Such action could only build up his prestige. Secretary Dulles said he would not agree to such a [Page 65]proposition. Nasser must be made to disgorge his theft. Mr. Humphrey said all the rest of the world would press us to build the dam. Secretary Dulles said such action would simply be one of rewarding theft.

The President said that Nasser has an exaggerated idea of the income from the Canal. In the discussion that followed, Secretary Dulles brought out that he can pay off the shareholders very largely with accumulated reserves, and would then have somewhere between $30 and 50 million a year clear. We must try to make him disgorge by international means—not by force. After such a try, if it is then necessary to act, world opinion would give greater support.

Secretary Dulles brought out that if Middle Eastern oil were lost to the West, rationing of oil in the United States would be an immediate result, with curtailment of automobile production, and a severe blow to the United States economy. Secretary Humphrey said there would be great anger against the UK on the part of the people of the United States if such a result came from unilateral British action.

Secretary Dulles said the British action would be likely to provoke Israeli attack on Jordan, with the result of inflaming the whole Arab world. He recalled that the British went into World War I and World War II without the United States, on the calculation that we would be bound to come in. They are now thinking they might start again and we would have to come in again. Mr. Allen Dulles said that initial military opposition by the Egyptians would be light, but that the problem of pacifying the area would be extremely difficult.

The President said we must let the British know how gravely we view this matter, what an error we think their decision is, and how this course of action would antagonize the American people despite all that could be done by the top officials of the Government. He felt it was essential to try other measures. Mr. Allen Dulles said that public opinion has flared up strongly in Britain. There is a demand for more than “calling a conference” on Eden’s part. Secretary Humphrey reported that there had been wild cheers for Eden at his mention of using the British Navy. The British people are extremely worked up over this situation.

The President said that, thinking of our situation in Panama, we must not let Nasser get away with this action. Secretary Dulles said we want to base whatever is done on this Treaty.5 The President added, “and on the operation of the Canal.” Mr. Dulles said that we want to stick to the Treaty since, if we ever get away from it, we might be pried away from our status in Panama. Mr. Allen Dulles [Page 66]said we should consider what might have to be done to protect Persian Gulf oil—sources in Kuwait, Saudi Arabia, etc. In response to a question, Admiral Burke said the Navy has four destroyers on station in the Persian Gulf or immediately available to it.

Secretary Dulles turned to subsidiary problems of an economic and financial nature, such as keeping hold of Egyptian assets in the United States for at least another forty-eight hours. By doing so we would be able to have added effect with the British and French. Press reports say that the Egyptians have subjected United States funds to license in Egypt. Mr. Humphrey said we could freeze the Egyptian funds and subject them to license. He said there are about $60 million worth of Egyptian government funds in the U.S. (Mr. Hoover said there are also perhaps $50 million in private Egyptian funds here) and the Egyptians are trying this morning to move some $10 million in treasury bills. Mr. Humphrey said he had issued instructions to catch this operation and hold it up for the moment. Secretary Dulles thought that freezing and licensing would have value, indicating that ordinary commercial transactions could go forward. We would thus keep some cards to play. Secretary Humphrey said that yesterday he had not wanted to do this, but in light of the British message he was not inclined to think we should freeze these funds and then soften the controls. Mr. Allen Dulles said that the repercussions in Egypt and throughout the world would be very severe. Secretary Dulles said we could be careful not to interfere with normal transactions, and asked what the Egyptians have done about American assets in Egypt. Mr. Allen Dulles thought they might retaliate by seizing all American assets in Egypt.

Secretary Dulles said he had suggested Byroade forward his views regarding commencing evacuation of American nationals, and Byroade had advised against that action.6 Secretary Dulles thought that the Egyptians if inflamed would attack Americans along with Europeans. He thought we should quietly move to get women and children out of the country. Mr. Hoover said that the first stage as planned has been to encourage personnel to volunteer for evacuation, with the U.S. paying the way. Byroade had agreed that planning for this action should go forward. Secretary Dulles asked how many private citizens and their families are in Egypt, and Mr. Hoover [Page 67]said that there were not many. Mr. Allen Dulles said in response to a question that the British have made no move thus far to remove their people. Secretary Dulles summed up by saying that we should get ready to move our people at once.

Secretary Humphrey thought that with regard to both the freeze and the evacuation, it might be better to wait until Secretary Dulles has talked to the British. Mr. Hoover thought that a formula on the freeze might be “since Egypt is freezing U.S. funds, we are freezing theirs while the matter is considered.” Mr. Humphrey thought that such action will start money movements throughout the world, to Switzerland, for example, and telegraph that something extremely serious is developing. The President pointed out that the French and British have already frozen funds. Mr. Humphrey commented that British funds were already blocked, so that the effect was not so great. Mr. Hoover brought out that the British had in effect prohibited the use of sterling in Egyptian trading. The President thought an announcement indicating that the situation is cloudy and that we are holding matters in the status quo while investigations are going on, but that normal commercial transactions could continue, might be considered. He thought the language of the announcement itself might serve to allay repercussions.

Mr. Dulles said that if he goes to London that action telegraphs that something serious is on. The President said that if Mr. Dulles can’t persuade the British from their course, the news of the rift would come out right away. Secretary Dulles said that if separate communiqués were issued, indicating a rift, the effect would be spectacular.

The President commented that the British apparently believe the pipelines from the Middle East would continue to run. Secretary Dulles recalled that they are reportedly extensively mined and that the Syrians could blow them immediately. The President thought the British should be told that we regard this as startling, that Secretary Dulles is coming over to explain how thoroughly and in what ways we disagree. He recognized the intensity of British feeling—specifically their feeling that they have been going down and down in the Middle East and that they have now reached a point where they must strike back. Mr. Allen Dulles said that British comment is full of references to Hitler’s occupation of the Rhineland. A number of differences were cited.

Secretary Humphrey asked what the repercussions would be if Secretary Dulles comes back with an obvious split of views between us and the British. The President said such an event would be extremely serious, but not as serious as letting a war start and not trying to stop it. Secretary Dulles said the situation would be almost as serious if we were simply to have Murphy disassociate himself [Page 68]from the communiqué; in that case we would be criticized for not having the Secretary of State go over to work the matter out. He said he thought there is a chance—just a chance—that he can dissuade them, perhaps a bit at a time, gradually deflecting their course of action. The President noted that the British have not yet taken the matter up with Parliament.

The President then said he wanted “not a whisper about this outside this room.”

Mr. Hoover recalled that the British had mentioned needing six weeks to mount the offensive they had in mind.

Mr. Humphrey said he would like to study how to carry out a freeze—how to frame the announcement in the best possible way.7

Secretary Dulles said he would plan to leave for London in two or three hours, and would call to ask that they keep the conference going until he got there.

The President said he would write immediately to Anthony Eden.

G
Colonel CE, U S Army
  1. Source: Eisenhower Library, Whitman File, Eisenhower Diaries. Top Secret. Drafted by Goodpaster.
  2. Supra.
  3. Reference is to “First Redraft of Communiqué”; see Document 32.
  4. See ibid.
  5. Reference is presumably to the Constantinople Convention of 1888.
  6. In telegram 191 to Cairo, July 28, the Department suggested certain precautionary measures be put into effect for personnel and dependents. (Department of State, Central Files, 274.1122/7–2856) Byroade responded in telegram 170, July 30, that “issuance warnings to staff and public would immediately become known Egyptians and would tend exaggerate tension, possibly to serious degree.” (Ibid., 974.7301/7–3056) At 10:11 p.m., July 31, the Department instructed the Embassy in Cairo to abide by the precautionary measures and noted that the British Government had instructed its Embassy in Cairo likewise. (Telegram 219 to Cairo; ibid.)
  7. Later that day the U.S. Treasury issued the following statement:

    “The Treasury announced today that it had temporarily placed under licensing procedure the assets in this country of the Suez Canal Company and the Egyptian Government pending determination of the ownership of these assets and clarification of the existing situation. All transactions with respect to such assets will be subject to Treasury license. This action does not in any way affect private Egyptian funds.” (Text of announcement is in telegram 218 to Cairo, July 31; ibid., 974.7301/7–3156)

    Subsequently on August 3 the Treasury issued a general license for all new transactions made after July 31. This license was issued on the condition that transactions involving the payment of Canal tolls by ship owners or operators, who were subject to the jurisdiction of the U.S. Government, be accompanied by a statement that payment was being made “under protest and without prejudice to all rights of recovery or otherwise.” Under this new licensing procedure, the assets of the Suez Canal Company and the Egyptian Government, on hand in the United States as of July 31, continued to be blocked. (The Treasury license was transmitted in telegram 260 to Cairo, August 3; ibid., 974.7301/8–356.) Telegram 582 to Paris, August 12, explains that “Decision unblock current transactions taken highest level to avoid exacerbating situation vis-à-vis Egypt and maintain free transit Canal pending Conference.” (Ibid., 611.74231/8–1256)