Foreign Relations of the United States, 1955–1957, Suez Crisis, July 26–December 31, 1956, Volume XVI

652. Telegram From the Department of State to the Embassy in Egypt¹

Washington, December 12, 1956—7:47 p.m.

1940. Embtels 1751,² 1808, 1830.³ Circular 426 was general directive setting forth principles which will guide USG in its relationship with NE in light new circumstances prevailing in area. Within this framework specific US attitudes toward individual countries will be determined in light of local picture. Para 6 of Circular points out need for agreed acceptable basis for cooperation as well as requirement that trend of events in area offer reasonable prospects of success.

Feasibility of US efforts to cooperate with peoples of NE in promoting economic and social progress in area depends in important degree upon contributions by states in area to production of atmosphere favorable to success of such undertaking. In Egypt’s case would be helpful if there were convincing evidence of determination to direct national resources to improving economic well-being of people. Also desirable would be constructive attitude re settlement Canal dispute and readiness make progress toward resolution Arab-Israel issue. Relaxation of tensions and strengthening of stability of area as result of steps taken by Egypt, Israel and other NE states would be example of helpful trend of events mentioned in para 6 of Circular 426.

Department has already requested Embassy outline to Nasser certain steps US would like see GOE take in interest improving regional atmosphere. (See Deptel 1912)⁴

Department concurs Banna’s inquiry was of reconnoitering nature. GOE officials should be given no encouragement expect any change from US position on status aid for Egypt, which remains as set forth in Deptel 1283.⁵ If matter US aid is raised at highest level it can then be discussed within context general US-Egyptian relations.

US position on unblocking Egyptian assets remains as described Deptel 1812.⁶

Rehabilitation of Port Said probably should be treated as special problem since it will be difficult separate it entirely from measures to rehabilitate Canal and place it in operation. Nonetheless GOE should not be encouraged raise subject US aid for this purpose.

Hoover

1. Source: Department of State, Central Files, 684A.86/12–1256. Confidential. Drafted by Shaw and Rockwell and approved by Rountree who signed for Hoover. Repeated to Paris and London.
2. In telegram 1751, December 1, Hare transmitted to the Department of State a summary of a conversation between the Embassy’s Economic Counselor Robert Carr and the Assistant Under Secretary of the Egyptian Ministry of Finance Dr. Abdelmoneim El-Banna during which the latter requested the U.S. position concerning continued U.S. development assistance to Egypt and the unblocking of Egyptian dollar assets. Hare requested guidance from the Department as to whether the Embassy should respond to the Egyptian Government along the lines indicated in circular telegram 426, November 21 (scheduled for publication in volume XII) or whether there was a special directive in regard to Egypt which the Embassy should follow. (Department of State, Central Files, 874.131/12–156)
3. Telegrams 1808, December 6, and 1830, December 8, informed the Department of State of Egyptian requests to obtain corn and wheat flour, respectively, under the P.L. 480 program. (Ibid., 411.7441/12–656 and 411.7441/12–856)
4. Document 649.
5. In telegram 1283 to Cairo, October 27, the Department of State advised that there were no shipments under development assistance programs for Egypt going forward or planned for the future except deliveries under the $40 million program committed prior to June 30, 1955. In addition, a limited technical cooperation program with Egypt was still going forward, but no new projects had been initiated under this program during recent months. (Department of State, Central Files, 774.56/10–2756)
6. In telegram 1812 to Cairo, November 30, the Department of State among other points informed the Embassy in Cairo that the Treasury Department would not allow the use of blocked Egyptian dollars to pay for future oil products imports. (Ibid., 611.74231/11–1956)