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

7. Telegram From the Embassy in the United Kingdom to the Department of State¹

London, July 27, 1956—8 p.m.

510. Cairo and Paris eyes only Ambassador. Department pass Secretary. For the Acting Secretary. Ref: Embtel 481.² Immediately after my telephone conversation this afternoon with the Acting Secretary³ I met with Lloyd and Ambassador Chauvel at the Foreign Office and we discussed the Canal problem for an hour. I mentioned the points conveyed to me by the Acting Secretary, namely that he had consulted with the President and by telephone at Lima with the Secretary;³ that the United States also took a very serious view of the situation created by Nasser; that the Department was about to issue a statement comparable to that issued by the British and French Governments this morning; that the United States favored consultation, at first on a tripartite basis and perhaps broader later, for example conceivably NATO; that the United States agreed the United Nations did not offer a useful forum at this stage; that the United States would prefer London or Paris for a tripartite meeting; that the Secretary did not consider it appropriate at this stage to attend such a meeting even if other engagements permitted but that the Dept. would send a high ranking officer soonest if desired; that the United States would at present prefer to have a look at proposals for action, economic, political or otherwise, now under consideration by United Kingdom and French rather than make proposals of its own; that nothing in the foregoing should be construed as any carte blanche approval of such proposals as might now be under consideration; and finally the Department’s preliminary view of legal aspect was that Nasser’s expropriation of Canal Company very different from the expropriation of such an institution as an oil company, there being possibility here of legal foundation for action.

Foregoing received with appreciation by Lloyd, particularly bearing in mind speed with which it was made available by Washington.

Chauvel summarized French position as of this evening under eight points which he said would be conveyed by French Embassy Washington to Department.⁴ In brief (1) freeze Canal Company’s assets abroad, 2) French Government disposed to give favorable consideration to Mysteres for Israel, 3) French had made protest to Egyptians this morning in Paris, 4) France wondered what U.K. might do about freezing Egyptian sterling balances, 5) French recommended early tripartite meeting, 6) French wondered what thoughts British might have on possible military action, 7) French Government taking steps protect French interests and nationals in Canal Company, and 8) French believed closest solidarity among Western governments indispensable in this matter.

Lloyd strongly argued against French point (2) and said HMG thought it imperative to keep Israel out of the situation, as much in Israel’s interests as anyone’s. Added regarding French point (4) that U.K. already has about one hundred million pounds sterling blocked and there was possibly ten million to twenty million pounds additional not now blocked that might be withheld by one means or another from Egyptians.

Lloyd then said there were several U.K. points worth mentioning. First and most important was that HMG considered it was “No good starting any measures unless we are prepared to take military measures in the end and if they should become necessary”. He considered political and economic measures would not succeed, they would not be enough, and therefore success of Western effort would depend on acceptance necessity take military measures in the last resort. British chiefs of staff now working on study of possible military measures.

HMG felt, Lloyd continued, it essential to freeze Company’s monies abroad. Understood shipowners now pay their tolls roughly 55 percent in London, 10 percent in Paris, and 35 percent in Egypt. British shipowners being told pay as usual. As to Company’s resources abroad, Britain would try to freeze them here as French were doing in Paris. Understood about one million dollars held by Morgan’s⁵ in New York as trustee for Company and wondered whether United States could block this asset. I said I had no knowledge of this fund or of possible basis on which U.S. could freeze it.

Lloyd referred to question of status of Canal Company’s personnel under Nasser’s decree (seventh paragraph Embtel 481). HMG considered that Company should make decision and personnel should take Company’s orders. Chauvel said French Government agreed and had so informed Company. Company had in fact informed personnel that “whole subject is under consideration and meantime you should carry out your normal duties”.

Lloyd said message from Eden to President had gone forward today, that it outlined general views expressed at last night’s meeting (and contained Embtel 481), and that it urged a tripartite meeting in the near future which it was hoped the Secretary could attend. Lloyd added that visit of Pineau to London commencing Sunday offered an ideal opportunity for a high level tripartite discussion. After what I had told him he realized Secretary probably could not come but he urgently hoped United States would send a high-ranking officer of the Department to London to reach here in time for a first meeting on Sunday evening, with further discussions to follow Monday. I said I had no idea whether a high-ranking officer of the Department could come here as fast as that but I would certainly convey Lloyd’s request as a matter of priority.

Lloyd said he envisaged that these tripartite discussions might result in the formulation of a tripartite note to the Egyptian Government making it clear that the three Western powers consider it necessary to ensure the full international status of the Canal, its security, free transit, etc. Note would continue that the three governments could not accept Nasser’s expropriation of the Company and would suggest that their objectives could be fulfilled by the establishment of some kind of an international consortium, perhaps as a specialized agency of the United Nations. Lloyd remarked the United Nations aspect would appeal to India. If Nasser refused to go along with this proposal, the three governments, together with any other friendly powers which might join with them, would then take strong action. This would, incidentally, solve the 1968 problem in 1956. Lloyd emphasized that this thesis was not to be taken as a definitive recommendation for the tripartite group but rather as an indication of HMG’s present general thinking.

Chauvel asked whether governments should send military advisors to tripartite meeting. Lloyd said he thought not and I ventured personal opinion United States would probably agree with Lloyd. (I later told Caccia not in Chauvel’s presence that Admiral Boone CINCNELM was of course in London and I thought might possibly be made available if governments decided military advisors should be present.)

Lloyd mentioned that there had been a meeting this morning in London with all the Commonwealth High Commissioners. It was necessarily a preliminary sort of meeting but it seemed to him clear that all the HICOMs were in agreement that Nasser’s action had created a very serious situation.

Finally, Lloyd emphasized in strongest terms the importance of keeping secret the fact that the United States, United Kingdom and French Governments had under consideration the possibility of military action.

Please inform me most urgently whether a high-ranking officer of the Department could reach London on Sunday for tripartite discussions. Would also appreciate information on Morgan Trust Fund (above) and whether there is any means whereby United States could freeze it.

Foster

1. Source: Department of State, Central Files, 974.7301/7–2756. Top Secret; Niact. Received at 8:31 p.m. Repeated to Paris and Cairo. The Department repeated the telegram Niact to Lima for Dulles as Tedul 21 and to Rome for Thomas as telegram 370, both on July 28. (Ibid.)
2. Document 2.
3. No account of this telephone conversation has been found in Department of State files.
3. No account of this telephone conversation has been found in Department of State files.
4. The message has not been found in Department of State files.
5. Reference is to J.P. Morgan and Company.