72. Memorandum of Discussion at the 292d Meeting of the National Security Council, Washington, August 9, 1956, 9-11:33 a.m.1

[Here follow a paragraph listing the participants at the meeting and agenda items 1–3]

4. Significant World Developments Affecting U.S. Security

[Here follows a report by Allen Dulles on unrelated subjects.]

Mr. [Allen] Dulles said he would conclude his remarks with some background on the Suez Canal situation, which was the subject of the next item on the agenda. The proposal for the London Conference had been accepted by all those invited except the USSR, Egypt, Indonesia, Greece and Spain. Egypt would probably not attend, but the others invited, including the USSR, would probably accept. He expected that eleven countries would be firm supporters of the US-UK-French position, and that the USSR, with Indian support, would spearhead Egypt’s case. The Egyptian case might receive support from Greece because of Cyprus, and from Spain because of Gibraltar. Pakistan, Ceylon, Ethiopia and other countries would probably play a waiting role.

Mr. Dulles then noted a report that Ben-Gurion had told Nasser that Israel would not take advantage of the present situation to attack Egypt. Reports had also been received of plans for sabotage in the area in general and of the Canal in particular, in the event of hostilities.

Mr. Dulles said that the Canal had never been under organized political international control. The Canal Company had performed housekeeping functions only, with no authority over who used the waterway. In the Russo-Japanese War, the Russian fleet used the [Page 166] Canal, although Britain was an ally of Japan. In the Spanish-American War, the Spanish fleet entered the Canal, but had to turn back when it could not replenish its fuel supplies because the American Consul had bought all the bunkering coal available in the area. The Canal was open to Italy during the Ethiopian War, in spite of the League of Nations. The U.K. closed the Canal to its enemies both in World War I and World War II. The President said that in World War II, Germany had in effect closed the Canal to the Allies because capture of Crete and El Alamein had enabled German forces to take a heavy toll of shipping.

The National Security Council:

Noted and discussed an oral briefing by the Director of Central Intelligence on the subject, with specific reference to the situations regarding Laos, the Burmese-Chinese Communist border, and the Suez Canal.

5. The Suez Canal Situation (Memo for NSC from Executive Secretary, subject: “Nationalization of the Suez Maritime Canal Company by the Egyptian Government”, dated August 3, 1956;2 Memo for NSC from Executive Secretary, subject: “Nationalization of the Suez Canal; Consequences and Possible Related Reactions”, dated August 7, 19563)

Mr. Anderson said that the final item on the agenda was a discussion of the Suez Canal situation. In accordance with the directions of the President, the discussion would be based on the following reports: (1) A report by the Secretary of State on the status of the Egyptian-Suez situation, including the latest developments. (2) A report by the Department of Defense on progress being made on the military studies referred to in paragraph 4 of the Joint Chiefs of Staff memorandum dated July 31 (transmitted by the reference memorandum of August 3), together with such tentative conclusions as may have resulted from the studies to date. Mr. Anderson noted that the Joint Chiefs had made a further comment, which had been circulated to the Council by the reference memorandum of August 7. (3) A report by the Director, Office of Defense Mobilization, on studies being made by U.S. oil companies as to the means of continuing petroleum supplies in the event that Middle East sources are impaired. Mr. Anderson then called on the Secretary of State for the first of these reports.

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Secretary Dulles said that it is well known that the United States regards the Suez situation very seriously. The Suez Canal has long been called the life-line of the British Empire, and this is truer today than ever before because of the growing dependence of Western Europe on the oil of the Middle East, with the Canal as the primary artery for its transportation. Pipelines could not be considered dependable alternate means for the transit of oil because the same political factors which can disrupt Canal traffic can also disrupt pipelines.

Secretary Dulles then turned to the challenge by Nasser, which he felt was not an erratic or an isolated action but an integral part of a long-term program. He recalled that Nasser’s book, Revolution, published in 1952, had developed at some length Nasser’s ambitions for Egypt and for the Arab world, and had described the sources of power available to the Arabs—Arab unity, Arab control of important crossroads in the world, of lines of communication and transportation, and of great oil resources. Secretary Dulles said that in connection with oil, Nasser’s book made the statement that without Middle Eastern oil the machinery of Western Europe would grind to a stop. Secretary Dulles felt that Nasser was dreaming of a great buildup of Arab power and a corresponding diminution in the power of the West. The Canal seizure was one of a series of steps to this end, and had accordingly raised basic questions involving the balance of power and the future of Western Europe.

Secretary Dulles reported that the Suez situation had been discussed fully in London last week. In these conversations both the British and French, with some support from their neighbors, had indicated that they were prepared to take action to repossess the Canal by force. We expressed the view that such action would be precipitate and would not be completely understood in the United States, especially since the use of force would be portrayed in some quarters as an aggression if it took place without prior efforts at peaceful settlement, to which the British and French were pledged under the UN Charter. Action by the British and French without the understanding and sympathy of the United States would thus open fissures between the United States and its allies. In deference to this view, Secretary Dulles continued, the British and French were attempting to secure world support for their case through the mechanism of the Conference scheduled to meet on August 16.

Secretary Dulles said there had been question as to whether the Conference on the Suez situation would meet, but it now seems likely that it will be held—due partly to U.S. effort—even though Egypt probably will not be there. A solid majority of the states attending—as many as two-thirds on some issues—would favor the Western position. The goal of the Conference would be the peaceful [Page 168] achievement of international operation and financing of the Canal. There had never been an international authority in charge of the Canal; the 1888 arrangements had placed operations in the hands of a private company with an international composition, but had not set up a public international organization. At the forthcoming Conference an effort would be made, not to reinstate the company, but to establish a public international authority to operate the Canal in accordance with the Treaty of 1888. Such an authority would have control of Canal finances and would set up an operating body. Egypt would be fully represented in both organizations, but would control neither. In addition, Egypt would participate generously in Canal revenues.

Secretary Dulles said the acceptance of this program was open to serious question. If the only issues were Egypt’s income from the Canal, or how much voice Egypt should have in its technical operation, the problem would be simple. But the issues were more fundamental: Nasser’s action was part of a series of actions designed to reduce Western Europe to subservience to Arab control. Anything less than full Egyptian control of the Canal might be interpreted by Nasser as a step backward in the fulfillment of his grandiose ambitions. Some alternatives to European dependence on Middle Eastern oil coming through the Canal would be pointed out by Dr. Flemming, but Secretary Dulles felt that these alternatives were unsatisfactory in the long run. He said he wished to repeat the basic facts that the transit of oil through the Canal and the pipelines constituted the life-line of Western Europe, and that the British and French were unwilling to accept domination of the life-line by the Arabs.

Secretary Dulles said he felt that the United States could not ask the British and French, or Western Europe, to accept subservient dependence on fanatical Egyptian control of the waterways. Such a surrender would reduce Europe to a dependency and jeopardize the objectives we sought in the Marshall Plan.

Secretary Dulles said there was some hope of a solution being reached, since the situation was more tractable than it had been a week ago; but still it was difficult to see how the two sides to this basic conflict could be reconciled. At the Conference, however, he anticipated some covert support for the US-UK-French position from the USSR and India. He had received information that an effort was being made in the Arab League to get the Arab countries to stop oil production in sympathy with Egypt.4 However, this move was not [Page 169] favored by all the Arab countries, some of which have mental reservations on the whole situation while ostensibly cheering Nasser on.

Secretary Dulles then raised the question of what the United States should do if the Conference fails to agree or if its proposals are rejected by Nasser. In this situation the British and French would be disposed to take forcible action. Should the United States put pressure on the British and French not to take such action? And, if so, how strong should this pressure be? Or should the United States support British and French action, or at least acquiesce in it? Secretary Dulles said he had discovered in London that the British and French would want from the United States (1) moral support, (2) economic support in the form of more oil and the financing of oil shipments from the Western Hemisphere, and (3) an indication of U.S. determination to keep the USSR out—that is, the United States would exercise a deterrent by making it clear that if the hostilities were enlarged by the overt participation of the USSR, we would move in in full force. (Secretary Dulles said parenthetically that the covert participation of the USSR in any hostilities that may occur was to be expected, including pressure on Iran.) Secretary Dulles felt that these matters should be studied carefully, since the United States might have to make important decisions in the next ten days or two weeks.

Secretary Dulles then reported that he hoped to confer on Sunday with a fairly representative group of Congressional leaders, including Senators Johnson, George, Mansfield, Knowland, Wiley, and Smith. Consultation would be harder on the House side; possibly Speaker Rayburn would be consulted. Secretary Dulles felt that consultation with the Congress was necessary, and that even a special session of Congress might be required. He was not happy about precipitating great issues at this time, but the issues were so grave that it was necessary to move ahead without regard to the political situation.

The Vice President, noting that the Democratic Platform Committee was about to meet, asked whether it would be advisable to try to ensure that the platform did not take a position which would [Page 170] be embarrassing to our negotiations on the Suez situation. Secretary Dulles said he was trying to accomplish this by indirection, and was keeping in close touch with Senator Mansfield, who seemed sympathetic.5 The Vice President said that there was some chance that the Democratic platform would recommend arms for Israel, and this might have an impact on the Near East. Secretary Dulles said the impact would not be great.

However, Secretary Dulles said that the attitude of Israel did complicate the Suez problem. The United States had planned, in line with the August statement of the President, to be prepared to give military assistance to the victim of an aggression in the Near East. If the British and French move into the Suez Canal and are attacked by Egypt, and if Israel then attacks Egypt, what is the situation? In any case, U.S. ability to exert an influence on the Arab-Israeli situation is diminishing. Secretary Dulles reported that the French feel that the Israelis should be armed rapidly, and are prepared to ship 24 additional jets. However, Secretary Dulles felt that while many Arab states are uneasy over Nasser’s bold course, any action which would put the Israelis out in front in the Suez situation would solidify the Arab world. Also, he felt that the Democratic platform would not materially affect Arab attitudes, since the Arabs take it for granted that if the Democrats win, the United States will back the Israelis.

The Vice President said he understood that financial considerations were not particularly important to Egypt. The Philippine situation had once been confused by nationalistic attitudes on sovereignty, and we had made a deal recognizing Philippine sovereignty and our use of Philippine bases. Perhaps something similar could be worked out in the case of the Canal if old concepts were re-examined. Management contracts were needed providing for Egyptian sovereignty and Western management.

Secretary Humphrey said perhaps a settlement could be reached along the lines of the settlement with Iran. Mr. Allen Dulles said the Suez problem was different; it was a question of who could close the Canal. Secretary Humphrey said there were two things to keep in mind: (1) The real difference was that Europe was dependent on a single source of oil supply—Secretary Dulles, interrupting, asked whether the presentations should not be finished before the general discussion began, and the President agreed. Mr. Anderson then called upon Admiral Radford to report on the military studies.

Admiral Radford said he agreed with the JCS papers that had already been circulated. He said that the problem was broader than [Page 171] the Canal, and that the Canal seizure might be only the first step in a chain of Arab action. He added that he had just read a cable from General Gruenther 6 which came as a revelation. This cable reported that there was no question but that the British Chiefs of Staff would recommend military action. Information from French sources, such as General Ely, indicated that the French were also determined. However, Admiral Radford said he was puzzled by one thing: The British and French must think they can end the military action quickly, for if they did not they would be dependent on our support.

Secretary Dulles said the British and French think the initial Egyptian resistance could be overcome very quickly, even though mop-up operations might last for years. He recalled that in the spring of 1953 the British had 88,000 troops ready to move against Cairo and Alexandria. The situation now was similar, only worse. Secretary Dulles then said that Mr. Macmillan had stated that the British realized they were starting something that might lead to an atomic war, but that they would rather die in that way than sink… .

Secretary Wilson said if the British felt so strongly about the Suez Canal, they should not have left it in the first place.

The President said that Prime Minister Eden, in a letter to him, had advanced the view that the pipelines would continue to function in the event of trouble. The President felt that this was a vain hope. Eden also asked us to provide the U.K. with oil from Venezuela. Mr. Allen Dulles said the pipelines would be cut in the event of war. Admiral Radford said all oil would be stopped before reaching the Mediterranean. The President pointed out, on the other hand, that the United States and the West are the markets for all this oil. Mr. Anderson then called upon the Director, Office of Defense Mobilization, for a report on the oil situation.

Dr. Flemming said that the Foreign Supply Petroleum Committee, consisting of oil company officials, had met Tuesday in New York and had developed a plan of action for the use of oil facilities, the rate of production, and so forth. The draft plan was now being studied by the Attorney General. Dr. Flemming said he hoped that the plan could be put into effect tomorrow or Saturday.7

Dr. Flemming said that if the Suez Canal were closed, it would be necessary for the United States to step up oil production by 800,000–900,000 barrels a day. The oil companies think this step-up can be accomplished. Demolition of the pipelines, with the Canal remaining open, would require the United States to step up production [Page 172] by 500,000–600,000 barrels a day. These figures, Dr. Flemming added, assume U.S. assistance to the U.K. and France, and no rationing in the United States. However, rationing might become necessary in the United States if the British were for a long period of time denied access both to the Canal and to the pipelines. In any case, a step-up in production would result in a serious problem in the transportation of oil.

The President asked about the prospects of increasing Free World refining capacity. He had been told, for instance, that with a small investment, Mexican refining capacity could be increased from 200,000 barrels a day to one million barrels a day.

Dr. Flemming said he thought it would require six months to get an additional 100,000 barrels a day. However, he said he would look into the situation.

The Vice President said he believed the President’s information was correct.

Secretary Dulles said that, in time, Venezuelan production could be stepped up.

Admiral Strauss asked how much U.S. production could be increased if the existing restrictions on production were lifted. Mr. Anderson replied that production could reach one million barrels a day in thirty to sixty days.

Secretary Wilson said he thought that possibly the United States should, as a gesture, fill the storage tanks now and immediately lift the restraints on production.

The Vice President agreed with Secretary Wilson, adding that the Arabs feel they have us by the throat and that it might therefore be advisable to indicate that we have more room for maneuver than they suppose.

Secretary Dulles pointed out that if we create the impression that Middle Eastern oil is not vital, we will knock the props from under the British case.

Secretary Humphrey said that Middle Eastern oil was vital in the long run. The Vice President said we could covertly indicate to the Arabs that we have maneuverability. Secretary Humphrey said that there was only one solution: To eliminate dependence on a single source of supply. He wondered about the possibility of pipelines through Turkey and Israel.

The President thought that even if there was a pipeline through Israel, the Arab oil-producing countries could always stop production.

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Secretary Humphrey said these countries must produce for Western markets. Moreover, if they have any brains they must know that Nasser will be able to dominate them by control of the Canal… . Secretary Humphrey said that in any case, there must eventually be a petroleum transit route that could not be cut.

Admiral Radford said that a pipeline through Israel could be cut. He was very dubious about the idea of parallel pipelines. Mr. Allen Dulles added that the Arabs also control the Gulf of Aqaba… .

Secretary Humphrey thought the producing countries would have to produce in order to get money. Mr. Allen Dulles pointed out that they could get money from the USSR. Secretary Dulles agreed that the USSR would buy the oil and sell it to Western Europe.

Secretary Humphrey said Western Europe had a strong position as a market if the United States could assist it through the present crisis. He thought Nasser would probably “shake down” the other Arab countries next. The President said the possibility of a “shake-down” should be especially apparent to Nehru, who is dependent on the Canal for more than oil. The President understood that six million tons of India’s imports went through the Canal. Secretary Dulles said Nehru would accept Egyptian management of the Canal. Secretary Humphrey said that as long as Nasser had possession of the sole route of transit for oil, he would control the situation, regardless of the Canal management, unless the West had troops in the area.

Secretary Wilson said the collapse of colonialism had been too rapid, and was having as much effect on the world as the rise of Communism. We should try to make the world see that the Western powers are not embarking on a new colonialism policy. The problem was not so much what Nasser has done, as what he threatens to do.

Secretary Humphrey said that, ostensibly, Nasser wants to build a dam. Perhaps an Iran-type settlement would enable him to get the money to build the dam. The President said this solution would make Canal tolls too high. He understood there was a limit to the tolls that could be charged if the Canal was going to be used. Secretary Humphrey thought a cash settlement might be possible. Secretary Wilson asked whether the Canal and dam questions should be merged. Secretary Humphrey said Nasser wanted to use the Canal to buy the dam.

Secretary Dulles feared the problem was not that simple. If we had built the dam, the Canal seizure would have occurred anyhow.

Secretary Humphrey inquired about the 86,000-ton tankers, and Mr. Allen Dulles said they would not be completed for three years.

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Dr. Flemming said we must plan on losing the pipelines, which might be denied longer than the Canal. After all, the British and French could open the Canal.

The President said the Departments of State and Defense should have a staff committee, including military officers, constantly at work to prepare factual statements of what the situation would be under each of the various possible contingencies relating to the Suez.

Secretary Dulles agreed that a study was needed of the various policy alternatives and policy questions that would arise if the Suez Conference breaks down. Should we try to stop use of force by the British and French? He did not favor this course, but it should be considered. How much help should we give the British and French? He felt the United States must make it clear that we would be in the hostilities if the Soviets came in.

Secretary Wilson wondered whether we ought not restrain our allies from drastic action.

The President said Egypt had gone too far. He asked how Europe could be expected to remain at the mercy of the whim of a dictator. Admiral Radford said Nasser was trying to be another Hitler. The President added that Nasser’s prestige would be so high, if he got away with the Canal seizure, that all the Arabs would listen to him. The Vice President felt the Arabs would probably not adopt a reasonable view of the situation. The President said the Arabs did not wish a quick settlement. If Nasser is successful, there will be chaos in the Middle East for a long time.

Secretary Wilson said Egypt had once owned a percentage of the Canal, but had sold it. The President said harems were expensive. Mr. Allen Dulles thought the West might well forget the history of the Canal.

The Vice President felt that the British and French preferred the use of the Canal to saving face. He wondered whether concessions could be made to Egyptian sovereignty in order to reopen the Canal. Secretary Wilson said Egypt has sovereignty now. The Vice President said Nasser must save face, secure more money, and ostensibly obtain more control.

Secretary Dulles said the British and French were unwilling to let him have all the things mentioned by the Vice President.

Secretary Wilson wondered whether the British and French, if they moved into the Canal area, would establish arrangements similar to those in Gibraltar. Mr. Allen Dulles pointed out that the Treaty of 1888 recognized the Canal as an integral part of Egypt.

Secretary Wilson said nationalization was too familiar to cause excitement. The British had engaged in nationalization. Secretary Dulles said the cases were not parallel.

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Dr. Flemming said he would like to develop action programs relating to oil supply, to go along with the alternative courses of action being studied by the State-Defense Committee. Admiral Radford said the Middle East Committee was at work now. The President remarked that he had not realized this Committee was dealing with the Suez situation.

Secretary Dulles thought that no new mechanism was required. However, the military implications of a statement on our part that we would intervene if the USSR does, must be studied and must be available to the Council on short notice. The Secretary added that the visit of a Russian fleet to the Suez area on August 15 was a possibility. Should we also send a fleet? The President said every possible outcome of the situation must be studied.

Mr. Peaslee asked whether consideration had been given to requesting an advisory opinion from the International Court of Justice. Secretary Dulles said that this action had been considered, but that Egypt was unwilling to accept the jurisdiction of the Court.

Secretary Dulles then turned to the question of the UN role in the Suez situation. He reported that he was lunching with Hammarskjöld tomorrow to discuss this question. He added that the British and French feel that UN action would be too slow to be effective. However, the American Republics feel the UN should take action. In connection with the slowness of UN action, Secretary Dulles felt that long acquiescence in the Egyptian seizure of the Canal would be virtually tantamount to de facto acceptance of Nasser’s action. He added that the British and French were thinking in terms of prestige and power, and not solely in terms of transit through the Canal.

The National Security Council: 8

Discussed the subject in the light of:
A briefing by the Secretary of State on the status of developments and possible future contingencies.
The views of the Acting Secretary of Defense and the Joint Chiefs of Staff contained in the enclosures to the reference memoranda of August 3 and 7.
A report by the Director, Office of Defense Mobilization, on the status of studies as to possible contingencies affecting oil supplies from the Middle East.
Noted the President’s directive that, in order to provide the basis for decisions which may be required in the future, the Departments of State and Defense should be jointly studying all possible contingencies which might develop out of the present crisis in Egypt, [Page 176] what courses of action the United States might have to take under each of these contingencies, and the military as well as the diplomatic implications of each such course; advising the Director, Office of Defense Mobilization, as such studies progress, in order that planning in reference to oil supplies might be coordinated with such State–Defense studies.

Note: The action in b above, as approved by the President, subsequently transmitted to the Secretaries of State and Defense and the Director, ODM 9

Marion W. Boggs
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret; Eyes Only. Prepared by Marion W. Boggs on August 10. The time of the meeting is from the record of the President’s Daily Appointments. (Ibid.)
  2. This memorandum transmitted the JCS memorandum of July 31 to the NSC; see Document 50.
  3. This memorandum transmitted the JCS memorandum of August 3 to the NSC; see Document 68.
  4. On August 6, Nuri Said told Ambassador Waldemar Gallman that Syria under Egyptian prodding would introduce a resolution at a meeting of the Political Committee of the Arab League that called for a complete stoppage of either oil production or at least pipeline operations. Nuri also mentioned reliable reports of probable sabotage in Jordan and Syria. He expressed his hope that the United States would use its influence to dissuade Saudi Arabia from any rash action. (Telegram 162 from Baghdad, August 6; Department of State, Central Files, 786.00/8–656) In a subsequent conversation, Yusuf Yasin left Ambassador Wadsworth with the strong impression that Saudi Arabia would not support the stoppage of oil shipments. (Telegram 62 from Jidda, August 9; ibid., 786.00/8–956) On August 12 the Arab League Council adopted a resolution endorsing Egypt’s nationalization of the Canal Company and proclaiming unity of sentiment with Egypt. Additional documentation relating to diplomacy preceding the meeting is ibid., 786.00.
  5. Dulles discussed the Suez situation with Mansfield on August 6. A memorandum by Dulles of that conversation, not printed, is in the Eisenhower Library, Dulles Papers, General Memoranda of Conversations.
  6. Telegram ALO 917, 081350Z Aug 56, from USNMR Paris to the Secretary of State, not printed. (JCS Files)
  7. See footnote 2, Document 30.
  8. The following paragraphs constitute NSC Action No. 1593, approved by the President on August 10. (Department of State, S/SNSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council, 1956)
  9. On August 10, Lay transmitted NSC Action No. 1593–b to the Secretaries of State and Defense. (Ibid., Suez Canal Situation) Subsequently, Dulles and Wilson decided that the existing planning group for the Middle East (MEPPG), including State, Defense, and CIA representatives, should undertake the preparation of contingency studies, as directed in the NSC Action. (Ibid., S/P Files: Lot 66 D 487, Egypt, and S/SNSC Files: Lot 66 D 148, Suez NSC Action No. 1593b, contain drafts and final versions of the seven papers written in response to this request as well as memoranda of discussions held during the relevant MEPPG meetings and other pertinent memoranda.)