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

Secto 5. I. Following is report of noon meeting between Secretary and Lloyd2 attended by number of others on both sides. Lloyd had just received Shepilov and commented latter seemed recognize need some new plan meet Suez situation, appeared to accept Lloyd’s statement that control Canal could not be placed under one man such as Nasser. Shepilov had not said what solution he might have in mind.

Secretary said he disturbed by news story speculating on difference between US and British-French positions. Secretary said he had put out statement denying this.3 Suggested misleading story might have been attributable Indian Embassy Washington. Lloyd expressed satisfaction Secretary’s statement and said in his broadcast had assumed US and UK stood together. Secretary commented that while he had not had opportunity review Lloyd’s broadcast carefully, his impression from quick reading was that it very good. Referring to mention in Lloyd broadcast to United Nations, Secretary said this element should be included in tripartite statement of principles governing solution Suez problem. Believed it important however not bring UN into matter too early in view delays which would be involved. Suggested, and Lloyd agreed, that Phleger get together with French and British representatives to arrive at agreement upon paper setting forth principles. Re wording of agenda,4 Lloyd agreed [Page 204]with Secretary’s suggestion that conference should “consider” a solution rather than “decide” upon a solution. Secretary believed that otherwise impression would be of imposing a solution upon Egypt without discussing with the latter.5

Lloyd raised question of chairmanship of Conference. Secretary believed would be wise to have permanent chairman other than Lloyd and give following reasons: 1) UK was looked upon with French as nation most deeply involved in controversies; 2) would be helpful if Lloyd would sit with British Delegation beside Secretary in order to discuss policy and tactics on continuing basis; 3) UK could express itself more strongly from floor as Lloyd as Foreign Minister could do this better than anyone else. Secretary thought Menzies might be best chairman. Lloyd stated that permanent chairman would not be elected before Friday and therefore still had further time to consider matter.

II. Secretary and Aldrich then met with Eden and Lloyd.6 Eden assured Secretary that British do not intend move armor to Libya.7 Present intention bring British forces in Libya up to strength by moving troops out of Malta, thus making room for further reinforcements there. Eden also said British have no intention taking military action against Egypt through Libya. Eden believed French may contemplate such action but would be impossible to do so.

Eden now thinking of utilizing economic sanctions against Nasser. Important thing would be deny Nasser revenues from Suez Canal. If such revenues could be put in outside bank and thus effectively denied to Nasser British believe his position would become untenable. Eden also said further economic sanctions being explored.

Re eventual use of force should that become necessary, British envision two possibilities: 1) convoying through the Canal; or 2) renouncing ‘54 Base Agreement and moving into base again.

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British reported Krishna Menon had urged that Lloyd be chairman of Conference and that India was prepared to endeavor to persuade Soviets accept Lloyd chairmanship. Queried on this, Secretary agreed US would support Lloyd candidacy, on understanding there would also be Executive Vice President to preside and enable Lloyd speak from floor.8

III. Immediately following this meeting, Secretary and Aldrich had lunch with Eden, Lloyd, Pineau and Chauvel.9 During course of luncheon it was decided that US would speak first and table tripartite resolution. Copy will be cabled.

Secretary said he had been considering necessity of adopting new philosophy on nationalization of resources which are of concern to economies of number of countries. Believed a concessionary contract between sovereign state and private interest should entail same abridgement of sovereignty as is involved in contractual treaty between sovereign states when the resource covered by the concession is of major international economic concern. Secretary indicated he might develop this concept in course of present conference.

Dulles
  1. Source: Department of State, Central Files, 974.7301/8–1656. Top Secret; Priority; Limited Distribution. Drafted by Macomber. Received at 12:10 a.m.
  2. A memorandum by Rountree of this conversation, which took place on August 15 at the British Foreign Office, is ibid., Conference Files: Lot 62 D 181, CF 745. Present at the meeting were: Dulles, Phleger, Bowie, McCardle, Barbour, and Rountree for the United States; and Lloyd, Caccia, Fitzmaurice, Ross, and other Foreign Office officials for the United Kingdom.
  3. During a Department of State press briefing on August 13, Department press officer Joseph Reap, in response to a question, noted that during the London tripartite conversations “the United States found itself in complete agreement with France and the United Kingdom that there should be international means to insure the practical and efficient functioning of the Canal as a free, open and secure international waterway in accordance with the Convention of 1888. The United States has not altered its view in this respect and is not aware of any difference in this matter between the British and French Governments and itself.” (Department of State, Daily News Conferences, 1956)
  4. On August 13, the Embassy in London transmitted to the Department of State the texts of the rules of procedure and the agenda in telegram 865. (Ibid., Central Files, 974.7301/8–1356) The text of the agenda reads as follows: “To decide whether, and if so what, steps should be taken to establish operating arrangements under an international system designed to assure the continuity of operation of the Suez Canal, as guaranteed by the convention of October 29, 1888, consistently with legitimate Egyptian interests, and to deal with any necessary financial and other ancillary measures.”
  5. On this point, the memorandum of conversation by Rountree reads: “The Secretary thought we would find strong sentiment that, in the absence of Egypt, the Conference could not ‘decide’ upon a solution, but could do no more than ‘consider’ one. The present terminology would make it appear that the Conference would be imposing a solution upon Egypt without discussion with the latter. He suggested that a way be found to avoid this, and thus perhaps preclude substantial opposition to the proposed rules and agenda.”
  6. A memorandum of this conversation, which began at 12:30 p.m. August 15, by Aldrich, is in Department of State, Conference Files: Lot 62 D 181, CF 745.
  7. On August 9 Barbour reported to the Department that he had received the impression from various conversations with British officials that Libya was being given an important place in British military planning and might actually be envisaged as a principal point of departure if action against Egypt were undertaken. (Telegram 768 from London; ibid., Central Files, 684A.86/8–956)
  8. According to the memorandum of conversation by Aldrich, “Mr. Lloyd made clear that he had a strong desire to be President of the Conference so as to be able to take firm decisions. Secretary Dulles said of course he would go along with this, if after reflection it continued to be Mr. Lloyd’s wish.”
  9. A memorandum of this conversation, which began at 1 p.m., August 15, at 10 Downing Street, is in Department of State, Conference Files: Lot 62 D 181, CF 725. The document was prepared by the U.S. Delegation at the Suez Canal Conference, but it does not indicate a drafting officer.