Office of the Historian

239. Memorandum of a Conversation, Mid-Ocean Club, Bermuda, March 20, 1957, 7:30 p.m.1

Bermuda, March 20, 1957, 7:30 p.m.

PARTICIPANTS

  • President Eisenhower
  • Secretary Dulles
  • Prime Minister Macmillan
  • Foreign Secretary Lloyd

Egypt

In discussing the problem of relations with Egypt, Mr. Macmillan raised what he called the “$64 question”, which I had put to Lord Home at Canberra, namely, were we going to wage political and economic warfare against Nasser or seek some arrangement with him in relation to Israel and the Canal on the basis of a combination of inducements and pressures which would mean that if he accepted, he would get the benefit of what had been held out as inducements. Mr. Lloyd made a strong personal attack about Nasser and his unreliability. The President and I said that we did not debate this point, but even conceding this “What would we do?”. President Eisenhower said we could not at the same time seek his cooperation and also combat him. Mr. Macmillan said that he thought the answer was clear that we should seek by all of the pressures and inducements we could mar-shall to get an acceptable solution of the short-term and then the long-term problems relating to the Canal and peace with Israel. . . .

I showed the attached two cables to Macmillan and to Lloyd,2 who read them with obvious interest, but made no comment either of approval or of disapproval.

In discussing what the US might do, I referred to the resumption of normal relations with unblocking of funds, access to PL480 wheat, technical assistance, etc. Mr. Macmillan said that the aspect of this [Page 451] program which worried him the most was the release of funds because that might put pressure upon them to release blocked sterling which they were reluctant to do so long as the Egyptians had war claims against the UK. I said I did not see how we could keep the funds blocked in their entirety although it might be that we could hold on to a part in order to cover possible claims for prior tolls paid to Egypt which might be claimed by the Suez Canal Company and also possible claims for mistreatment of US persons and properties in Egypt. I thought, however, that most of the blocked funds would have to be released if we resumed normal relations and had an acceptable Suez Canal settlement. Mr. Macmillan appeared to acquiesce in this view.

John Foster Dulles3
  1. Source: Department of State, Conference Files: Lot 62 D 181, CF 865. Secret. This conversation took place during dinner. The time of the conversation is from Dulles’ Appointment Book. (Princeton University Library, Dulles Papers)↩
  2. Documents 236 and 238.↩
  3. Printed from a copy that bears this typed signature.↩