Foreign Relations of the United States, 1955–1957, Arab-Israeli Dispute, 1957, Volume XVII

262. Telegram From the Embassy in Egypt to the Department of State¹

Cairo, April 2, 1957—1 a.m.

3093. Embassy telegram 3083.²McCloy gave me following fill-in last night following his final talks with Nasser and Fawzi:

Talk with Nasser centered primarily around his reactions to our comments on Egypt second draft³ and on memo of personal suggestions which McCloy had prepared at request of Fawzi.⁴

Reference proposed revision of draft McCloy led off by urging forthright action by GOE in order create atmosphere of confidence and even suggested GOE go further and voluntarily increase Development Fund from 25 to 30 percent as evidence of Egypt constructive intention. In so doing he followed general line of our representations. (Bunche later told me he did so with great vigor). Nasser began response by rather disarming acknowledgment of understanding if implications of situation and admission of doubt Egypt able run Canal effectively without foreign help. However, when conversation turned specifically to United States suggestions he reverted to characteristic suspicion and said seemed clear our proposals primarily made “to make case for Israel”; this could be read between lines our entire draft. As particular evidence of this he pointed to adherence provision of which, he maintained, Israel would be one of first to take advantage and to follow up by citing six points in order put Egypt on spot. He seemed fully convinced this was our principal motive.

Another point to which he took exception was provision regarding Development Fund which he convinced intended put in escrow. McCloy pointed out provision did not so read. Nasser was only half-convinced. Nasser also objected to restriction placed on raising tolls even within one percent limit proposed by GOE, and to setting up an outside board. Why couldn’t Canal Authority have its own board as had old Canal Company?

Nasser’s objections to mention of six points were especially strong. Not only were they subject to varying interpretation but they had been product of negotiations with British and French who now known to have been dealing in bad faith. To be sure they remain on books but he just didn’t want to talk about them any more. McCloy said his strongest arguments didn’t seem shake Nasser in this regard.

McCloy then read to Nasser personal and informal memo which he had noted down at Fawzi’s request in attempt move ahead (text in immediate following telegram). Nasser seemed interested and asked to retain copy. McCloy agreed but emphasized tentative character and said not at all sure would be approved in his United Nations capacity. Nasser’s reactions to specific points were as follows: 1) he was fairly receptive to idea of increasing Development Fund to 30 percent.⁵ 2) Regarding board of consultants he questioned desirability of bringing United Nations in picture but, after McCloy’s explanations, he seemed not to exclude idea.⁶ He also questioned desirability of mentioning board in declaration since would perpetuate “for eternity”. 3) Regarding suggested reference in announcement to World Bank.⁷ He did not object in principle but said dubious about making announcement to that effect now because of his recent unhappy experience with that institution. Said he would like have Fawzi’s views.

Regard repayment of advances by surcharge,⁸. Nasser said only that United Nations should be repaid for its help but he wondered what attitude of various countries would be. Russians and Indians had already said they did not intend participate in defraying clearance costs.

Nasser spoke highly of Wheeler and said wanted show appreciation in some way. He also repeated usual story that matter Israeli passage through Canal not only legal question but practical security problem. As matters stand would have to deploy half of army along Canal to assure safe passage of single Israeli ship.

McCloy said conversation with Fawzi had covered series subjects from Israel to world scene. Re American draft, Fawzi said useful and would use as much as possible. He also felt McCloy’s draft would be helpful and hoped to be able weave in some ideas.

When McCloy noted there had as yet been no strong reaction from British or French, Fawzi suggested might be result of domestic troubles of effect of consultation with US but he then hinted that might be in anticipation of early “explosion”. When McCloy asked what he meant, Fawzi said GOE has reports of unusual movements of French fleet which would seem unrelated to Algerian situation and also has had disquieting intelligence reports from Israel. He emphasized that this information was very confidential.

McCloy said that in conversations with both Fawzi and Nasser, he had suggested possibility of improved American-Egyptian relations if certain pending difficulties could be surmounted but that neither had sought pursue subject.

In conclusion, McCloy said he felt that his endeavors may have helped some in promoting receptivity to American suggestions and he thought he had probably been particularly helpful in strengthening hand of Fawzi. However, he was not overly sanguine.

McCloy is returning direct to New York without stopping in either Paris or London.

Hare

1. Source: Department of State, Central Files, 974.7301/4–257. Secret; Priority. Received at 4:19 p.m.
2. At 11:30 a.m., March 31, in Cairo, Hare delivered to Fawzi a third-person Note setting forth the comments of the U.S. Government on the Egyptian memorandum of March 26 (see telegram 3253, Document 258) and, as an enclosure to the Note, the revised text of the Egyptian memorandum as cabled to Cairo in telegram 3238, Document 255. At the same time, Hare presented orally the comments suggested in telegram 3253. (Telegram 3081 from Cairo, March 31, and despatch 734 from Cairo, April 1; Department of State, Central Files, 974.7301/3–3157 and 974.7301/4–157, respectively)

   Telegram 3083 from Cairo, March 31, transmitted Fawzi’s preliminary comments at the time the documents were presented. (Ibid., 974.7301/3–3157)

3. Reference is presumably to the Egyptian draft memorandum of March 26; see telegram 3032, Document 250.
4. McCloy’s memorandum was transmitted to the Department of State in telegram 3094 from Cairo, April 2, not printed. (Department of State, Central Files, 974.7301/4–257)
5. In his memorandum, McCloy suggested raising the amount of the proposed Suez Canal Capital and Development Fund to 30 percent of the Canal’s gross revenues, as a means of emphasizing Egypt’s good intent without any cost to Egypt.
6. McCloy recommended the establishment of a board of consultants appointed by the U.N. Secretary-General to be composed of: (1) representatives of the private interests whose products and materials pass through the Canal; (2) representatives of the shipping and passenger interests who use the Canal; and (3) a certain number of individuals of high standing and experience who could be said to represent the public interest at large.
7. McCloy also proposed that coincidentally with the publication of the Declaration the Egyptian Government should announce that it was requesting the World Bank to study immediately, in conjunction with its preliminary plans and methods of financing, the radical rehabilitation and improvement of the Canal as a modern waterway fully designed to meet future trade needs.
8. According to McCloy’s memorandum, Egypt should also announce its acceptance of the principle that the advances voluntarily made by contributing nations toward clearing the Suez Canal should be repaid and that as a matter of equity Egypt was prepared to impose a surcharge on the existing tolls designed to liquidate such advances as promptly as possible, the surcharge not to exceed 10 percent of existing toll charges.