Office of the Historian

308. Telegram From the Delegation at the North Atlantic Council Ministerial Meeting to the Department of State1

Bonn, May 1, 1957—11 p.m.

Secto 4. Immediately upon his arrival Bonn Selwyn Lloyd called on Secretary and raised subject London’s 292 May 1 repeated Dept as 5925.2 He described briefly SCUA meeting yesterday and referred particularly to difficult problem presented in UK with respect to payment of Canal tolls. He emphasized importance to UK of principle of acceptability of sterling in ME area. He said representatives of Bank of England and Bank of Egypt will discuss question of payment of tolls in sterling in Basel on Saturday. He hoped proposal for another Security Council meeting described reference telegram would “hold” situation and place UK in better bargaining position in connection these discussions. He said Egypt might be given advanced notice that Egyptian Declaration has not commanded confidence of users and that particularly because of unilateral nature of Declaration further discussion in Security Council desirable. Lloyd felt Egyptian Govt might be reasonable in SC and might accept stipulation to effect that Egyptian Govt would not amend or withdraw Declaration except by agreement.

Secretary said Egypt would doubtless take position that it cannot negotiate with entire world and he felt Egyptian reaction to Lloyd’s proposal would be negative. While he was disposed to cooperate in order to gain time for negotiation and settlement of sterling problem, he felt it would be preferable to hold out Security Council meeting as possibility rather than as a “fixed event”. He pointed out that if Egypt should appear at such a meeting and adopt a defiant attitude, it would put all users in awkward position. He understood that economic pressure on UK is great and British would be obliged in any event to use Canal. If Egypt proved recalcitrant, UK and others would nevertheless [Page 583] be obliged to accept Egyptian conditions as presently set forth in Declaration. Secretary recognized it might be useful to threaten Egypt with a SC meeting, but thought it would be unwise actually to hold such a meeting.

Lloyd said he would report Secretary’s views to London.3

  1. Source: Department of State, Central Files, 974.7301/5–157. Confidential; Priority. Received at 8:11 p.m. Repeated Priority to London and Paris.↩
  2. Supra. A memorandum of the conversation between Dulles and Lloyd, prepared by the Delegation at the NAC Ministerial Meeting (USDel/MC/5), is in Department of State, Conference Files: Lot 62 D 181, CF 878.↩
  3. For another account of this conversation, see Document 310.↩