356. Notes of the Secretary of State’s Staff Meeting, Department of State, Washington, July 18, 1957, 9:15 a.m.1

[Here follows discussion of other items on the agenda.]

Export Controls on Blocked Egyptian Funds

6. Mr. Dillon said that there now remains, exclusive of diplomatic funds, a little less than 30 million of Egyptian blocked funds in this country. He observed that, since this sum represents only about 3 months collection in canal tolls, the pressure on the Egyptian Government is not so great as before the canal was reopened. He contrasted this diminishing pressure with the increasing difficulties encountered by American firms, particularly TWA, which are losing money on its overseas operations and cannot get its money out of Egypt. With respect to export controls, Mr. Dillon said that American automobile concerns have complained because the UK controls are less stringent than those imposed by our government; and the American firms fear they will lose an export market to British competition.

In the light of the changing circumstances, Mr. Dillon said he planned to initiate a review of the adequacy and desirability of maintaining the present financial and export controls on trade with Egypt. He noted, however, that we are committed to consult with the British before making any changes.

Suez Canal Clearance Costs

7. Mr. Dillon said it will soon be necessary to adopt a clear, firm policy with respect to UK and French claims for reimbursement for their participation in clearing the Suez Canal. He said he judges that [Page 694] their claims for the use of equipment during the UN clearance operation under the direction of General Wheeler are valid; but that the claims which antedate the UN operation must be dealt with separately. Unless this is done, he said, the surcharge question will become terribly involved and repayment to the UN will be difficult to effect.

Mr. Becker added that it would be difficult to recognize the UK and French claims without prejudging the question of ultimate liability and that most Egyptian claims would have equal standing with those of the British and the French. Mr. Wilcox agreed, and said that the Egyptian claims will be larger in amount and will have tremendous nuisance value.

[Here follows discussion of the remaining items on the agenda.]

  1. Source: Department of State, Secretary’s Staff Meetings: Lot 63 D 75. Secret. The source text does not indicate a drafting officer.