375. Memorandum of a Conversation, Washington, September 30, 19571

SUBJECT

  • Suez Canal

PARTICIPANTS

  • Mr. Kaissouni, Egyptian Finance Minister
  • Secretary Anderson, Treasury
  • Deputy Under Secretary Dillon
  • Black, President, World Bank

At Mr. Black’s invitation Secretary Anderson and Mr. Dillon met Mr. Kaissouni at Mr. Black’s house for tea. Mr. Black opened the conversation, which lasted about an hour, by describing his earlier talk with Mr. Kaissouni2 and indicated that he had tried to impress upon Mr. Kaissouni the importance of Egypt’s initiating compensation negotiations with the Suez Canal Company. Both Secretary Anderson and Mr. Dillon then took up this line and pressed him vigorously, stating that they were sure the Egyptian Government meant to live up to the commitment it had many times repeated to provide adequate compensation. Mr. Dillon pointed out that nothing could be more helpful towards a solution of the problem of the blocked Egyptian funds in the U.S. than progress by Egypt on the compensation matter. Mr. Kaissouni professed not to fully understand how the two questions were linked, and this was explained to him in clear and simple language so that he finally admitted that he understood our problems.3

Mr. Kaissouni then said that President Nasser’s statement that he would like to meet with President Eisenhower was most significant and that it was unfortunate that the U.S. had not promptly answered this overture in a more friendly manner.4 Secretary Anderson answered at some length, pointing out the fact that in a situation where there was a lack of confidence between two countries a meeting at the [Page 740]highest level would not necessarily be very productive. This type of meeting was most effective when steps had already been taken to begin to restore confidence. In this connection he again mentioned that some action be taken on the compensation problem for the Suez Canal stockholders.

Mr. Kaissouni said there were legal problems involved in a solution of the Suez Canal Company problem and the Egyptian Government had difficulty deciding with whom they should deal as the representatives of the stockholders. It was pointed out to Mr. Kaissouni that the members of the Board of the Suez Canal Company were reportedly willing and ready to negotiate with Egypt as the representatives of the stockholders rather than as the representatives of the Company.

Mr. Kaissouni then said that lack of contact led to many misunderstandings, and he cited in particular the Egyptian economic relations with Syria. He said it had been reported to him that a member of the Egyptian Embassy had recently visited the Department of State where he had been told that the U.S. frowned on the Egyptian proposal for a common market with Syria. Mr. Kaissouni said that this proposal had been put forward in order to strengthen Syria and to prevent its moving too far to the left, and therefore should have been welcomed by the U.S. He then mentioned the purchase of Syrian wheat by Egypt for 6 million English pounds in a triangular deal through Italy. He said that this was not in the best economic interests of Egypt as Egypt could have much more easily bought the required wheat from the Soviet Union and paid for it in cotton. However, they had foregone this opportunity in an attempt to strengthen the independence of the Syrian regime.

Mr. Kaissouni then closed with a renewed appeal for more high level contacts between the Egyptian and U.S. Governments, and expressed the hope that high level U.S. governmental officials could visit Egypt to talk at first hand with Egyptian leaders. The tone of the meeting was cordial throughout.

  1. Source: Department of State, Central Files, 974.7301/9–3057. Confidential. Drafted by Dillon.
  2. During the evening of September 26, Black and his wife dined with Kaissouni and his wife. During the conversation, Kaissouni, who impressed Black as being genuinely pro-Western and extremely anxious to prevent a further turning of the Egyptian people against the United States, emphasized the psychological impact of the blocked assets question. Kaissouni also stated that he was hesitant to raise the question with U.S. officials as any direct refusal would exacerbate the problem. Black later reported the contents of the conversation to Rountree. (Memorandum of conversation by Rountree, September 28; ibid., 398.14/9–2857)
  3. Documentation concerning interaction between the Department of State and the Compagnie Universelle du Canal Maritime de Suez is ibid., 974.7301 and ibid.,NEA/IAI Files: Lot 69 D 488, Suez Canal—The Suez Canal Company 1957.
  4. Telegram 850 from Cairo, September 28, reported that Nasser made the statement during an interview with NBC and AP correspondents. (Ibid., Central Files, 974.7301/9–2857)