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

412. Telegram From the Department of State to the Embassy in the United Kingdom¹

Washington, November 26, 1957—1:44 p.m.

3873. Deptel 3780.²

1. British Embassy recently gave Department for comment Foreign Office assessment on “present position of Colonel Nasser’s government.”³ Main thesis of assessment was that since Nasser likely to remain in power for some time to come, consideration had to be given to basis of Western relations with him. Foreign Office paper concluded that attempt should be made to create “situation in which Egypt was regarded as nothing more than unfriendly neutral, rather than risk pushing her further into Soviet embrace by persistent antagonism.” Assessment appeared principally to be rationale for UK-Egyptian agreement “resolving British financial interests and commercial property in Egypt, current trade and Egypt’s sterling balance,” and including resumption limited diplomatic relations.

2. Department handed British Embassy its comment on November 25. Main burden was that fruitful relations between US and Egypt were not possible as long as GOE attitude toward USSR and other NE states remained unchanged; US was ready, however, to establish more normal relations with Egypt if Egypt moved to more truly neutral position; we understood UK desire to regain control of its interests in Egypt as well as to obtain compensation for Egyptianized properties but would prefer that any significant reduction of Western pressures be in response to convincing indications that Nasser is becoming aware of the dangers involved in close association with the Soviet Union. We commented that unless UK agreement with Egypt extracted substantial concessions from Nasser, “it might be better that no agreement be concluded.” We believed effect of moves toward Egypt upon friendly Arab states must be kept very much in mind.

3. In giving comments to British Embassy, Department stressed problem which US would face regarding Egyptian blocked dollars if UK released most of Egyptian blocked sterling. We recalled our position was to unblock dollars when agreement or substantial progress toward agreement reached between Egypt and Canal Company. We inquired whether would be feasible that certain portion of sterling to be unblocked be held in reserve pending “agreement or substantial progress toward agreement” between Egypt and Canal Company, but British Embassy official expressed doubt whether this could be injected into Rome talks at this date. He stated his understanding that it was UK intention not release any sterling as result current talks until “satisfactory progress” toward settlement problem compensation Canal Company made. We made clear our view such progress not yet evident.

4. Text Foreign Office assessment and Department’s comments being air-pouched.

Dulles

1. Source: Department of State, Central Files, 774.00/11–2657. Secret. Drafted by Rockwell and Stabler and approved by Rockwell who signed for Dulles. Repeated to Cairo and Rome.
2. Telegram 3780, November 22, advised the Embassy in London that it would be desirable to discuss with officials from the British Embassy in Washington the possible effects which an Anglo-Egyptian financial agreement might have both on the U.S. position in the area and on the attitude of friendly Arab states. (Ibid., 641.74231/11–1957)
3. The texts of the Foreign Office’s assessment and the Department of State’s response to it, neither printed, are ibid., 774.00/11–2157.