89. Memorandum of a Conversation, Foreign Office, London, August 28, 1959, 4:30 p.m.1
PARTICIPANTS
- United States
- Secretary of State
- Ambassador Whitney
- Mr. Gates
- Mr. Merchant
- Mr. Irwin
- Mr. Berding
- Mr. White
- Mr. McBride
- Mr. Burdett
- United Kingdom
- Foreign Secretary Lloyd
- The Rt. Hon. David Ormsby-Gore
- Ambassador Caccia
- Sir Richard Powell
- Sir Frederick Hoyer Millar
- Sir Patrick Dean
- Mr. CP. Hope
- Mr. J.G.S. Beith
- Mr. D.S. Laskey
- Mr. K.M. Wilford
SUBJECT
- IBRD Loan to Egypt and Israel Transit of Suez Canal
Mr. Lloyd raised the question of Israel transit of the Suez Canal saying the Israelis appeared to have three choices: (1) to throw in the sponge to Nasser; (2) to go to war; (3) to appeal to the UN. The last appeared most likely. However, if Israel went to the Security Council it could not expect much help. Israel must also realize that a General Assembly debate would not result in a satisfactory resolution. Perhaps Israel would ventilate the matter in its opening speech at the General Assembly. Mr. Lloyd hoped the UK would speak before Israel so that he would not be obliged to start off with statements on freedom of transit. However, in a subsequent speech something might be said on the subject.
[Page 198]In Mr. Lloyd’s view real trouble would arise if Israeli transit of the Suez Canal came up in the UN at the time IBRD approval of a loan to the UAR for improvement of the Canal was announced. Inevitably there would be a strong public reaction in the UK. The UK would be asked why it was giving money to Nasser when he was behaving badly on the transit issue. Mr. Lloyd assumed that there would also be a reaction in the United States fostered by the Zionist press. The US and UK would be placed in an almost untenable position.
The Secretary stated that he was not up to date on the present status of this matter. At his request Mr. Burdett explained that the US believed it would be politically inadvisable for the Bank to attach to a loan conditions about the Israel transit issue. Except for the question of Israeli transit the UAR had been behaving satisfactorily in its operation of the Canal. The political issue of Israeli transit might perhaps best be handled by the UN. Mr. Herter said he doubted the question of transit could be dealt with effectively by the UN. Israel is also at fault on the Palestine problem and this of course would be brought out in any UN discussion.
Mr. Lloyd continued that the last thing the UK wanted was to give anyone the impression that it was trying to block a loan to Egypt for Suez Canal improvement. This would run completely contrary to UK efforts to improve relations with the UAR. He rather agreed with Mr. Black that it would be a mistake to attach specific conditions to a loan. Perhaps there could be some general statement by Egypt with respect to the Constantinople Convention. What worried him was that announcement of loan and debate on Israeli transit of the Canal at the UN might occur at the same time.
The Secretary commented that in general Egypt seemed to be living up to the Suez Canal Convention. Egypt justified its stand on Israeli transit by the argument that a state of war existed with Israel. Mr. Lloyd remarked that when Egypt took action, it was justified by the claim that “a state of belligerency” existed, but that when the Israelis so acted, it was “aggression.” Mr. Burdett mentioned that Israel might be persuaded to give the “practical” arrangements worked out by Mr. Hammarskjold a trial run. Mr. Lloyd said this would be difficult in view of the public rejection of the Egyptian proposals by the Israeli Foreign Minister.
Mr. Lloyd expressed the opinion that we might be heading towards trouble over the Gulf of Aqaba. He said that if the Egyptians blockaded Aqaba, Israel would go to war. The Secretary said he was more worried over action that Saudi Arabia might take. It would be easy to place guns at the entrance of the Gulf and fire on Israel shipping. Mr. Lloyd thought that in this case also Israel would fight. [Page 199] The Secretary expressed doubt. He added that trouble over Aqaba would place the US in a most difficult position since it has taken the position that the Gulf comprises international waters.
Referring to the IBRD loan, Mr. Herter suggested that if a rumpus arose at the UN at the time the loan was being considered, it might be possible to get the Bank to postpone a decision. However, Egypt might press for conclusion of the agreement. In response to a question Mr. Burdett said our latest information was that the loan might come before the IBRD Board in September. Mr. Rucinski was completing technical negotiations in Cairo. Egypt had announced that agreement had been reached but the IBRD had countered that the statement was premature. Mr. Burdett said he understood Mr. Kaissouni was expected in the United States in September at which time he might press for conclusion of the loan agreement.
Mr. Lloyd alleged that handling this problem with the IBRD was “your baby.” The Secretary rejoined that it was a joint problem. Mr. Lloyd inquired about the attitude of France but no definite information was available at the meeting.
Mr. Lloyd again asked where the loan now stood in the Bank. He had understood from Mr. Black that the Bank would not extend the loan prior to a solution of the Inge Toft case. Mr. Lloyd inquired whether it would be possible to obtain from the Bank a precise timetable of the handling of the loan. Mr. Herter said he thought this could easily be done and undertook to do so. He added that discussions with the IBRD of the connection between the loan and Israel transit of the Canal was a delicate matter which might be handled best by private talks with Mr. Black rather than through telegraphic exchanges.
The Secretary asked Mr. Lloyd how the UK would vote on the loan when it came before the IBRD Board. Mr. Lloyd replied that he could not give an answer at this stage. It would be disastrous to have to vote negatively when the UK was trying to coach Nasser back to normal relations. It would be better if the Bank decision were not taken in September.
- Source: Department of State, Conference Files: Lot 64 D 560, CF 1449. Secret. Drafted by White and Burdett and cleared with Merchant. A summary of the conversation was transmitted to the Department of State in Secto 24, August 29. (Ibid., 886B.10/8–2959) Secretary Herter accompanied President Eisenhower on his visit to Paris, Bonn, and London, August 26–September 7.↩