Foreign Relations of the United States, 1955–1957, Suez Crisis, July 26–December 31, 1956, Volume XVI

169. Report Prepared in the Executive Secretariat of the Department of State¹

Washington, September 4, 1956.

SUMMARY OF DEVELOPMENTS IN SUEZ SITUATION

Suez Committee

Prior to the movement of the Suez Committee to Cairo, a series of exchanges took place between the Department and Under Secretary Henderson regarding the US positions. Henderson stated the Committee’s understanding that it was not called upon to negotiate on the question of compensation to the Suez Canal Company.² In reply, we told Henderson³ that the Secretary has said, although there is a close relationship between the disposition of the company’s assets and the proposed final settlement by convention, we should not at this time attempt to take a final decision on this aspect of the problem.

We responded to Henderson’s suggestions for practical implementation of the five-power proposals by recommending changes and comments. Most of these related to our thinking with regard to the operation of the canal system by a new Suez Canal Board, but we also suggested a strengthening of the section relating to sanctions which may be taken against any party which interferes with the use or operation of the canal.⁴ We hold it important that immediate resort to the UN can be taken in such an instance, even in the face of a Soviet veto.

The Committee traveled to Cairo over the week-end and had its initial meetings with President Nasser yesterday. Henderson reported⁵ that the meeting, which was devoted only to procedural matters, was cordial and apparently successful in creating a good atmosphere for the talks.

At the first meeting, Menzies gave Nasser an aide-mémoire⁶ which was intended to set forth the atmosphere of the London Conference on Suez and of the Committee discussions since that time. Attached to the aide-mémoire was the 18–power statement.

Menzies expressed the thought to Nasser that the Committee’s viewpoint, and that of the Egyptian Government, might be presented at successive meetings. He stressed, however, that while a vigorous exchange of views might ensue after Nasser had given the Egyptian position, the Committee would speak always in a friendly spirit. Menzies mentioned that at a later stage the Committee might work out with Egypt an agreed document, perhaps in the form of heads of agreement. He said that the Committee was not empowered to negotiate but only to report back to its principals Nasser’s ideas on the proposals it would advance.

Henderson states that Nasser, while obviously nervous and ill—at-ease, successfully reciprocated the friendly approach by Menzies. Nasser spoke very briefly, saying that no “hostile arguments” would be advanced from the Egyptian side. He suggested that meetings be flexible without prior determination of the exact course to be followed after the initial presentations. Nasser also stated his preference for one meeting a day at the Committee’s convenience, remarking that he was occupied by other matters with Egypt being obliged to “overcome economic sanctions” and “keep an hourly watch on military preparations in the Mediterranean”.

On Monday evening, the Committee’s first substantive meeting with Nasser took place.⁷ The informal friendly atmosphere was maintained during the course of the one-hour meeting, which was taken up almost entirely by Menzies in explaining the Committee’s proposals. Henderson indicates that Menzies presentation was admirable and that he showed consummate tact in presenting the more unpalatable passages.

Menzies advanced the International Bank as the illustration of the type of “institutional arrangement” which might be resorted to in operating the canal. While emphasizing the respect of the user nations for Egypt’s sovereignty, Menzies stated that they also had a stake in the canal, which he was sure Egypt would not wish to ignore. With all due respect to Egypt, Menzies said there would be a diminution in international confidence if any subsequent government of Egypt could use the institutional arrangement for the operation of the canal as a political instrument.

Following the meeting Menzies met alone with Nasser for about 15 minutes.⁸ He informed Committee members later that he wished to clarify certain points and in particular he thought that Nasser should know that the London Conference did not consider the use of armed force. The purpose of this Committee, Menzies told Nasser, was also to seek a peaceful solution.

British and French Positions

[Here follow a summary of the special instructions sent at the direction of President Eisenhower on September 2 to London, Paris, and other diplomatic missions, Document 160; the responses received from Paris in telegrams 1050 and 1054, Documents 162 and 164; and the response received from London in telegram 1270, Document 165.]

Operation of Canal

An Egyptian Exchange Control Circular issued on August 30 requires that Suez Canal dues be paid in Egypt in Egyptian pounds and that the shipping companies establish accounts for this purpose. To feed these accounts, the Exchange Control Office has authorized for the time being the purchase of local currency against blocked sterling or francs. As sterling or franc disbursements from blocked accounts will be credited to the Egyptian Government in London or Paris, the effect of this action is to deprive the Suez Canal Company of the canal fees.

The Department has informed Paris, London and Cairo⁹ that there have been virtually no inquiries from US citizens interested in jobs as Suez pilots. We plan to stress the uncertainties of employment conditions and the state of tension prevailing in the area if such inquiries are forthcoming. However, because of our desire to avoid any accusation that the US is contributing to the breakdown of Canal operations, and our preference that any new pilots be hired from the West rather than Iron Curtain countries, we do not plan to take any official action against individuals who might wish to accept Suez jobs.

1. Source: Eisenhower Library, Whitman File, International File. Top Secret; Eyes Only for Designated Recipient. The source text is initialed “DE.”

   On September 4, Hoover forwarded this report to Goodpaster under cover of a memorandum which reads: “I thought it would be helpful for you to have each day for use with the President a brief summary of the most important cables received and despatched on the Suez situation. I also plan to send such summaries on an ‘Eyes Only’ basis to the following: Treasury—Secretary Humphrey; Defense—Secretary Wilson; White House—Mr. William Jackson; JCS—Admiral Radford; ODM—Dr. Flemming; CIA—General Cabell. A copy of the first of these summaries is enclosed. Subsequent summaries should be shorter than this first summary which covers the cable traffic over the holiday weekend [Labor Day, September 1–3].” (Department of State, Central Files, 974.7301/9–456)

   Between September 4 and November 1, 41 of these reports, all entitled “Summary of Developments in Suez Situation” were forwarded to the White House for Goodpaster’s use in briefing President Eisenhower. Copies of the report were also sent to the individuals mentioned above. The series was officially discontinued as of November 5 “in view of the changed Middle East situation.” (Memorandum from Howe to William Jackson, November 5; ibid., 974.7301/11–556) The reports were prepared by the Reports and Operations Staff of the Executive Secretariat of the Department of State. They are filed in the Eisenhower Library, Whitman File, International File under a covering sheet entitled “Special Suez Summary”.

2. Reported in telegram 1243 from London, August 31, not printed. (Department of State, Central Files, 974.7301/8–3156)
3. The Department’s response was sent to Henderson in Cairo in telegram 607. (Ibid.) In a letter dated August 22, Foreign Minister Pineau queried Secretary Dulles as to the U.S. position on the compensation question. (Letter from Pineau to Dulles; ibid., 974.7301/8–2256) Dulles responded on August 29 along the lines indicated here. (Letter from Dulles to Pineau; ibid., Phleger Files: Lot 58 D 517, Suez Canal—Special File of Papers Mar–Oct 1956 (H. Phleger)) None of these documents is printed.
4. Henderson forwarded to the Department of State a list of ideas on how the Eighteen-Power Proposal might be implemented in telegram 1144 from London, August 29. (Ibid., Central Files, 974.7301/8–2956) The Department transmitted its comments on these ideas to Henderson in telegram 1548 to London, August 31 (ibid.), and in telegram 657 to Cairo, September 5 (Ibid., 974.7301/9–156).
5. Henderson reported on the Suez Committee’s initial meeting with Nasser, which began at noon September 3, in telegram 570 from Cairo, September 3. (Ibid., 974.7301/9–356)
6. The text of the aide-mémoire was transmitted to the Department of State in telegram 569 from Cairo, September 3 (ibid.) and is printed in The Suez Canal Problem, July 26–September 22, 1956, pp. 306–309. Exchanges between Henderson and the Department of State concerning the drafting of the document are in Department of State, Central File 974.7301.
7. The meeting took place at 7 p.m. in Cairo September 3. Henderson’s report is in telegram 575, September 3. (Ibid., 974.7301/9–356) A copy of this telegram in the Eisenhower Library, Whitman File, Dulles–Herter Series, is initialed by Eisenhower.
8. Henderson conveyed Menzies’ account of the private meeting in telegram 575 from Cairo, September 3, as follows: “Stories had been circulating that one of chief results of London Conference was removal of danger of resort to armed force in obtaining solution of Canal problem. He thought it only fair to let Nasser know that Conference did not consider matter use armed force. Purpose of Conference had been to try to find peaceful solution. Although this committee did not represent Conference, it represented eighteen powers present at Conference and its purpose also was to seek peaceful solution. In certain countries which had major interest in Canal, particularly in Great Britain and France, feeling still very high. Although it was devoutly to be hoped that peaceful solution could be found, nevertheless it was impossible to give assurances that failing peaceful solution no force would be applied. If he were representing the British and French Governments, he could not make such statement without giving impression that he engaging in threats. He wished it understood no threat was implied. It was purpose of committee to indicate what might happen if peaceful solution could not be found.” (Department of State, Central Files, 974.7301/9–356)
9. In telegram 825 to Paris, September 1, repeated to London and Cairo. (Ibid.)