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

370. Department of State Position Paper¹

Washington, September 9, 1957.

SD/A/C.1/473

REPAYMENT OF ADVANCES FOR CLEARANCE OF THE SUEZ CANAL²

(Committee One—Item 5a)³

The Problem

At the end of last December, the Secretary General, mindful of the serious consequences that prolonged closure of the Suez Canal might lead to, made a special appeal to ten countries, including the United States, about the possibility of raising the necessary cash in order to proceed with getting the Canal cleared by contract with private firms. This action was taken pursuant to General Assembly resolution 411 of November 24, 1956 [by the General Assembly],⁴ as well as to a request by the Government of Egypt to the United Nations for assistance in the matter. No countries were approached which were directly involved in the dispute. The Secretary General let it be known that a plan would eventually be worked out for making repayment. Accordingly, the United States advanced $5 million, with the further understanding that every effort would be made to have this amount matched. Actually, a sum of about $11.2 million was raised, and the total cost, instead of being in excess of $20 million, as estimated, is less than $10 million. What, now, should be the United States position with regard to repayment of these advances?

United States Position

1. The United States should let it clearly be known that it expects that the sums advanced should be eventually repaid.

2. The United States should support a politically feasible plan calling for repayment through a surcharge on the tolls, provided it is made without prejudice to any question regarding ultimate legal responsibility for blockage of the Canal and clearance costs.

3. The United States should support submission to the General Assembly by the Secretary General of a plan designed to cover the repayment of advances according to (1) and (2). It should seek to avoid, by such means as are appropriate, having the Assembly get involved in a serious political rift which could embrace questions of claims, war damages, compensation, and responsibility. For this reason, it should take the position that the United Nations is obligated in the first instance to repay the advances made by the original group approached by the Secretary General. Our objective should be to isolate this issue in this way in order not only to avoid serious political difficulty but to assure repayment to the original group making the advances.

Comments

Those countries which reacted favorably to the Secretary General’s special appeal are the United States, Norway, Germany, Canada, Denmark, Italy, Australia, Sweden and Holland. (Belgium was also approached, but did not react favorably.) The Secretary General is committed to seeking means for making repayment. Further, several of the legislatures of the countries making the advances clearly indicated that repayment was expected. Nevertheless, there is the possibility of a move to have the advances written off. The United States should make it clear, therefore, when appropriate, that it expects that repayment will eventually be made.

The rationale of the surcharge plan is to devise a politically acceptable method for obtaining repayment. This implies a plan which, if it does not answer the problem of who is to blame, at least avoids the issue. A temporary charge would be placed on all shipping regardless of origin, and the extra cost presumably passed on to the consumers. The tolls would not be raised, and the surcharge would be eliminated once the sums advanced were recovered. The plan must, as noted, be without prejudice to legal responsibility, but this, of course, is the whole purpose of the surcharge proposal in the first place.

Obviously, some form of Egyptian cooperation is necessary for the plan to be a success, purely from a mechanical point of view. Further, the cooperation of India is also necessary. Without such cooperation, there would be grave danger that the plan would in practice not apply to all shipping, and it is important to the success of such a plan that it apply to all shipping, at least to shipping other than merely that of the Suez Canal Users Association nations. Obtaining Egyptian cooperation might well require allowing Egypt to play some role. This should be kept as small as possible, and, whatever Egypt does, it should be made clear that she acts, not on her own, but as a United Nations agent. Furthermore, the United Nations should have full right to examine the activities of whatever entity is finally appointed to collect the surcharge on its behalf, and to audit all pertinent accounts. It is not to be excluded that, with proper handling, use of Egypt could possibly serve to give the United Nations more entry into the Canal affairs, rather than to strengthen Egyptian management control. It is to be stressed, however, that it would be unacceptable to the United States for Egypt to “cooperate” with the surcharge plan to the point of blocking shipping, even if this were done alone in the name of the United Nations. Such action would be illegal since the United Nations does not have the legal authority to impose a charge on private shipping for any purpose. Further, a most dangerous precedent would be set. As noted below, the effectiveness of a surcharge plan recommended by the United Nations must be based on the support of public opinion and by a broad segment of the membership.

Recently, the United Kingdom and France have taken active interest in the matter. These countries, since they were directly involved in the dispute, were not approached by the Secretary General for a monetary advance at the time of the special appeal addressed by the latter to ten nations. They have, however, submitted claims to the United Nations for work done both prior to the United Nations take-over and subsequent to it. These claims amount to approximately $3,500,000. The Secretary General has replied that he intends to submit the matter to the General Assembly for decision. The United States wishes to reserve judgment on the question until an opportunity will have been had to examine the claims in detail and to review the general United Nations attitude toward them. At such a time, an addendum to this position will be formulated and submitted.

Some countries have suggested that the advances be written off. This would of course eliminate all possibility of eventual repayment. Accordingly, the United States position is fully opposed to such a suggestion. Other countries have proposed that the costs be covered by United Nations assessment in accordance with the regular assessment scale. United States objection to the assessment plan is based mainly on the belief that such a plan could not possibly receive adequate United Nations support, if for no other reason than the large sum involved. The United Nations budget is approximately $50 million. This year the United Nations will already be faced with the rather overwhelming problem of raising an additional $40 million to finance its Emergency Force (UNEF).

General Assembly rather than Security Council approval of a surcharge plan would be desirable, not only because two of the several parties concerned are not Security Council members, but also because the plan, to be successful, must enjoy broad United Nations support and, in fact, a broad mandate. Obviously, the mandate of merely the creditor nations is not adequate. A final consideration is the fact that the surcharge plan is fundamentally a voluntary arrangement. It is therefore necessary to obtain broad General Assembly endorsement.

1. Source: Department of State, IO Files: Lot 71 D 440, PP 12th GA Committees 1–6. Limited Official Use. Prepared for the use of the U.S. Delegation to the 12th Regular Session of the U.N. General Assembly, which opened in New York on September 17.
2. Documentation concerning this subject is ibid., Central Files 974.7301.
3. It would seem that this item would be more appropriately a Committee V matter. [Footnote in the source text.]
4. Brackets in the source text.