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

93. Circular Telegram From the Department of State to Certain Diplomatic Missions¹

Washington, February 13, 1957—7:13 p.m.

682. Re Suez Canal. View probability Suez Canal will be opened in very near future to at least limited traffic, Dept believes it matter of urgency that interim arrangement with Egypt be sought concerning Canal traffic and tolls pending final settlement. It has been suggested that Egypt would insist upon provisions under which tolls would be “legally paid to Egypt” but that Egypt would accept conditions on disposition of tolls. UN Secretariat has been holding conversations this subject in New York with delegations France Norway United Kingdom and US. Representative of SYG has expressed hope these four countries could quickly reach agreement so that SYG could then negotiate with Egypt.²

In US view, which has been communicated SYG, a satisfactory interim arrangement would include following elements:

(1) Egypt would designate a neutral and impartial agency to receive, hold and dispose of all Canal tolls. This would be designed to meet Egyptian requirement under agreement negotiated by SYG with Egypt and representatives of user nations that tolls be “legally paid to Egypt”. Identity of agent would have to be fixed in agreement setting up interim arrangement. International Bank for Reconstruction and Development would be agent we prefer. There are of course other possibilities including United Nations organization.

(2) Agreement would provide that agent should pay one-half of tolls to Egypt immediately to cover operating costs, or if Egypt prefers a sum sufficient to pay operating costs but not exceeding 50% of receipts. Prior to hostilities beginning at end October 1956, Egypt was receiving approximately 45% Canal tolls; remainder were being deposited in accounts of old Suez Canal Company. Agent under agreement would retain remaining portion of tolls received and keep them in a separate Suez Canal account to be disbursed later in conformity with provisions of over-all Suez Canal settlement in accordance with six principles approved by Security Council October 13, 1956 and in light exchange of letters between SYG and Fawzi October 25 and November 2. This account would meanwhile remain frozen and would not be under control of Egypt but subject terms of agreement.

(3) Agreement would provide that, from time of opening of Canal to traffic until effective date of an over-all Canal settlement, Canal would be operated in accordance with the six principles.

Dept does not believe it would serve any useful purpose to try to incorporate in interim arrangement any provisions on repayment of advances for clearing Canal. Effort to secure Egyptian agreement that Canal clearance costs shall be paid out of ordinary Canal revenues would greatly delay and very possibly frustrate conclusion of any interim arrangement at all. At same time we are not prepared to agree to inclusion of provisions placing burden of Canal clearance costs on users through surcharge on tolls. Question of repayment of advances should be taken up in negotiations for over-all settlement.

Request addressee posts discuss in their discretion problem of interim arrangement for Suez Canal with appropriate FonOff officials explaining US views as indicated above. FYL We hope secure agreement in next day or two with France Norway and United Kingdom and inform SYG of jointly agreed position so that he may resume negotiations with Egypt on urgent basis. Dept will inform USUN soon as British Embassy has received clearance from London. We understand France and Norway are in agreement with US position but we are likewise awaiting French formal approval. End FYI.

SYG representative has suggested agreement on interim arrangement might possibly be endorsed by United Nations General Assembly after it is agreed to by Egypt France Norway United Kingdom and United States. Dept will wish to consider further whether such procedure is necessary and desirable.

Dulles

1. Source: Department of State, Central Files, 974.7301/2–1357. Confidential. Drafted and approved by Meeker who signed for Dulles. Sent to Canberra, Copenhagen, Paris, Bonn, Tehran, Rome, The Hague, Oslo, Lisbon, Madrid, Stockholm, Ankara, and London; repeated to Addis Ababa, Tokyo, Islamabad, and USUN.
2. As instructed in Gadel 138 (Document 71), Lodge discussed Hammarskjöld’s working paper with Cordier on February 11. A summary of the conversation was transmitted to the Department of State in Delga 711, February 11. (Department of State, Central Files, 974.7301/2–1157)