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

385. Telegram From the Department of State to the Mission at the United Nations¹

Washington, October 16, 1957—9:06 p.m.

Gadel 48. Suez Canal Clearance. Delga 124.² Secretary General’s draft report acceptable to Department. Believe however surcharge not in excess three percent preferable. Smaller percentage would make arrangement more palatable and might also permit in some cases absorption extra cost without rise in prices. If majority favor five percent US would of course concur.

In advising Secretary-General Department’s acceptance, suggest you note following:

1. Department believes Secretary General should make every effort use United Nations as Collecting Agent.

2. Department believes adequate assurances must be obtained that surcharge will be collected without favoritism and that there will be adequate UN accounting and audit control.

3. From a tactical point of view Department of opinion best course of action is to avoid specific and formal determination at this time whether Egypt has or has not authority under UN resolution block passage non-payment surcharge and to accept resolution at face value (which certainly worded imply some sort of obligation to pay).³ Formal acknowledgement Egypt given this authority by UN not acceptable to several countries legal point of view and would lose United Kingdom support surcharge arrangement. Formal recognition Egypt given no authority block passage not acceptable some countries and would create too great temptation not to pay. On other hand, so long no such positive evidence exists that shipping will not be blocked, most likely shippers unwilling take chance risk non-passage economize extra charges equal to only three percent tolls.

FYI Department no longer opposed (Deptel 128, August 16)⁴ imposition by Government of Egypt of compulsory surcharge pursuant to recommendation UN resolution. Department does not wish make this fact known however in view general agreement UK nature of surcharge plan and settlement UK French claims issue. End FYI.⁵

Dulles

1. Source: Department of State, Central Files, 974.7301/10–757. Limited Official Use; Limit Distribution. Drafted by Waring; cleared by Dillon, Raymond, Hanes, Berry, and Robert T. Merrill of the Office of Transport and Communications in the Bureau of Economic Affairs; and approved by Dulles.

2. In Delga 124 from USUN, October 7, Lodge reported that he had received from Hammarskjöld the text of the latter’s draft report on the clearance of the Suez Canal and that the report was fairly well set except for sections on siltage and reimbursement of advances, on which Hammarskjöld sought U.S. comment. The text of the reimbursement paragraph (No. 42), as conveyed by Lodge to the Department of State, reads as follows:

   “After consideration of various possible alternatives for meeting the costs of the operation as reflected in paragraph 41 above, the Secretary General would recommend that repayment to contributor countries be effected by means of the application of a surcharge on Canal traffic under which arrangement a levy of 5 per cent on Canal tolls would be paid into a special United Nations account, the procedures to govern such payments to be negotiated with the Egyptian government. On the basis of the current level of Canal traffic, it can be estimated that by this method the costs will be reimbursed over a period of one-and-a-half to two years.” (Ibid.)

3. Loftus E. Becker and Dulles exchanged memoranda on this subject on October 9. Becker’s memorandum, with attached comments from Dillon and Wilcox, is Ibid., 974.7301/10–957. Dulles’ memorandum is Ibid., 320.5774/10–957.
4. Not printed. (Ibid., 974.7301/8–957)
5. Hammarskjöld submitted his report to the General Assembly on November 1. (U.N. doc. A/3719) Paragraph 42 embodied several changes from the original draft including the provision for a 3 percent surcharge. The General Assembly considered Hammarskjöld’s report on December 14 and adopted Resolution 1212 (XII) which authorized the Secretary-General to take the necessary steps to put into effect his recommendations for reimbursing the advances made by contributor countries. (U.N. doc. A/PV.730)