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

418. Memorandum of a Conversation Between the President of the International Bank for Reconstruction and Development (Black) and the Deputy Under Secretary of State for Economic Affairs (Dillon), Department of State, Washington, December 4, 1957¹

Washington, December 4, 1957

Mr. Black, reporting on his recent visit to Cairo, stated Nasser evidenced a much keener appreciation of Egypt’s economic and financial problems than on previous occasions. Nasser, he said, noted that Egypt was already at work on their development program, and some aspects of the Aswan Dam project. However, at no time in his conversations with Nasser or Kaissouni did either raise the question of the Bank lending funds to Egypt.² Mr. Black stated that the stories filed by Mr. Caruthers³ in the New York Times badly reported his conversations. He himself did not see Caruthers during his stay in Egypt. Ambassador Hussein, Mr. Black thought, has been working very hard during his stay in Cairo to improve relations with the US and in his opinion the Ambassador has had some success. Nasser, in Mr. Black’s opinion, wants to settle the Suez Canal problem. This he did not believe reflected a change in Nasser’s morality, but his desire to do business with the west: Nasser understands that if he is to achieve this end he must settle the Suez Canal problem. In bringing his interview with Mr. Nasser to a close Mr. Black reported he asked him what he should tell the press. Nasser stated that he should say he had been asked to act as a mediator in settlement of the Suez Canal dispute. When asked whether he should mention that the Bank would be undertaking a study of the Canal, Mr. Nasser said this should not be mentioned, since for some months now he had been critical of Mr. Black and the Bank. He did not think his sudden change in attitude would be understood.

With reference to the dispute between Egypt and the Suez Canal Company he explained he had in mind appointing a mediating team. He did not think that actual negotiations would occur until some time after the Suez Canal Company stockholders met in January and a negotiating group for the Company had been approved. In determining the make-up of the Bank’s mediation group he had asked Mr. Shoaib,⁴ who represents Egypt on the Board of the World Bank to go to Cairo to check out the acceptability of the individuals who might be appointed and to assess the climate for negotiations. Mr. Shoaib, he stated, was expected back in Washington December 4. The group which he has in mind would probably be headed up by Mr. George Wood⁵ and Mr. Iliff,⁶ if the latter, who is a British national is acceptable to Egypt; he also mentioned the inclusion within the group of a Swiss, a Dutch and an Indian national; also an American lawyer. The names of these individuals were not mentioned. Mr. Black explained that this group would explore the problem; would visit Cairo and Paris and would identify the difficulties in effecting settlement.

Mr. Black stated that on Friday of last week following Mr. Fawzi’s return to New York he explained to him the action which he was taking and asked Mr. Fawzi for his views on the acceptability of a Britisher in the mediating group. Mr. Fawzi stated he found no objection to the inclusion of Mr. Iliff. Mr. Fawzi also reported very favorably on Mr. Black’s visit to Cairo. He also asked Mr. Black for his views on what he should tell Mr. Pineau with whom he was meeting Friday afternoon. Mr. Black reported he suggested that he might comment on Mr. Black’s recent visit to Cairo and efforts to mediate the dispute and express Egypt’s desire to see an early settlement of the problem. Mr. Fawzi then asked Mr. Black if he thought he should see Mr. Dillon. He explained that he would not wish to ask for an appointment but he would be willing to come to Washington to talk with the Secretary. Mr. Black reported that he would be willing to scout around in Washington to find out what the attitude might be on a meeting between the Secretary and Mr. Fawzi. Mr. Fawzi’s queries were reported to Mr. Allen Dulles who in turn raised the question with Mr. Rountree. Mr. Dillon confirmed that the subject had come up at the Secretary’s staff meeting and it was agreed that a meeting between the Secretary and Mr. Fawzi would be a good thing. Whereupon Mr. Black said if Mr. Dillon wished he would be willing to call Mr. Fawzi and convey this information to him. Mr. Dillon said that he would discuss the matter with the Secretary and inform Mr. Black at a later date as to whether he should call Mr. Fawzi. In regard to the study of the Suez Canal traffic, Mr. Black indicated he was looking to Mr. Wheeler to head up the Bank’s study group. He said that a considerable amount of work has already been done by the Ebasco⁷ people and that one of the Bank’s members has been absorbing all possible information pertaining to the Canal. He said he planned to see Mr. Younes Thursday morning and he presumed that Mr. Younes would want to discuss the Bank’s plans for this study.

Referring to recent releases from the Egyptian blocked accounts to the Export-Import Bank, Mr. Black asked whether the money due from Egypt to the International Finance Corporation could be handled by drawing on this account. Mr. Dillon stated he thought obligations due U.S. institutions were of a somewhat different nature, and our recent action in regard to funds due the Export-Import Bank did not establish a precedent which would justify authorizing a release to the IFC. However, if any further releases were to be considered he promised to give consideration to the request of the IFC.

1. Source: Department of State, Central Files, 398.14/12-457. Official Use Only. Drafted by Shaw.
2. Ambassador Hare transmitted to the Department of State reports of Black’s conversations with Nasser and Kaissouni in telegram 1174, November 9, and telegram 1176, November 11. (Ibid., 398.14/11–957 and 398.14/11–1157, respectively)
3. Osgood Caruthers.
4. Mohamed Shoaib, Pakistani banker, served as an executive director of the International Bank for Reconstruction and Development, representing the interests of Pakistan, Iran, Iraq, Syria, Lebanon, Jordan, Egypt, and Ethiopia.
5. An American banker.
6. William A. Iliff, Vice President of the IBRD.
7. Reference is to Ebasco Service, Inc., a U.S.-based firm of consulting engineers. Prior to nationalization, the Suez Canal Company had negotiated a contract with Ebasco for a technical study of the work necessary to handle ships growing constantly larger.