Egypt (3)

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Egypt (3)

P.M. 

Don't like giving this £15 M. immediately after urging Eisenh. to w'hold U.S. economic aid.  Read extract from his message.

A.E. 

He cdn't say this was on a par with aid.  It is their money – we owe it.  Awkward :  but clearly a different class of thing.

P.M. 

"Our" balances (viz. Egypt's) shd. be a card in our negotns.

R.A.B. 

Sorry to have to raise it now.  But under the Agreemt. this is the time of year.  Agreemt. favours us because it restricts rate of  w'drawal £180M. is total. No room for argument re the £5M.  Condns. are fulfilled :  & we must pay it unless we break internatl. agreemt. – with what effect on our credit.  That must be paid on 1/1. As to remaing. £10M., no date is specified.  In '52 we told B/E. to hedge if asked to pay :  & we didn't pay it until Apl.  But our relns. then were much stormier.  I wd. sooner pay it on 1/1:  but if Cab. prefers we can delay it as in '52.

P.M. 

If hostilities or the like occur, we cd. cancel the whole £160 or so.

R.A.B. 

Tho' some of it results fr. current trading.

P.M.

 If we break off relns., we can pinch it.  I shd. like them to know m'while in terrorem.

R.A.B. 

Transaction is betwn. central Banks.  Ordinarily wd. not involve any publicity – unless interested politicians talked about it.

A.E. 

How much harm to credit in delaying the £10 M?

R.A.B.

Dangers in other M/E. States e.g. Kuwait.

P.M. 

See tht. there must be a breach betwn. us before we cd. lay    hands on their balances.  I favour bringing the E. issue to a head.  If they accept our terms   we must take the agreemt.  But if they go on dawdling we shd. give notice tht. after prescribed time our offer lapses & we go about re-deploymt. in our own way.

A.E. 

Wd. be reasonably well received by Govt. supporters in H/C. But in M/E. am not sure tht. it wd. be to our advantage.  We shd. weigh the advantages v. carefully.

P.M. 

Gt. advantage if we kept initiative & went of our own accord.

A.E.

But you go then, w'out any right to return – no Treaty & no safeguards for Canal.  Shall I submit memo. summarising pros & cons for each course?

P.M. 

Must have an early Cabinet on this.

Al. 

Recommend skinning the base, then w'drawing as mil. opn. –     w'out prior running down of nos.

P.M.

Wdn't avoid serious loss of prestige.

P.M.

Keep back the £10 M. m'while, as in 1952.

R.A.B. 

Will be awkward to delay for more than a week or so.

Taken from C.C. 81(53) - Meeting held on 29 December 1953.