CAB129-78 — Page 60

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(THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT)

SECRET

C.P.(55) 168

1st November, 1955

CABINET

COPY NO.

ASWAN HIGH DAM

Note by the Chancellor of the Exchequer

I attach for the consideration of my colleagues a memorandum which has been prepared by officials on the subject of the Aswan High Dam.

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As will be seen, this memorandum sets out three possible

alternative courses of action, namely. -

3a

P

(a) to accept the risks of financing the project ourselves

with the co-operation of the French and German Governments;

(b) to encourage the Egyptian Government to seek a

loan from the International Bank for Reconstruction and Development from which the project would be financed without the need for any further assistance;

(c) that, in addition to a loan from the International Bank, the Egyptian Government should seek either grant aid or an Export/Import Bank Loan from the United States Administration, The United Kingdom GovernTM ment would have to make it clear that they could not themselves give any grant aid.

The memorandum by officials recommends that we should reject the first of these courses. In view of our balance of payments position I think we should be unwise to undertake to under-pin the Egyptian economy for the next 15 years or so, as described in paragraphs 4-7 of the memo“ randum that is, without the help of the United States Government at least behind us, I feel that this view is right even if we have the help of the French and German Governments, The latest reports from our Ambassador in Cairo show that the Egyptian Government seem to recognise that it would be prudent for them to seek a loan from the International Bank.

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The memorandum by officials recommends that we should prefer course (b) if it in fact proves practicable, and that we should explore this possibility further with Mr. Black (President of the International Bank) through Sir Roger Makins, our Ambassador in Washington, and Lord Harcourt, the United Kingdom Executive Director of the International Bank, The officials recognise that it is possible that the Bank would refuse to grant a loan unless the project has also the economic support of the United States Government. This is the view of the United States

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