CAB129-78 — Page 62

SECRET

ASWAN HIGH DAM

Memorandum by Officials

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On 25th October the Cabinet agreed that, before embarking on an independent course of action in regard to the financing of the High Dam at Aswan, we should have further conversations both with the International Bank and with the United States Administration and should explore the possibility of their giving financial support for the construction of the Dam by the Anglo-French-German Consortium (C, M. (55) 37th Conclusions, Minute 3).

20 The outcome of the conversations which have taken place with the Bank and the United States Government is set out in Washington telegrams Nos. 2584, 2595, 2596 and 2605. Apart from some statistical differences between the American estimates of the cost of the project and our own, which are being examined as a matter of urgency, the position which emerges is as follows:-

3

(i)

(ii)

Both the United States Administration and Mr. Black,

the President of the International Bank, insist that if the Bank is to make a loan the contract must be put out to international tender in one form or another; and

The United States Administration is now convinced that

the only satisfactory solution to the problem of finance is for the International Bank to make a loan equivalent to 50 per cent of the foreign exchange cost of the project and for the United States and United Kingdom Governments to provide by grant aid the remaining 50 per cent. Whether the American aid were provided from Congressional appropriation or by way of an Export/Import Bank Loan, the United States Government have let it be known that it would have to be expended on goods and services from the United States; this would mean that the basis of the existing Consortium, if it were to secure the contract, would have to be widened to embrace a number of United States firms, presumably up to 25 per cent at least of the total membership. Alternatively, at the very minimum a large proportion of the sub- contracting work and the supply of equipment would have to be in American hands,

(iii) H. M. Ambassador has expressed the view that a decision

to authorise the immediate signature of a contract by the Consortium would effectively preclude any participation by either the United States Govern- ment or the International Bank,

Three alternative courses seem open to Her Majesty's Government,

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