Memorandum, State Department Summary of Telegrams

OFFICE OF THE SECRETARY OF STATE WASHINGTON DECLASSIFIED State Dept. Guidelines, March 6, 1982 E.O. 12065, Sec. 3-402 October 31, 1952 9-10-85 By DEB SECRET SEGURITY INFORMATION SUMMARY OF TELEGRAMS EGYPT Our Embassies in London and Cairo have informed us concerning instructions to the British Ambassador to Egypt on three outstanding UK-Egyptian problems -- the release of five million pounds rom the sterling balances, delivery of fifteen jet aircraft ordered by Egypt, and resumption of purchases of Egyptian cotton. The British Ambassador, Stevenson, had pointed out that un- less satisfactory solutions can be reached on these matters it would be impossible to lay the groundwork for any serious discussion of the Anglo-Egyptian defense problem. As a result, agreement is now re- ported to have been reached with the Minister of Finance on release of the much-needed sterling to Egypt. The Foreign Office has in- formed the Ambassador that Britain's failure to enter the cotton market is due to purely economic factors. The British Government fears it would be unable to defend in Parliament the release of the jet planes without Egyptian public acknowledgement of its intention to pay compensation for British lives lost in the January 26 riots. The British Ambassador in Cairo has been instructed to raise the matter with Prime Minister Naguib, suggesting the compensation should not be less than 200 pounds for the British claims, plus $100,000 Canadian dollars. If Naguib makes a satisfactory public statement, the UK Ambassador is authorized to tell him the UK will release the fifteen jet planes. In the circum- stances, Embassy London recommends we withhold action on release of police equipment to Egypt for awhile longer. IRAN In a general estimate of the Iranian situation, on the occasion of the break in diplomatic relations with the UK, our Embassy in Tehran is impressed with the fact that events since the accessions of Dr. Mosadeq's second National Front Govern- ment show a real political and social revolution is in progress. They SECRET SECURITY INFORMATION