Nasser's Revenge

"I look at Americans and say: may you choke to death on your fury."

So cried Egypt's Dictator Gamal Abdel Nasser early last week as he presided over the dedication of a new Cairo refinery. While Soviet Ambassador to Egypt Evgeny Kiselev nodded approvingly in the audience, Nasser spluttered his anger at the U.S. withdrawal of its offer to build the billion-dollar Aswan Dam, and branded as "lies" the U.S. explanation that it acted because of the shakiness of the Egyptian economy (TIME, July 30). Choking on his own fury. Nasser promised: "Egypt is going ahead with the High Dam."

But how? Nasser had already pledged his country's cotton crop for years to come to pay for his Communist arms. Moscow last week made it plain that it was not willing to finance the dam, even though it had let Nasser blackmail the West with the threat of a Soviet counteroffer. Now Nasser stood exposed. Even his brother Arabs privately agreed that he had asked for the trouble he was in. All this was vexing to 38-year-old Gamal Abdel Nasser, who is a proud man.

Two days later, on the fourth anniversary of the dethronement of ex-King Farouk, the West got a jolting reminder that Nasser has a nasty bite as well as a loud bark. Stridently haranguing a crowd of more than 150,000 with semi-hysteria reminiscent of Hitler, Nasser shouted denunciation of Israel, Britain and the U.S. for an hour and a half, then, with apparent irrelevance, turned his fire on World Bank Director Eugene Black.

"Whenever Black spoke." said Nasser. "I went back in my memory to the year 1854, when Ferdinand de Lesseps arrived in Egypt and told the Khedive: 'We want to dig the Suez Canal. The Suez Canal will bring you untold benefit.' " Egypt put up $40 million to help build the canal, supplied forced labor to dig it, and "120,000 workers died digging the canal . . . Britain forcibly took away from us our 44% of the company's shares . . . Instead of the canal being dug for Egypt, Egypt became the property of the canal."

Then Nasser delivered his blow: "We shall build the High Dam as we desire ... The annual income of the Suez Canal is $100 million. Why not take it ourselves? In the name of the nation, the President of the Republic resolves that the World Maritime Company of the Suez Canal will be nationalized ... At this very moment some of your Egyptian brethren are taking over the Canal Company."

The crowds cheered deliriously. It did not matter to them that Nasser was wildly askew with history and simple finance. The Suez Canal was dug with a loss, not of 120,000 lives, but of a few hundred, and Britain bought Egypt's shares in the canal only after the debt-ridden Egyptian government voluntarily offered them to

Disraeli.* It would matter more to the mob that Nasser's figures were wrong: the Suez Canal's net profit last year was $30.5 million. To clear $100 million a year, Nasser would have to more than double its already-steep tolls (about $8,000 one way for a laden 16,600-ton T-2 tanker).

"We shall rely on our own strength, our own muscle, our own funds." cried Nasser.

"And it will be run by Egyptians! Egyptians! Egyptians!" But Nasser also imposed military law on the Canal Zone, and forbade any employees (including foreign technicians) to leave their jobs under threat of a long prison term.

"Act of Plunder." Until Nasser seized the Suez Canal, there were those who counseled: rebuke him but don't crush him; don't drive him into some wild revenge, or into Russia's arms, for he at heart is friendly to the West. They agreed that it was right to reject his attempted blackmail on the Aswan Dam, but wrong to needlessly humiliate Nasser by waiting until he accepted the West's dam offer before withdrawing it.

This line of argument became academic after Nasser, taking his revenge, brazenly seized the Suez Canal. "An act of plunder," cried the French government. Suez Company shares, bluest of blue chips on the Bourse, fell 21% after shareholders learned that Nasser's willingness to pay compensation was dependent on prior surrender of all the Suez Company assets.

Nasser's nationalization decree had not even a shred of legality. The concession given by Egypt in 1854 to the Suez Canal Company runs until 1968, at which time Egypt would inherit the canal. Last May, negotiating with the company over the amount of capital it was to maintain in Egypt, Nasser's government explicitly admitted the validity of the original concession. (Nasser's demand, made a year ago, that the company keep at least $28.7 million of its funds in Cairo, suggests that he had the idea of nationalization in mind for a long time -- and not just since being rebuffed over the Aswan Dam.) But for expropriated shareholders, to get a ruling on Nasser's action from the International Court of Justice at The Hague might well take a decade. Besides, Egypt said flatly that it would not recognize the right of any international body to question its seizure of the canal.

"Inadmissible & Unacceptable." The first Western reaction to Nasser's stroke was one of hot anger. Britain's Prime Minister Eden, notified during a dinner for Iraq's young King Feisal, fired off a formal protest which the Egyptians re fused to accept. HITLER ON THE NILE, cried Lord Rothermere's Daily Mail. The reason for Britain's high dudgeon was two fold. Many Tories have never got over Britain's humiliating retreat from its billion-dollar base in the Canal Zone in 1954, and any action which menaces Brit ain's oil supply menaces Britain's very existence.

France's Foreign Minister Christian Pineau just as angrily protested the canal seizure, and for good measure bluntly informed the Egyptian Ambassador to France that "the French government has noticed repeatedly that the Egyptian dictator has failed to fulfill his word of honor." including his soldier's pledge not to stir up any more trouble in Algeria.

At this point the Egyptian ambassador stomped out. declaring the French protest to be "inadmissible and unacceptable." The U.S. State Department at first seemed to take the attitude that it might be best to let Britain and France (who together own 88% of the Canal Company) fight their own battles. But after White House discussions, and long-distance conversations with John Foster Dulles in Lima, Peru, State's attitude hardened. It was Nasser himself who helped to harden it.

While the West stammered. Nasser rode in triumph from Alexandria to Cairo, getting a hero's welcome at every stop. This was his big moment: bigger than his seizure of power, his expulsion of Farouk, his kicking out the British. Brother Arab nations cheered him too. Nasser has done it again, they said. Arab politicians are apt to consider a well-delivered jab at the West a more statesmanlike act than running one's economy properly.

At Cairo station Nasser was met by a screaming crowd of 200,000 carrying banners and pictures of Nasser. As he rode from the station to his office, chanting, dancing throngs showered him with flowers, hailed him as the "Hero of Nationalization, Hero of Bandung, Hero of Brioni, the first Egyptian to rule Egypt!" Standing at last before his office window--it had taken his Cadillac an hour and a half to make what is usually a seven-minute trip--Nasser shouted his defiant answer: "The noise that we expected arose in London and Paris without any justification except imperialist reasons, the habit of sucking the blood of nations and stealing their rights. As for France and the vulgarity of the French Foreign Minister, I will say nothing. I leave it to the Algerians to give them a lesson in good manners." Then, in an ominous hint at the shape of things to come, he said: "I strongly warn the imperialist countries that their evil games will be reason for disturbing free navigation in the Suez Canal." Supplement to Sanctions. By week's end the Western powers had begun to do something besides stammer. Acting U.S.

Secretary of State Herbert Hoover Jr.

summoned the Egyptian ambassador to express U.S. shock at "the many intemperate, inaccurate and misleading statements" made by Nasser "during the past few days." Rejecting hotheaded talk that British troops should reoccupy the Canal Zone, the Eden government froze an estimated $1 billion of Egyptian assets (including the Canal Company's) in Great Britain. Defense secretaries took stock of aircraft carriers, destroyers and airborne troops available if needed. Alternate ways to avoid patronizing the Suez Canal were canvassed. The French talked of an old plan to dig a canal from Haifa to the Gulf of Aqaba, running through Israel. The big problem was Middle East oil, which supplies 70% of the European market, and accounts for half of the Suez Canal traffic. Perhaps the desert pipeline to the Mediterranean might be expanded. And new supertankers might make the long and costlier way around the Cape of Good Hope more practical (see BUSINESS).

Some form of economic sanctions was plainly in the.works. Carried far enough, it could probably come close to wrecking Egypt's economy. The U.S., for example, by dumping its surplus cotton, could ruin the world price of Egypt's only significant source of foreign exchange. The danger was that really effective sanctions would drive Egypt further into the embrace of the U.S.S.R. (Nasser is scheduled to go to Moscow this month).

In 1951, when Mohammed Mossadegh nationalized the Anglo-Iranian Oil Com pany, the Western powers, faced with a similar threat, applied economic sanctions.

In the end these sanctions had brought the overthrow of Mohammed Mossadegh.

The question at week's end was whether Nasser had so irretrievably set his course that he too would end by willing his own downfall.

* The Khedive having gone broke paying for, among other things, Giuseppe Verdi's A'ida, which he commissioned to celebrate completion of the canal.

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