Through & Around Suez

Although he seems to be losing the battle to rule the Arab world, Egypt's Colonel Nasser last week won control of what is now undeniably his, the Suez Canal.

Great Britain, the most important of his enemies, gave in and accepted Nasser's terms and rates; Egypt, in return, let Britain pay its tolls in sterling. It was a settlement as useful to hard-pressed Egypt as to Britain, for much of the Egyptian economy is intertwined with Britain's. London still holds $300 million of blocked Egyptian funds. Some time, when they get to speaking to each other again. Britain will claim that Egypt owes her more than $350 million in obligations incurred when an angry Nasser nationalized the Suez Canal Co. and "Egyptian-ized" foreign investments in Egypt, and Nasser can be expected to counter with a big bill for damages suffered in the British invasion. But until such sticky matters can be worked out, so big a maritime power as Britain could not afford to boycott the canal while others used it.

Britain's capitulation left France and Israel still defiant of Egypt, but in different ways--Israel eager to use the canal immediately, France angrily hoping to continue a Boycott for better terms. ''Little by little all our friends are walking out on us in felt slippers . . . even Britain, our comrade in misfortune last November," sighed France's L'Economie. But the show of outrage put up by France's Premier Guy Mollet had more to do with internal politics than foreign policy. French shipping interests were no more eager than the British to lose business to other nations or to "flags of convenience."

"Sooner or Later." In the midst of all the dignified swallowing of pride that was going on, Israel proclaimed that it was about to send an Israeli ship through the canal to assert its right, and Egypt just as huffily said that the ship would be stopped on the basis of Egypt's right to "self-defense." For more than a month a ship fully loaded has sat in Haifa harbor ready for the testing. For 48 hours last week there was an onrush of international tension. The U.S. announced publicly that it still supported Israel's legal position in Suez, but it has privately counseled Israel to move gradually and to establish a pattern of shipping Israeli goods in foreign bottoms through the canal before sending a ship with an Israeli flag. In the end, Israel said that "sooner or later" its ship would go through, and passions subsided.

But it was in London's Thames-side Shell-Mex House that the real drive to escape Nasser's dominance was being planned. There 30 of the world's top oil industrialists gathered at the urging of Standard Oil (N.J.) President Monroe Jackson Rathbone. They talked privately, partly because they had to be wary of defying the U.S. antitrust laws and partly because they have learned that in the Middle East their aims are sometimes best achieved by not loudly proclaiming them.

Sea to Sea. Before them lay a bold but practical proposal: to spend nearly $850 million on a new 1,000-mile-long, 40-in. pipeline from the Persian Gulf through Iraq and Turkey to the Mediterranean port of Iskenderon (formerly Alexandretta). This line would handle 800,000 barrels a day by 1960, and a second line might later be added. The new pipelines, along with those now running through Syria, could together handle far more oil than used to go through the canal. More impressive than the pipes, the world's shipyards are building nearly 300 monster tankers (over 40,000 tons) too big to pass through the 46-ft.-deep canal. By 1965 tankers would be able to haul some 4,000,000 barrels daily around the Cape of Good Hope for less per ton than shipment now costs through the canal in smaller tankers. Western Europe's total pre-crisis consumption was less than 4,000,000 -barrels a day.

The oilmen did not say that they were planning to circumvent the canal, or to bypass unreliable Syria. They were merely preparing to meet increased demands. They knew Turkey would be happy to get $20 million a year in transit royalties, and that oil-rich Iraq would like to have its oil delivery less dependent on neighboring Syria, whose blowing up of the pipelines last November cost Iraq $70 million in revenue. Noisy nationalists in Syria and Egypt are already setting up a hue and cry that "Arab oil must be shipped across Arab lands." But the oilmen would be happy to bypass unpredictable Syria: they consider Turkey an ally and a more trustworthy business partner. But Iraq's Premier Nuri asSaid must be sensitive to Arab opinion, including his own. Recently, to quiet Arab nationalists, Iraq trumpeted its opposition to any plan to "divert oil from existing pipelines," but this high-sounding declaration needs to be read twice. A pipeline across Turkey would not be a diversion but an expansion.

The basic fact about Middle East oil is that Western Europe's consumption is expected to double in the next ten years. But anyone with a pencil and paper can calculate that when the new pipelines and tankers are in operation the Suez Canal will no longer be as desperately necessary to Western Europe as it turned out to be last October. Then 60% of the oil moved through the canal; by 1965 perhaps no more than 40% of a greatly increased total will go through Suez. The loss of revenue that would otherwise be his is a price that Nasser will have to pay.

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