The Chairman
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Turning to Europe, McCloy recommended a similar de-emphasis of the military component in U.S. policy. Though suggesting that the European allies might find it prudent to equip themselves with nuclear weapons by 1960, he said that a major effort should be made to end the arms race through active exploration of “the most far-reaching proposals, including those for total disarmament—universal, enforceable and complete with international control and inspection.” He argued that Western Europe’s security could be better enhanced by building strong economies. In his most shocking departure from official wisdom, McCloy suggested that NATO offer the Soviet Union firm guarantees to recognize the boundaries and security of communist Poland and Czechoslovakia. For the first time since leaving Germany as high commissioner, he suggested that, in return for recognition of the Oder-Neisse Line, Germany might be reunified. That was not all. Peaceful trade should be revived between Eastern and Western Europe, while a broad program of cultural, educational, and personal exchanges should be implemented with the Soviet Union itself. Though McCloy said he didn’t believe long-term Soviet goals had changed, he suggested that “some very radical and important changes had taken place in Soviet methods.” (Ten days after the publication of the book and McCloy’s foreword, The New York Times published the full text of Nikita Khrushchev’s speech denouncing Stalin and his crimes.)
At the time, such unorthodox views were hotly debated in the German Bundestag and inside the editorial pages of many European newspapers. The New York Times headlined its news story on the release of the book, “Policy of Reality Urged upon West: Unit Headed by McCloy Bids Allies Meet Soviet Shifts with Flexible Outlook.”15 McCloy’s views, particularly his remarks urging a greater tolerance and flexibility toward “neutralism,” contrasted sharply with Foster Dulles’s official pronouncements. Only a couple of weeks after the release of McCloy’s essay, Dulles told an audience in Iowa that neutralism “is an immoral and shortsighted conception.”16 Such public differences with the secretary of state inevitably revived speculation in both Europe and Washington that McCloy might soon replace Foster Dulles.17
Speculations of this sort had not been confined to the possibility of a Cabinet post. The previous autumn, when Eisenhower had a heart attack, leaving in doubt whether he would run for re-election in 1956, The New York Times had added McCloy to the list of “dark-horse” candidates for the Republican nomination.18 For some time, various columnists had identified him as a member of Eisenhower’s “unofficial Cabinet,” a label McCloy fiercely disclaimed. Now, in the midst of the 1956 presidential campaign, he was branded by Drew Pearson and Fulton Lewis, Jr., as a member of the “Dump Dick” movement. Describing him as “a potent power in GOP politics,” Pearson reported in July that McCloy “has added his weight to those trying to maneuver Vice President Nixon off the ticket. . . .”19 Fulton Lewis reported that McCloy, Paul Hoffman, Lucius Clay, Bedell Smith, and Harold Stassen were all trying to get Nixon off the ticket, fearing that if he someday were to become president they would be barred from their “side door influence with the White House.” McCloy denied this charge as a “vicious misstatement” and protested in a letter to Lewis that he had never talked about the vice-presidential nomination with any of these men.20
Pearson had exaggerated when he labeled McCloy a “potent power” in Republican Party politics. McCloy had never dabbled in party politics in the manner of a Tom Dewey or a Lucius Clay. Like Eisenhower, he felt a personal distaste for the mundane aspects of party politics and was never seen at New York Republican affairs or in the back rooms of the state or national party bosses. This was not his style. Lewis was also incorrect to report that McCloy was part of any organized lobby to get Nixon off the ticket. McCloy didn’t have to operate through someone like Lucius Clay; if he had felt strongly enough about the issue, he would have gone straight to the president.
There is no record that he raised the matter with Ike in any of their private meetings. But there is no doubt that McCloy was not personally enamored of Nixon; he and Eisenhower had been angered by Nixon’s mimicry of McCarthy’s “generation-of-treason” language during the 1954 congressional campaign. Like many of his colleagues in the Council on Foreign Relations, McCloy found Nixon transparently ambitious and unsound in his political judgments. And though Pearson and Lewis missed the story at the time, the president himself was indeed quietly trying to persuade Nixon to take a Cabinet post instead of running on the ticket in 1956. Nixon firmly resisted Eisenhower’s arguments that a Cabinet post would give him better exposure and experience to run for the presidential nomination in 1960. In the end, Ike couldn’t bring himself to fire his young vice-president.21
That summer, the Middle East was drifting into war. In McCloy’s view, the road to this war had begun with a miscalculation on the part of Foster Dulles. Egypt’s Gamal Abdel Nasser had been trying to persuade the Americans—and if not the Americans then the Russians—to help finance his proposed Aswan High Dam, a project Nasser was determined to make the centerpiece of his economic-development program. For months he had been negotiating with the Americans on the financing of the dam, which was slated to cost some $500-600 million. By the spring of 1956, Nasser’s hopes for Western funding rested with the World Bank. Eugene Black had become an ardent advocate of the project, and had agreed to contribute $200 million if the United States and Britain matched that figure. In December 1955, Foster Dulles had given his approval to the scheme—but he attached certain conditions, including a pledge by the Egyptian government that it would not assume any other foreign loans without the permission of the World Bank. This Nasser regarded as an infringement on Egyptian sovereignty and a thinly veiled attempt to prevent any further purchases of Eastern-bloc arms. Still, Black was convinced he could negotiate a compromise, and left for Egypt in early 1956.
McCloy did what he could that spring to help Black push the dam project along. Black, who consulted with his old friend quite frequently on World Bank matters, argued that whoever financed the dam would essentially determine Egypt’s political orientation for the next two decades. Nasser might be difficult, he said, but he was an Arab leader the United States could work with over the long term. Nasser’s professed neutralism didn’t bother McCloy. When Black came back from his February negotiations with Nasser on the dam, McCloy arranged for Black to give Eisenhower a private briefing on the Egyptian leader. But this was one issue that Eisenhower had delegated entirely to Foster Dulles. And when Nasser, in May 1956, recognized the People’s Republic of China, Dulles was firmly convinced that Egypt, not merely neutralist, was drifting into the communist camp. On July 19,1956, he called in the Egyptian ambassador and, in a manner even Eisenhower later said was “abrupt,” withdrew the U.S. offer to help finance the dam. Black was mortified, particularly since Nasser had just agreed to accept all the terms of the U.S. offer. He later called it “the greatest disappointment of my professional life. . . .” Nasser himself was angered, and a week later announced in a three-and-a-half-hour speech to the Egyptian people that he had nationalized the Suez Canal in order to finance the construction of the High Dam. Dulles was shocked, and the British were outraged. The London Times called it “an act of international brigandage.”22
Foster Dulles had believed that, by denying Nasser the means to build his dam, he could deal the Egyptian leader a humiliating blow. He had received tentative permission from Eisenhower to develop the same kind of destabilization program used by the CIA to overthrow Arbenz in Guatemala. But it quickly became clear that Nasser’s nationalization of the Suez Canal was a bold political stroke. It galvanized pent-up nationalist emotions and made Nasser the indisputable leader of the Arab world.23
In the wake of the nationalization, the British and French signaled to Washington their readiness to use force against Egypt. Eisenhower sent Foster Dulles on two hours’ notice to London with a message designed to calm the European powers and make them understand that U.S. military forces would not support such an operation. Simultaneously, the U.S. Tre
asury ordered the assets of both the Egyptian government and the Suez Canal Company frozen. The latter had sizable accounts with Chase Manhattan Bank in both New York and London. McCloy had met the chairman of the Suez Canal Company, Jacques Georges-Picot, in New York on several occasions. The Frenchman had once briefed the Council on Foreign Relations on the company’s operations in Egypt, and McCloy was aware that Georges-Picot had talked extensively with Eugene Black about a possible World Bank loan for modernization of the canal. Now, as tensions rose, Georges-Picot occasionally called McCloy to talk about the disposition of the company’s frozen account and other aspects of the crisis.24 Between his trip to the Middle East in February and his frequent contacts with both Black and Georges-Picot, McCloy was well informed about the developing crisis.
Throughout that summer and early autumn, Foster Dulles acted as if he were the legal adviser to the French and British in their case against Nasser. By October, he had lost control of events. Behind his back, his clients (so to speak) had taken the matter out of his hands. Dulles picked up only the barest hints of the collusion between the British, French, and Israelis, who by late October had already set the date for an invasion of Egypt. Shortly before hostilities commenced, Dulles phoned McCloy in the middle of the night and asked if he had noticed any major transfers of British sterling that could signal a war. McCloy called back the next morning to say that he saw no evidence of any large financial shifts.25
Soon afterward, the Israelis launched a ground attack across the Sinai Peninsula toward the Suez Canal while the British and French bombed Port Said. Dulles was devastated by what he regarded as a betrayal of trust on the part of the British. He again phoned McCloy from Washington and had him pulled out of a meeting of the Ford Foundation trustees in order to discuss whether Israel should be restrained.26 Three days later, the secretary awoke with severe intestinal pains. Exploratory surgery discovered cancer; Dulles was to spend the next two months hospitalized. That same week, Eisenhower won a second resounding victory at the polls over Adlai Stevenson. The war crisis had killed whatever was left of Stevenson’s losing but dynamic campaign.
The New York Times immediately reported that McCloy’s name was again circulating in administration circles as Eisenhower’s favored replacement for the ailing secretary of state.27 In fact, for the next several months Eisenhower himself took charge of the crisis. He would, however, find a low-profile role for McCloy to play from New York.
Venting his anger at his European allies and Israel, Eisenhower demanded and got a cease-fire and a pledge from the tripartite aggressors to withdraw their troops from both the canal zone and the Sinai. By the time the fighting stopped, however, the canal was blocked by at least a dozen sunken vessels and two bridges. The United Nations’ secretary general, Dag Hammarskjöld, was given the task of clearing the canal. Within days, the newspapers announced that McCloy was working as an unpaid consultant for Hammarskjöld. Salvage vessels, tugs, and dredgers had to be found and brought to Egypt; in the meantime, the canal might be closed for as long as six months, a blow not only to Egypt’s economy but also to that of Western Europe, which depended for much of its oil on tankers transiting the canal. Washington thus had a strategic-economic interest in seeing the canal—which Bismarck once called “the world’s neck”—reopened as quickly as possible. Though the chairman of Chase Manhattan Bank obviously had the right contacts to raise loans for the operation, Hammarskjöld also knew that McCloy had Eisenhower’s trust and support.
In short order, McCloy got the operation moving. To start with, he hired an old friend, Lieutenant General Raymond A. Wheeler, to supervise the project on the ground in Egypt. Wheeler had once been in charge of maintenance for the Panama Canal, and McCloy had known him during the war as the man who built the Burma Road. More recently, he had persuaded Eugene Black to hire him as a consultant to the World Bank.28 “Spec” Wheeler flew out to Cairo immediately and began assemblying the necessary crews and salvage equipment to clear the canal. Within five weeks, McCloy had a financial plan put together; the major Western countries whose shipping fleets used the canal pledged to contribute $2-3 million each toward the operation. Throughout late November and December, McCloy met with Hammarskjöld and Herbert Hoover, Jr., the undersecretary of state who was running the State Department in Dulles’s absence. Shortly before Christmas, U.N. Ambassador Henry Cabot Lodge reported to Hoover, “Hammarskjöld advises me that McCloy is pulling the whole problem together as you desired, but is doing it in such a way that he does not get too far out in front and thereby make it appear that the United States is running the whole show.”29
In fact, the salvage operation involved a number of delicate political problems. Almost as soon as Wheeler got out to Egypt, he reported that the British were trying to use the salvage operation as a cover for keeping their naval force in the canal. Wheeler cabled that their goal was “how to make a withdrawal not a withdrawal.”30 Nasser, in the meantime, decreed that no salvage operation could even begin until all three invading forces were out. The British and the French were gone by the end of the year. But the Israelis held on to pieces of the Sinai until March 1957 and only retreated when Eisenhower threatened to cut off all U.S. governmental and private aid to the country.
McCloy juggled these political problems in the midst of his fundraising campaign. In early January 1957, he was able to report that he had firm commitments from Germany, Norway, Sweden, and Denmark to contribute $1 million each to the canal clean-up fund. He now thought the entire operation would cost less than the originally projected $40 million, and as things turned out, the canal was cleared of all obstacles by March 1956, well ahead of schedule. Late that month, McCloy flew to Egypt. Cairo was devoid of its usual throngs of tourists, and he found himself the only guest at one of the city’s main hotels. General Wheeler gave him a quick tour of the canal zone and the Palestinian refugee camps in the Gaza Strip, where his party escaped unscathed from an exploding mine. But the high point of the trip was a nearly five-hour talk with Gamal Abdel Nasser. Now that the canal was cleared of obstructions, McCloy was instructed by Hammarskjöld and the Eisenhower administration to negotiate an understanding with Nasser on how the canal would be operated. He brought with him a draft of a statement of principles and policies that the Western users wanted Nasser to recognize. The Egyptian was willing to be accommodating, even to the extent of agreeing that canal tolls might initially be collected by the World Bank.
It was clear, however, that on some issues Nasser himself would be making the decisions. He told McCloy, for instance, that no Israeli ships would be allowed to transit the canal, “as he would require troops along the whole distance to prevent tossing of hand grenades back and forth.” (McCloy actually thought there was “some degree of truth” to this statement.) But the two men got along quite well, and by the end of the meeting, Nasser was confiding to McCloy that he was “worried about falling down on [the] operation of the Canal.” He needed loans to buy tugs, without which the largest oil tankers could not be guided through the narrow channel. McCloy said he had been talking to Eugene Black about a World Bank loan for Egypt, but he indicated to Nasser that this was probably contingent on the Egyptians’ reaching a settlement with the stockholders of the old Suez Canal Company. Speaking as if McCloy were an official representative of Washington, and not a private, unpaid consultant to the U.N. secretary general, Nasser told him that he was quite grateful for the help he had received from the Eisenhower administration in getting the British, French, and Israelis out of Egypt. But he said he now had the impression that “the tide is turning” and that the United States was “now becoming more pro-British, pro-French, and pro-Israeli.”31 McCloy enjoyed parrying such rhetorical thrusts. Like many Americans who had had a chance to talk with Nasser at length, he came away from this first encounter highly impressed with the charismatic Egyptian leader. He sensed, as one CIA agent later wrote, that this was a leader with whom one could reason: “One could discuss any subject with Nasser, includin
g the possibility of peace with Israel, with the feeling that he was listening intelligently to what was said and was using his brains rather than his emotions as he offered his rebuttals.”32
Upon his return to the United States, McCloy gave Foster Dulles a full briefing in New York on his conversation with Nasser. He also sat down with his colleagues at the Council on Foreign Relations and gave an off-the-record evaluation of the Egyptian president. More than two hundred members showed up to hear McCloy’s briefing, including Henry Kissinger, Nelson Rockefeller, Reinhold Niebuhr, Walter J. Levy, C. D. Jackson, and such old friends as Benjamin Buttenwieser, Ben Shute, Shep Stone, Emilio Collado, and Don Price. McCloy gave a highly favorable description of the man who had so recently caused the West such grief. He reported that he found the Egyptian to be “healthy, athletic, friendly and courteous.” Though Nasser was “bitter, suspicious and strongly politically minded,” McCloy clearly liked him. “A man with a pleasing smile and disarming manner, Nasser did not appear,” McCloy said, “to be a ranter, nor did he remind one of a Hitler or Mussolini; he seemed instead to be a typical army officer.” No topic was dismissed as “too sensitive to permit frank treatment.” Nasser bluntly asserted that he “had no illusions” about the Soviet aid he received and noted that he had only accepted such arms and bread after the West had refused to come to his assistance. When McCloy questioned whether communist influence on his regime was becoming “excessive,” Nasser assured him that, “after saving his head from the British noose, he had no intention of putting it into the Soviet’s.”
McCloy concluded his talk by giving his fellow Council members what in retrospect must be seen as a fairly astute assessment of the Egyptian leader: “Nasser is apparently very conscious of the nature of his popular support and he feels that his actions are limited by his own demagogic speeches. The Egyptians strongly feel the need of asserting their independence. They don’t want to be pushed around though they know that they need outside help if their plans for progress are to materialize.”33 In McCloy’s view, Nasser and other nonaligned leaders like him were the kind of men whom Washington had to work with if the United States was to conduct a sound foreign policy, grounded in the political realities of postcolonial nationalism. But what may have persuaded many influential Council members up in New York, left Foster Dulles unmoved down in Washington. There was no room in Dulles’s neat little game of global alliances for mavericks like Gamal Abdel Nasser.