The Second Year of the Union - Part 4: The Currency Exchange Debate and Nasser's Documented Positions on Israel and the Suez Canal

Thursday, 16 April: The Currency Exchange Question

At my last meeting with President Abdel Nasser, at his own home, with Dr. Abdel Moneim El-Kaissouni present, he raised the question of exchanging the currency circulating in the Southern and Northern Regions, on the grounds that the major merchants had smuggled their money abroad, so that it was only fair to deprive them of it.

I opposed this measure, arguing that paper currency is a legitimate debt owed by the state, and that it has no right to break its own contract with its citizens, lest they lose confidence in both their currency and their state.

No one disputes that merchants had smuggled their money abroad, out of fear of the rumors of nationalization (rumors later confirmed), but they had not kept it in the form of national currency. They had exchanged it instead for dollars or pounds sterling, invested as deposits in foreign banks to earn interest, or used its value to establish projects in the countries where they had settled, perhaps even obtaining that country's own citizenship.

It had become customary for Syrians returning to their own country to go down to the currency exchange market and buy Syrian currency at less than its real value, then bring it back with them to their homeland.

For this reason, one would expect that little Syrian or Egyptian paper currency actually remained in the hands of merchants abroad.

Even if we granted, for argument's sake, that some of it did, and a decision was issued replacing the old national currency with a new one, the smuggling merchants and the money-changing houses were hardly "sleeping on both ears." They would certainly rush to bring back whatever remained in the country and work to exchange it for the new currency.

This would be an easy thing for them to do, especially in Syria, whose extremely long borders cannot possibly be fully monitored.

Egypt was in no better position, surrounded as it is by seas and vast deserts.

I therefore saw no benefit whatsoever in this operation, and its victims would be nothing more than elderly women in the countryside, who neither listen to the radio nor understand government decisions.

El-Kaissouni insisted, and I insisted as well.

The matter was settled by limiting the operation to the Egyptian region alone, in the hope that El-Kaissouni's own treasury might gain no less than 45 million Egyptian pounds, earned "purely and cleanly."

The President's Decision No. 94, dated 16 April of that year, was issued, providing that "Egyptian banknotes of the 50- and 100-pound denominations shall be withdrawn from circulation and exchanged for banknotes of other denominations.

"The exchange shall take place from 18 April to 15 May 1959. Once this deadline has passed, the official circulation of the old notes shall be voided, and the holder's right to claim their value shall lapse."

The moment this decision was published, a reverse smuggling operation began, moving these notes into Egypt. I learned that planes flew over designated spots in the Western and Eastern Deserts, dropping sacks of banknotes, which the smugglers scattered among the sand dunes would collect, obtaining new notes in their place.

I later heard from the President that the operation had brought the treasury less than three million pounds, which were, of course, nothing more than the savings of elderly women and orphans in Upper Egypt.

Saturday, 18 April

Contacts between ministers and foreign ambassadors are a familiar part of political life. It is their custom to request an appointment from the minister's own office manager, arrive precisely at the appointed time, and leave the moment their allotted time expires.

Some ambassadors are a pleasure to be around, others leave one uneasy at the very sight of them, or at their conversation. Among the tiresome ambassadors was an Italian one, who appeared to have been one of Mussolini's own men, before his regime fell, or else the new regime had simply kept him on in service. I noticed he was eager to carry out any errand the "Western" ambassadors assigned him, especially sounding out our own views before they themselves approached us with them. We found him a great burden, but it was customary to receive him whenever he requested a meeting. At one official gathering with an Italian delegation from Rome, I quietly drew the attention of one of its members, seated beside me, to their own ambassador's conduct, but he grew angry, "politely," and told me he objected to my accusing him of being an agent. My own impression was that the Italian ambassador was behaving as the envoy of a defeated state does toward those who had conquered it.

Britain had an ambassador in the mid-1950s who cabled his own government to inform them he had discovered that I was "of communist leanings." Even so, he would invite me to lunch or dinner, and I would return the favor, though each of us despised the other all the while.

Perhaps because of this very atmosphere of "hypocrisy," I declined, on three occasions, to accept the post of ambassador for my own country, twice in Paris, and once in Buenos Aires.

Today, America's ambassador in Cairo, Monsieur Raymond Hare, arrived in Damascus. Neither America nor any other country still maintained embassies in our own bereaved city, this being one of the "grave sins" held against the Union. Even so, the embassies had been converted into general consulates in Damascus, and the dinners and the talk continued much as they had before the Union. Despite this reasonable arrangement, there were those who still said: "We were once a capital, and now we've become a mere dependency."

Mr. Hare visited me at my office, all smiles and good cheer, perhaps reflecting a shift in their own thinking about the turn our head of state had taken, throwing the communists into prison and attacking the Soviet Union, which drew Khrushchev's own counter-attack. We were fully aware that America and its allies wished to encircle the Soviet Union with hostile pacts drawing their inspiration from NATO, and that Syria remained beyond their reach, the missing link in the Baghdad Pact, just as Nasser had become their enemy, ever since he nationalized the Suez Canal and fought a fierce war to defend that nationalization, emerging victorious, bringing down the governments of Britain and France in the wake of the collapse of their own schemes in the Middle East. They had no choice but to concentrate their reliance, for guarding their oil and strategic interests, on Israel instead.

Hare told me of his own difficult childhood, and how, to help secure the household's own basic needs, he had been forced to work from the age of twelve. It was only natural that he should give thanks for the fortune that had carried him along the path of advancement to a post he had never dreamed of holding.

Despite his kindness and the sweetness of his conversation, I avoided discussing political matters with him, these having become the exclusive province of the President of the Republic.

It may be useful for students of political relations with Israel that I pause a little here on what the United Arab Republic actually thought on this sensitive subject, as expressed by its own President in his words and statements.

On 8 August 1957, Israel succeeded in securing the passage of its own ships through the Gulf of Aqaba. Abdel Nasser was forced to accept this "loss," since he had emerged from the Suez battle the year before in less than his best condition.

It was natural that Israel would then raise the question of its own ships passing through the Suez Canal.

The President offered it two options, in a speech delivered on 8 July 1957:

Referring the matter to the International Court of Justice, to give its opinion on the right of Israeli ships to pass through this canal, a legal solution Abdel Nasser declared he would accept, whatever the international court decided.

Or resolving the matter peacefully and politically, within the framework of a comprehensive political settlement of the Palestinian question, in accordance with United Nations resolutions.

The first option favored the Republic, since the Constantinople Convention concerning the Suez Canal grants Egypt the right to bar ships of states at war with it from passing through the canal.

Egypt was, at that time, in a state of war with Israel.

Abdel Nasser repeatedly reaffirmed this position afterward. In a speech on 28 July 1959, he said: "The passage of Israeli ships through the Suez Canal has nothing to do with rights of international navigation, since it forms part of the Palestine problem, and of the Palestinian people, who have been denied their right to freedom and to life."

In a similar speech, delivered on 25 April 1960, he said: "If Israel fulfills its obligations under United Nations resolutions, its ships will pass through the Suez Canal," and he pledged explicitly to cooperate with any committee the United Nations might form for this purpose.

It should be noted that the Arab Republic had, in practice, been turning a blind eye to the passage of non-strategic goods through the Suez Canal. But when Israel deliberately and openly announced the preparation of a Danish ship carrying goods bound for Israel, the President ordered this ship halted, in May 1959.

Mr. Hammarskjöld, Secretary-General of the United Nations, intervened with the President to "smooth over" the matter, and reached an agreement with him to turn a blind eye to the passage of non-strategic Israeli goods through the canal, on condition that this not be publicly announced. Golda Meir, the Israeli Foreign Minister, objected to this condition, however. Abdel Nasser immediately responded that any legal settlement with Israel had to be built on respect for Palestinian rights, the right of return to their homes from the lands of their exile above all.

Abdel Nasser stood firm against Israel's own ambitions, regarding its establishment in this position at the very heart of the Arab world as a threat to the Arab nation, and a malicious attempt to fragment it and prevent its unity, so as to keep it weak, finding protection nowhere but in the embrace of the colonial states that exploited Arab oil.

This was a policy Israel found useful in achieving its own ambitions, leaping into Arab lands step by step whenever necessary.

In a speech delivered on 24 February 1960, the President said:

"Israel has not been content with what it has already taken, nor with what it has done against our Palestinian brothers. Its own leaders have declared, without any embarrassment, with the utmost arrogance and in the loudest voice, that the kingdom of Israel extends from the Nile to the Euphrates. This means their occupation of a large part of Syria and Jordan, a large part of Iraq, Egypt, Saudi Arabia, and Lebanon.

"This is a doctrine that clearly means that world Zionism, with the colonial powers standing behind it, seeks the complete destruction of Arab nationalism."

At that time, Israel was "importing" a hundred thousand Jewish immigrants a year.

When Ben-Gurion announced that Israel wanted between one and two million Jewish immigrants to come to it over the next ten years, Abdel Nasser asked, in a speech dated 21 February 1959:

"Where will they live? Israel cannot possibly, with its current resources, absorb such an enormous number of immigrants. It will have no choice but to pursue a policy of expansion into Arab lands, in order to establish the sacred state of Israel it plans between the Nile and the Euphrates."

Israeli policy, as it appeared to us, and as it has always remained fixed and firm, held that any Jew, anywhere in the world, was one of its own citizens, obliged to return to the mother homeland in Palestine.

It incited against the Arab Republic, with which it maintained open hostility, broadcasting to the world and spreading the claim that Abdel Nasser was working to establish an Arab empire, how sweet a charge that was to our own hearts, while also inciting the Syrian people, through its broadcasts, its intrigues, and its agents, to rise up against "Egyptian occupation and Egyptian colonialism."

It is regrettable that it found allies among certain Arab leaders, who feared for their own hold on power in the face of this Arab leader, a man working to liberate and unite the Arabs, under whatever form of union they themselves willingly and freely accepted.

Sunday, 19 April

Here is a "national" step, though one that did not win the admiration of many of us.

The internal statute of the Council of the Union of Arab States (between the United Arab Republic and Yemen) was signed today, by President Abdel Nasser and "the Imam and King of the Mutawakkilite Kingdom of Yemen, Ahmad Hamid al-Din, may God grant him success."

It was published in the Official Gazette this same day.

This statute had been awaited, so that the Union's ministers could begin their work.

Three Syrian ministers, three Egyptian, and three Yemeni were appointed to this council.

The three Syrians were the veteran fighter Ihsan al-Jabiri, Mr. Riyad al-Maidani (former Secretary-General of the Ministry of Justice), and Mr. Adnan al-Azhari.

Under Article 11 of the statute (the agreement), they were granted legal and financial guarantees and immunities, and all the rights enjoyed by political representatives, in accordance with the provisions of international law.

Article 12 provided that all the provisions applying to ministers would apply to them as well, placing them on equal footing in matters of protocol and the financial rules governing salaries, allowances, and other such provisions.

Their service was considered active service, counted toward retirement.

I said a moment ago that this step did not win the admiration of many of us, since we were not convinced that the Imam of Yemen, of whose extraordinary conduct so much is said, could ever accept a decision issued by any "human" authority other than his own absolute one, applying to his own Mutawakkilite Kingdom.

Time proved that the true measure of things lies not in the outward appearance of agreements, but in what souls conceal within themselves.

We soon began reading, in the newspapers, odes composed by the late Imam denouncing socialism, having entered into a union with its own advocates that soon proved to be nothing more than a sleeper's dream.

As for the Union's own ministers, their voices grew hoarse, until we no longer heard so much as a murmur or a cough from them.

They held periodic meetings in Damascus, Cairo, and Sanaa, and were never remiss in "indulging" themselves, while carrying out their own "union duties."

Monday the 20th

The Executive Council, that is, the Council of Ministers, tasked me with hosting a dinner for the American ambassador, and I chose the Oriental Club for our dinner, perhaps the finest venue for official functions in those days, before the rise of the great five-star hotels that today lift their heads so proudly, such as the Sheraton near Kiwan, the Meridien on the Beirut road, and the Cham Palace in the city center, alongside a great many other hotels besides.

We used to have lunch or dinner there for 5 Syrian lira. The government, before the Union, had once held a dinner there for King Saud, and I was presented with its bills, claiming a thousand guests (certainly untrue) and a cost of twenty-five lira per person. I refused to authorize payment of the bills, given the exaggeration in both price and numbers, and negotiations with the club's own owner (al-Habboubati) continued for nearly three months, until we reached a compromise: accepting the figure of a thousand guests, in exchange for lowering the cost per person to 16 lira, an exorbitant price by any measure. The Prime Minister reminded me that "this is a reception for a king," and that the guest of honor held loans from the state amounting to ten million Syrian lira, which we had no intention of pressing him to repay just then.

Two months earlier, the president of the Arabic Language Academy had invited us to a dinner he held in "honor" of the members of the Union of Arabic Language Academies, meeting that year in Damascus, and I learned that the cost per person came to a full thousand lira, no less.

This was a sum more than three times my own monthly salary and my wife's own allowance (a mere four lira a month) from back when I was first appointed a professor at the Faculty of Law.

I invited to this dinner the central Minister of the Treasury, Hassan Jabara, a number of other ministers, and some members of the American consulate in Damascus.

My invitation to the late Jabara was meant to "smooth over" the atmosphere between us, since he wished "to have oversight" of the Ministry of the Treasury, in his capacity as central minister, though I never did discover just what areas he could possibly have any real oversight over.

The Minister of the Treasury oversees the preparation of the budget, and it was only natural that I should discuss its figures with him, in preparation for submitting it to the Council of Ministers, then the President, then the People's Assembly, which had not yet even been formed. The Minister of the Treasury is likewise concerned with tax collection, presiding over the various departments attached to his ministry, ruling on their affairs with their staff, and ending his day hearing citizens' complaints, ruling on them with the assistance of the ministry's own department directors. And whenever a new tax was contemplated, which did not happen during this particular period, it would certainly need to be the subject of thorough discussion with him first.

He visited me at my office, and we discussed the state of finances, arriving at a shared view that the state's own financial situation needed support from the Southern Region, support that did indeed materialize.

My own sense was that he was not at ease with his position "on the sidelines" as a central minister. It appeared that other central ministers besides him tried to find themselves work "to amuse themselves with," and so began encroaching on the regional ministers' own affairs, which led President Abdel Nasser "to forbid the central Syrian ministers from interfering in the affairs of the executive ministers."[1]

---

Endnotes:

[1] Ahmad Abdel Karim, Lights on the Union, p. 268.