1. On Monday 23 January I lunched alone with Sharett. He made several inquiries concerning Nasser and Zacharia. He asked if they appeared to be frank. If I thought they were really concerned in a program of economic development for their country. If they used the language well. If they appeared to have an attitude of seriousness on the importance of our undertaking. I stated that both spoke good English. That occasionally there was some need for explaining particular words or phrases. That I had asked them to repeat their observations in case of doubt. That I believed they were seriously concerned with their economic and development program. He asked what this program included. I replied that it included projects of irrigation, community centers, schools, water surveys and similar efforts.
2. Sharett asked whether I had directly ascertained from Nasser if he would agree to representatives below the level of heads of state meeting secretly on neutral territory to discuss the issues. I replied that I had not put the question directly to Nasser, asking for a yes or no answer, but had asked him to explore the idea which he had agreed to do. I then stated that since Nasser had limited conversations on his side, the choice of such a representative might be difficult. Sharett agreed it would be much more difficult for Nasser than for Israel.
3. Sharett said he wanted to make two very pointed statements. He then stated that he thought I had correctly assessed the primary issue dividing the two countries as being one of territories and boundaries. He reminded me that the Prime Minister had stated that Israel could not consider any relinquishment of territory as a price for peace. He understood Nasser’s insistence on a territorial link between the Arab States but felt that this might be a cover for Nasser’s real intentions of cutting off the State of Israel from the Port of Elath [sic. for Eilat] and their access to the Red Sea. He felt that a “belt of territory” connecting the Arab States and separating Israel from the Red Sea would be untenable even though a corridor to Elath should be provided. He said that Elath represented to them a great national hope and was necessary to the fulfillment of their ambitions. He wanted me to understand the necessity of Israel maintaining her territory and her connection to the Red Sea through the Gulf of Aqaba under ail circumstances.
4. His second point related to refugees. He said in this area he saw a ray of hope. That it was unthinkable for Israel to be asked to provide settlement for “new Arab families”. That currently Israel had an Arab community of about 180,000. That recently they had authorized members of the family who had been separated from those now located in Israel to return to Israel. That this policy might be enlarged so as to include additional relatives and thereby allow Egypt to take the position that they had secured from Israel the repatriation of a percentage of the refugees. That this enlargement would be limited to increases in existing families but that once repatriated they would have freedom of action. Sharett said that historically the Arab States had not been connected and it might be to the Western advantage if the Arabs of Africa and Asia were not united. That the existence of Israel between them might be a blessing.
5. I replied saying that unquestionably the territorial problem was the greatest barrier to a settlement. That if both sides approached the problem with absolute inflexibility, discussions at any level would be of little profit. That I had insisted on Nasser maintaining position of flexibility and I hoped that Israel would maintain an attitude of flexibility despite any feelings which they might now have about the problem.
6. On the question of refugees, I stated that I too saw hope. That I did not believe Nasser was deeply concerned with the actual numbers repatriated but essentially with setting up device which would preserve principle of some freedom of choice between repatriation and compensation. Sharett said he appreciated this point of view but that acceptance of the “principle of the freedom of choice was a dangerous one”. He thought that there was room to explore various devices by which the refugee problem could be solved.
7. As I was preparing to leave, Sharett said he wanted to emphasize again that the most important problem at the moment was our decision concerning additional arms for Israel.
SOURCE: FRUS 1955-1957 XV, doc.31.