Secretary of State John Foster Dulles announces that the United States is withdrawing its offer of financial aid to Egypt to help with the construction of the Aswan Dam on the Nile River. The action drove Egypt further toward an alliance with the Soviet Union and was a contributing factor to the Suez Crisis later in 1956.

In December 1955, Secretary Dulles announced that the United States, together with Great Britain, was providing nearly $70 million in aid to Egypt to help in the construction of the Aswan Dam on the Nile River. Dulles had agreed to this assistance only reluctantly. He was deeply suspicious of Egyptian leader Gamal Abdel Nasser, who he believed to be a reckless and dangerous nationalist. However, others in the Eisenhower administration convinced Dulles that the American aid might pull Nasser back from his relationship with the Soviet Union and prevent the growth of Soviet power in the Middle East. Just seven months after the announcement, however, Dulles declared that the American offer was being revoked. He cited difficulties in arranging the financial details of the U.S. grant with the Egyptian government, but his real motivation was Nasser’s unceasing attacks on Western colonialism and imperialism and Egypt’s continued dalliance with the Soviet Union.

Dulles might have believed that without the American aid, the dam project would fold. On this point, he was wrong. The Soviets rushed to Egypt’s aid, and the Aswan Dam was officially opened in 1964. Nasser, of course, was furious with the U.S. action. So, too, were the British, who believed that America’s withdrawal of aid had provided the opening for Soviet penetration of Egypt. In October 1956, British, French, and Israeli forces attacked Egypt, claiming that they were protecting the Suez Canal. The incident nearly provoked a U.S.-Soviet confrontation, but President Dwight D. Eisenhower coupled stern warnings against any Soviet military action with a refusal to support the British, French and Israeli invasion. The invading forces withdrew from Egypt in early 1957. Nevertheless, the damage to U.S. relations with the Middle East was done and the area would remain a Cold War hotspot throughout the next 35 years.