Office of the Historian

26. Telegram From the Embassy in Burma to the Department of State1

Rangoon, February 18, 1956—9 p.m.

950. From Howard Jones2 and Ambassador. We had extended conversation with Industries Minister U Kyaw Nyein at his residence yesterday during which Minister made following points:

(1)
Burma much interested in announcement aid to Ceylon and hopes this clears away Battle Act problems re Burma. We replied we had no official confirmation press report this subject but emphasized in any event Burma would have to provide proof of “cooperation” under Battle Act. Kyaw Nyein said he realized this but thought it presented no insurmountable difficulties.
(2)
If way cleared for aid, Burma basically interested in three categories:
(a)
Technicians for rice;
(b)
Use of PL 480 local currency;
(c)
Loans for economic development program.
(3)
Under last category Kyaw Nyein indicated Burma needed approximately $150 million over period three years for sound projects including transportation, port development, expansion steel plant capacity in view new discovery rich iron ore, light consumer industries such as textiles which now take 25% of foreign exchange, fertilizer plant, etc.
(4)
He repeated what he had told Ambassador previously about Burma having been forced against will into Russian deal. Although we gave no assurance whatever, he obviously interpreted exploratory conversation as encouraging, and appeared highly gratified at possibility of American assistance.
(5)
He also recalled conversation with Hollister and Jones in Singapore3 above subject and appeared regard visit as in part response to hope expressed at that time some way could be found around Battle Act.
(6)
Re IBRD agricultural program Kyaw Nyein hoped Bank would review Basch4 position. He saw no reason why Bank could not undertake certain projects and Russians others if kept completely separate.

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Apparently Russian mission arriving in May as previously reported will include industrialists to survey development program. It is clear time is running out on this situation but we both gained strong impression from Kyaw Nyein conversation, confirmed by later visit with U Raschid, and by meeting with representatives American economic and technical adviser groups and of Ford and Asia Foundations, all of whom concurred in view that Burma could still back away from any substantial Russian technical assistance or aid program in view no definite commitments yet except for handful technicians now here and those coming to erect technological institute.

While convinced situation can still be salvaged no small gesture will suffice to accomplish this. We should like to suggest for Department’s consideration possibility approving three point program as outlined by Kyaw Nyein with extension of economic development line of credit of $150 million over period of years following pattern established so successfully Indonesia by Export-Import Bank.

As we see situation time element is all important and provision of credit line would obviate necessity of individual project justification prior to basic aid decision. We urge Department consider high level approach to both IBRD and Export-Import Bank to enlist their support for program of this character, assuming Battle Act difficulties can be overcome.

In addition to categories of aid mentioned above, Department and ICA may also wish consider small amount of grant aid for completion of medical center, to which U Nu attaches so much importance (and for other items suggested Embtel 7745).

To accomplish our purposes in endeavoring counter Soviet economic drive we feel it essential that decision be reached not later than early April. In our opinion importance this problem cannot be over-emphasized if Burma is to be saved for free world and we hope it will be given high priority which it deserves.

Satterthwaite
  1. Source: Department of State, Central Files, 411.90B41/2–1856. Secret; Priority.↩
  2. Jones was visiting Rangoon.↩
  3. No record has been found in Department of State files of this conversation, which apparently took place when Hollister visited Singapore between October 16 and 21, 1955, as U.S. Representative at the Ministerial Meeting of the Consultative Committee for Economic Development in South and Southeast Asia (the Colombo Plan). Jones was a member of Hollister’s party.↩
  4. See footnote 3, Document 21.↩
  5. Document 22.↩