Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

46. Memorandum From the Assistant Secretary of State for Far Eastern Affairs (Robertson) to the Secretary of State¹

Washington, June 27, 1956.

SUBJECT

• Proposed Rice-for-Technicians Agreement with Burma

Problem:

The agreement with Burma calling for the exchange of $1.1 million of U.S. technicians for an equivalent value of Burmese rice is threatening to founder, on the very day before it is scheduled to be signed, because of U.S. insistence on an oral commitment by the Burmese that they will refer to the U.S. and give the U.S. an opportunity to veto the employment of individual Americans (see Rangoon niact telegram No. 1470—Tab A²).

Discussion:

The Burmese Government has approved the proposed rice-for-technicians exchange of notes, but has unequivocally rejected a subsidiary oral arrangement proposed by ICA providing for ICA prior approval of the technical services contracts (Deptel 984, March 28, Tab B³). The Burmese state that in the normal course of events they would be likely to consult with the Department regarding proposed contracts, but they cannot accept an obligation to do so since that would be an unacceptable string and also in view of the fact that the rice-for-technicians exchange is considered a commercial transaction in Burma.

Embassy Rangoon states that, in view of (1) the Burmese statement that consultation with the U.S. on proposed contracts is likely to take place and (2) the serious political repercussions of having the already publicized rice-for-technicians exchange fail because of a U. S. “string”, it will affect the exchange of notes on June 29 unless directed to the contrary. (The exchange must be effected on or before June 30 in order to obligate FY 56 funds for this purpose.) However, as Deptel 1294 (Tab C)⁴ crossed Rangoon telegram 1470 the Embassy will undoubtedly take no action on the exchange until further instructed by Washington.

This has been discussed with Dr. FitzGerald of ICA who states that Mr. Hollister will not concur in the Embassy’s proposed course of action unless directed to do so by the Department. We believe strongly that our political objectives in, and relations with, Burma dictate that we should accept the Embassy’s position. It should also be noted that publicity attendant to a breakdown of these negotiations because of “U.S. strings” would provide Communist propaganda a theme which could seriously damage U.S. prestige in the area and elsewhere.

Recommendation:

1. That, if you approve the above, you sign the attached telegram to Rangoon (Tab D) and telephone Mr. Hollister to seek his concurrence.⁵

1. Source: Department of State, Central Files, 411.90B41/6–2756. Secret.
2. Not attached to the source text. Telegram 1470 from Rangoon, June 27, reported that U Kyaw Nyein told Braddock that the Burmese Government could not make such a commitment. (Ibid.)
3. Not printed. (Ibid.)
4. Telegram 1294 to Rangoon, June 27, instructed the Embassy to defer the exchange of notes until new instructions could be sent. (Ibid., 411.90B41/6–2656)
5. A memorandum by Bernau of a telephone call from the Secretary to Hollister on June 28 records Hollister’s concurrence. (Eisenhower Library, Dulles Papers, General Telephone Conversations) Telegram 1303 to Rangoon, June 28, reads: “Concur action proposed your 1470. We do so assuming that Burmese will in fact act reasonably in this matter, and they should be apprised of our assumption.” The second sentence was added by Dulles and the telegram was signed by him. (Department of State, Central Files, 411.90B41/6–2756) Telegram 1479 from Rangoon, June 30, reported that the notes were exchanged that day, that Braddock had apprised Barrington of the U.S. assumption, and that the latter had replied, “Naturally we will act reasonably, it goes without saying.” (Ibid., 411.90B41/6–3056) For text of the agreement effected by the exchange of notes, see 7 UST (pt. 2) 2189.