The Ambassador in China, (Stuart) to the Secretary of State
[Received June 12—9:13 a.m.]
1275. Second meeting of post-UNRRA Working Party held morning June 9 at FonOff request (reEmbtel 1080 , May 17, repeated Shanghai 457) Embassy represented by officers designated in third paragraph reference telegram. Chinese wanted to discuss Foreign Minister’s memo of May 30 transmitted in Embtel 1184 of May 31 with particular regard to (a) tentative U. S. reactions to proposal; (b) Embassy’s comments on two supplemental memoranda on controlled distribution and rationing filed by China last week informally in accordance with paragraphs 1 and 2 of original FonOff memo; and (c) presentation of preliminary data on other relief projects as foreshadowed in paragraph 3 of same.
- With respect to (a) above, Chinese were disappointed to learn that no word had been received from Department indicating approval of scope and objectives contained in their proposals. They were advised that Washington’s action on such important matters within a [Page 1312] week was hardly to be expected, and particularly when so little detailed information originally made available for study. Believe, however, China will exert continued pressure to secure support or disapproval in principle of their program. Embassy believes early consideration of this by Department desirable, especially as to availability of supplies requested.
- Embassy’s representatives made several observations on basis of preliminary study origin of FonOff memo as follows: Referring to paragraph 4, it was emphasized that U. S. rather than Chinese Govt would be expected to take lead in finalizing any program for participation of voluntary agencies. China argued that they should be responsible for action in this matter. They were advised, however, that unless Department took contrary view Embassy through its Relief Advisory Staff would take positive interest in this phase of post-UNRRA relief and in determination of extent to which voluntary agencies would be invited to take part. Please instruct. Believe in view of widespread criticism among voluntary agency personnel of UNRRA-CNRRA program that Embassy should take definite steps to initiate and later guide voluntary agency and American community participation in post-UNRRA program.
- Referring to penultimate paragraph of basic memo, Chinese were again reminded of our intent not to have post-UNRRA program become the occasion for continuing either CNRRA projects or CNRRA organization weaknesses in any form. Assurances were given by China that wording of this paragraph in the memo did not imply CNRRA would be used as such but merely noted Chinese Government’s willingness to make experienced personnel or established facilities of CNRRA available where continuity was desirable. Embassy believes this tendency must be discouraged except where irreplaceable candidates or services are involved.
- On point (b) above, Chinese had presented 2 memoranda to Embassy outlining in greater detail proposals for use of post-UNRRA supplies in development of rationing and controlled distribution plans. They were advised that since these documents had only been received on June 4, there had not been opportunity to study feasibility of proposals and that Embassy’s informal comments would be delayed for further meeting. Embassy representatives reiterated that U. S. willingness to provide post-UNRRA supplies in connection with such distribution plans would be conditioned upon prospect of its successful operations and clear understanding both private and public that U. S. was not undertaking responsibility to furnish food supplies essential to maintenance of program. It was also pointed out that controlled distribution and rationing would ultimately have to be merged in order to provide equitable treatment to all classes of population, and to avoid [Page 1313] accusation that controlled distribution of food to groups is essentially means of using scarce food as currency. Memos referred to are being transmitted by despatch.33
- Embassy will file further comments on general nature of proposals after study of all data available.
- Reference (c) paragraph 1, additional relief and project requirements were tentatively estimated by Chinese representatives as including approximately 870,000 tons of food and 23 million dollars worth of supplies. In latter total Chinese mentioned $1,300,000 for seeds, 5,000,000 for fertilizers, 900,000 for pesticides, 150,000 for veterinary supplies, and 1,350,000 for tractor project, POL34 and spare parts. These expenditures were justified as agricultural rehabilitation in deficit and famine areas (mainly Yellow River flooded regions) for increasing food production to avoid recurrence of relief need next spring. Medical supply requirements, including those for epidemic control and replenishment of expendable stocks, amounted to 12 million. A separate requirement of $2,200,000 was presented to cover POL needs for relief and food collection purposes in the first semester of 1948. Most of this according to Chinese would be used for operation of UNRRA supplied equipment in transportation and agricultural projects (CNRRA waterways, transport, CNRRA highway transport, and fisheries rehabilitation administration).
- Above food requirement assures substantial purchases internally with local currency proceeds of U. S. post-UNRRA contribution and includes 350,000 tons for distribution in flooded areas, 220,000 tons for distribution in famine areas and 180,000 tons for distribution in draught areas. Further comments35 will be made after review of information on hand with Agriculture Attaché.36 Embassy’s preliminary reaction is that relief project needs, especially food, are unrealistic in terms of transportation and administration facilities available. They will be screened carefully as is already procedure being followed on Yellow River requirements.
- In two meetings with Chinese as thus far reported, total requirements for post-UNRRA aid have been submitted in excess of $60,000,000. After screening in further joint meetings and by U. S. representative here, total dollar cost will doubtless reach target originally set as maximum for planning purposes by Department. With reference to paragraph 2 above and Deptel 610, May 22, repeated Shanghai 838, Department will note that at least two-thirds of anticipated post-UNRRA grant will, according to present Chinese plans, be spent along with more than equivalent amount of Chinese Government [Page 1314] funds to inaugurate controlled distribution and later rationing in key urban areas. Embassy believes and has repeatedly emphasized in meeting with Chinese that honest, efficient and effective administration of such a program must be apparent in planning and later in operation. Have also reminded Chinese that success in this effort, or failure, may have most significant bearing on later U. S. efforts to assist China economically. Despite such firm threats, Embassy is aware of and believes Department must also accept inevitable risks of our being implicated, however indirectly, in any failures.
Sent Department, repeated Shanghai 530, June 12, 11 a.m.