796.00/5–1750

Memorandum by the Assistant Secretary of State for Far Eastern Affairs (Rusk) to the Acting Secretary of State (Webb)

secret

Subject: The Situation in the Philippines

The Secretary last talked with the President in mid-April about the situation in the Philippines.1 At that time he pointed out the high points of economic and political deterioration and suggested that unless there were a turn for the better within the next few days or months it might be necessary for the United States to consider what steps it would have to take to prevent a rapid decline into chaos with, presumptively, the emergency of the Communist-dominated Huk-balahaps as the primary power.

During the last month the downward trend has continued. Although there have been no major reverses in the economic picture, it has remained stagnant. The principal deterioration has been political. President Quirino’s political control has continued to slip; and popular discontent with his administration has increased, despite his political maneuvering to re-establish his position. He requested the Congress to grant him emergency powers, which have so far been refused. He attempted to divide the opposition by the introduction of a disgracefully large pork barrel appropriation bill containing something for all political figures, but this measure also has failed to materialize. [Page 1451]Despite the wide-spread nature of public discontent, however, the opposition has not yet become sufficiently cohesive so as to constitute an immediate threat for President Quirino’s downfall.

Philippine-American relations have reached a serious impasse. A few days ago President Quirino, in a sudden reversal, orally agreed to accept an American Economic Mission at any time.2 In view of his changeability and skill in securing his ends by political maneuvering, we are unwilling to accept this proposal unless we have it in writing. The most serious point in Philippine-American relations at the moment concerns a legislative proposal which would reserve 40% of all import quotas for new Philippine importers. We have protested3 this proposal as contrary to the Trade Act,4 and have suggested that its implementation might compel the United States to consider some kind of retaliatory action under Article 10, Section 4 of the Trade Act. Ambassador Elizalde has further confused the situation by telling President Quirino that the United States would in the end accept a compromise. Ambassador Cowen believes this development has seriously undermined his position and has asked the Department to take an unequivocal public stand to the effect that if the objectionable legislation is passed the United States would indeed be compelled to revoke [invoke?] Article 10, Section 4.5 We have informed the Ambassador that although he should continue to make the strongest possible representations we cannot make the threat he desires because it is most unlikely we would invoke Article 10, Section 4. Such action would have consequences and repercussions on general Philippine-American economic and political relations far beyond the importance of the particular issue in question.6

  1. See the draft memorandum from the Secretary of State to President Truman, April 20, and footnote 1 thereto, p. 1440.
  2. See telegram 1395, May 12, from Manila, supra.
  3. The protest under reference here was contained in a note delivered to the Philippine Embassy on April 25, not printed (496.006/4–2650).
  4. The reference here is to the Philippine Trade Act of 1946, approved April 30, 1946; Public Law 371, 79th Congress; 60 Stat. 141. For documentation regarding the Act, see Foreign Relations, 1946, vol. viii, pp. 873, 937938.
  5. Article X, Section 4 of the United States–Philippine Trade Agreement of 1946 authorized the President of the United States to suspend the agreement if he determined that the Philippines was discriminating against United States citizens or business enterprises. Ambassador Cowen’s recommendations referred to here were presented in his telegram 1266, May 3, from Manila, not printed (496.006/5–350).
  6. The details of the policy summarized here were transmitted in telegram 808, May 5, to Manila, not printed (411.9631/5–550). A brief version of the Department of State’s views on the pending Philippine import control legislation was issued to the press as a statement on May 12; see Department of State Bulletin, June 19, 1950, p. 1019. A Philippine import control bill, incorporating a few of the concessions requested by the United States, was adopted by the Philippine Congress on May 18 and published on May 23. The Department of State continued to feel that the legislation inflicted undue hardship on established United States importers. Documentation on this problem is concentrated in Department files 496.006 and 411.9631.