Department of State Policy Statement 2

top secret


a. objectives

Our fundamental objectives with respect to Ceylon are the development of enduring friendly relations, the continuance in power of a non-Communist government, the continuance of Ceylon’s close relationship with the UK and the Commonwealth, and the strengthening of Ceylon’s ability and determination to maintain peace and resist Communist imperialism. We would like to see Ceylon develop an attitude which would enable the US to obtain, and the UK to retain, facilities required in time of peace or in the event of war, and which would prevent the USSR from obtaining any form of military support or other assistance from Ceylon. We desire increased Ceylonese responsibility for the solution of its problems, and further development of economic and political institutions along democratic lines.

b. policies

It is US policy to encourage Ceylon to maintain its close ties with the Commonwealth, to expand its foreign relations, and to develop a sense of responsibility in the field of foreign affairs. Ceylon may be expected to uphold the UK-Commonwealth point of view in this field.

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Ceylon has a parliamentary form of government. The terms of the Ceylon Independence Act of 19473 conferred on it the same status as that of the other Dominions of the British Commonwealth. Its Government is conservative, representing the concentrated power of family, land and money. It is stable and competent. There is freedom of the press and freedom of political action. Although all parties have legal status at the present time, the Government has under study the question of the desirability of banning the Communist Party.

The Communist Party of Ceylon (CPC) was established in 1943 and is headed by active, intelligent, and clamorous leaders. It does not appear to have great organization in depth and has not yet shown evidence of wielding a dangerous degree of power or influence. At present the Party is reorganizing and preparing for underground work. Publications, and perhaps directives, are received through the Communist Party of India (CPI) and the CPC may be presumed to be working with the CPI.

Ceylon has, in addition to the Communist Party, a Marxist Party, the Lanka Sama Samaja, and a splinter group from the latter organization. These parties have been unable to agree on anything but opposition to the Government. We hope, and it seems possible, that the groups will remain divided.

Other parties which have shown leftist tendencies and are usually in opposition to the Government are the Tamil Congress and the Ceylon Indian Congress, representing the large Indian minority in Ceylon. The Government of Ceylon is alive to the danger of Communism and is taking reasonable steps to combat it, while at the same time it has demonstrated a sensitivity to the perpetual leftist attacks to which it is subjected. It is our policy to assist the Government in combatting this menace, particularly by providing it with counterpropaganda which it has requested.

Ceylon has a higher literacy rate than its neighbors and is generally prosperous when its export products command high prices as at present. Nevertheless, some outside assistance is needed for economic development. The Government has taken a great interest in development programs and has worked actively for a Commonwealth plan for aid to South and Southeast Asia,4 of which it will be a beneficiary. Headquarters for the technical assistance aspects of this plan are being set up in Colombo by the Commonwealth. Ceylon has made ambitious but poorly coordinated plans for its economic development. It is our policy to encourage the Ceylon Government to undertake [Page 2015]a survey of economic development potentialities as the basis for coordinated programs; to help Ceylon obtain American experts; to render assistance under Point IV and other programs in its efforts to develop its human and material resources; and to coordinate any US assistance programs with programs of the Commonwealth and the United Nations. Our assistance to Ceylon should include projects which have a popular appeal in Ceylon and promise early and concrete results. Ceylon is the first country to conclude a standard Technical Cooperation Agreement with the US under the Point IV program. The Agreement was signed on November 7, 1950.5

The US has suggested to the Government of Ceylon the possibility of negotiating a treaty of Friendship, Commerce and Navigation. Treaty relations between the US and Ceylon are at present based on US–UK treaties applicable to Ceylon under the External Affairs Agreement between the UK and Ceylon signed November 11, 1947.6

Ceylon exports chiefly tea, coconut products and rubber, while it imports nearly all manufactured goods and about half of its food supply. Its trade is principally with the Commonwealth countries, with the UK having the largest share. We desire Ceylon to continue its trade with friendly countries and to cooperate in denying resources to the Soviet bloc.

With present high prices for primary products, Ceylon is one of the more prosperous Asian countries and spends relatively more on educational and other social services than its neighbors. Like the Indian and Pakistan budgets, however, the Ceylon budget is declared “balanced” only by a fiction. The Central Bank of Ceylon was opened in August 1950. Its first Governor is an American who was a member of the staff of the Board of Governors of the Federal Reserve System and had been originally loaned to the Government of Ceylon to assist in setting up its Central Bank.

Ceylon is attempting, and we support efforts in this direction, to become more nearly self-sufficient as regards food supplies. Its most ambitious project, the Gal Oya Development scheme, is intended to open up land for resettlement and cultivation. An American firm, Morrison-Knudsen, is constructing a dam, a small power plant and irrigation canals for watering 65,000 acres of rice and farm land as part of this project. An American engineer from the Bureau of Reclamation is beginning his third year as an adviser on this project under PL 402.7

Ceylon is dependent upon outside assistance for defense against aggression. Under the terms of the UK–Ceylon Defense Agreement [Page 2016]of November 1947,8 the two governments undertake to “give to each other such military assistance for the security of their territories, for defense against external aggression and for the protection of essential communications as it may be in their mutual interest to provide.” The Government of Ceylon undertakes to grant to the Government of the UK all necessary bases and facilities as agreed for the above purposes, and the UK undertakes to furnish such military assistance as may be required towards the training and development of Ceylonese armed forces.

Ceylon has requested a small amount of military equipment from the US and has asked the UK to consider bringing the US into arrangements for increasing the strength of Ceylon’s armed forces. The UK has been noncommital on the latter point. Because of our urgent and important need for communications facilities9 in Ceylon, we recognize that we may have to extend at least token assistance, complementary to assistance furnished by the UK to Ceylon. Ceylon’s armed forces are of negligible size and less than three percent of its total budget is earmarked for defense. The UK has been urging Ceylon to accept more responsibility for its defense. We concur in this policy.

We support Ceylon’s application for membership in the United Nations, an application which, like those of several other nations, was vetoed by the Soviet Union. Ceylon’s wish to become a member of the UN has become part of the general question of the admission of new members. The US will continue to work for Ceylon’s admission along with that of other countries which we feel should be admitted but whose applications have been opposed by the USSR. Ceylon is a member of various UN organizations, such as the UN Economic Commission for Asia and the Far East, the International Labor Organization, World Health Organization, and the Food and Agriculture Organization. It adheres to the General Agreement on Tariffs and Trade and is a member of the International Bank for Reconstruction and Development and the International Monetary Fund.

Ceylon has applied for membership in the Far Eastern Commission (FEC) and has expressed its interest in Japanese peace treaty negotiations. There appear to be insuperable obstacles at this time to membership in the FEC because of the requirement of unanimous consent of present member governments which include the USSR and Nationalist China. (Ceylon has recognized Communist China.) Our policy at this time is to ensure that Ceylon has an opportunity to [Page 2017]express its views on the Japanese peace treaty at the same time as such Asian non-FEC members as Indonesia and before peace treaty provisions become final.

US relations with Ceylon since its independence have been friendly, though there has been a considerable amount of nationalistic anti-western feeling and a reluctance to grant concessions to the US. Ceylon has adopted the position that the UK and US have an inherent responsibility and obligation for assisting its economic and military development. It is our policy to discourage this concept and to encourage Ceylon to accept more responsibility for its own destiny.

c. relations with other countries

Ceylon is a member of the British Commonwealth, and its most valued and closest ties are with the UK and members of the Commonwealth. It has exchanged diplomatic missions with the UK, Australia, India, US, Burma and France. Within the Commonwealth it is far more inclined to follow the lead of the UK than that of India. Although it appears to regard India as the rising leader of South Asia, it distrusts India and Indian Prime Minister Nehru and fears India’s designs for “leadership” as likely to menace Ceylonese independence. Next to this, perhaps the most serious matter affecting India–Ceylon relations is the status in Ceylon of some 850,000 Indian Tamils, employed for the most part on tea and rubber estates. This large group has not in general been assimilated into the Ceylonese population, appears to be more loyal to India than to Ceylon, has demonstrated some sympathy toward communism and opposition to the Government, and represents a drain on Ceylon exchange through remittances to India. Measures were taken by Ceylon, such as the “Indian and Pakistan Residents (Citizenship) Act,” the “Exchange Control Regulations for Indian Residents,” and the program of restricting employment to nationals of Ceylon in order to alleviate some of the problems created by this group. The measures were regarded so seriously in India that they became a subject for discussion between the two Governments. As a result Ceylon has modified the Indian and Pakistan Residents (Citizenship) Act and the Ceylonization program, and India has agreed to withdraw from Ceylon officials employed by the Indian High Commission in Ceylon to assist Indian Tamils in obtaining Ceylon citizenship.

The Prime Minister of Ceylon10 has stated on numerous occasions Ceylon’s desire to remain within the Commonwealth. This desire is based on the realization that Ceylon alone is defenseless against aggression from whatever quarter, the fear of internal Communist activities and appreciation of the continued usefulness of British [Page 2018]capital which has built up the tea industry and brought about such economic development as exists in Ceylon. Under the terms of its External Affairs Agreement with the UK of November 1947, Ceylon is given the full international status of a Dominion and appoints its own diplomatic representatives. Where the Government of Ceylon has so requested, the UK has arranged for its representatives to act on behalf of Ceylon in those countries where Ceylon has no diplomatic representatives.

Ceylon has not been very receptive towards the idea of a Pacific Pact or regional organization because of its fear of India, which might be the most powerful member of such an organization, and because of a feeling it would not be very effective without UK or US participation. Should the UK or US take a leading part in such an organization, Ceylon would probably adopt a warmer attitude toward it.

Ceylon has followed the UK lead in extending recognition to Communist China. The Prime Minister has stated, however, that this step was merely recognition of the fact of Communist China’s existence and not an indication of sympathy with it. With respect to Indochina, the Prime Minister stated in a secret conversation with our Ambassador that Ceylon supports the Vietnam Government and recognizes the necessity of working through the French as well as directly with the Vietnamese. Ceylon has carried on very friendly relations with Burma, from which it imports a large part of its rice supply, lent it sacred Buddhist relics, and participated in the Commonwealth loan to Burma. Ceylon has also shown an increasing interest in Japan and in a Japanese peace treaty. Japan’s geographical remoteness from Ceylon leads it to regard that country with less fear than it regards India.

Ceylon has no diplomatic relations with the USSR or with the satellite countries. The Soviet veto of Ceylon’s application for UN” membership has been a great disappointment to Ceylon. Within recent months Ceylon has refused to allow Czechoslovakia to establish a legation in Colombo. That country, like the USSR, has opposed Ceylon’s application for UN membership on the ground that it is not an independent state. The present Government of Ceylon has shown no desire to establish diplomatic relations with the USSR or its European satellites.

d. policy evaluation

Ceylon is believed to consider its relations with the US as secondary to those with the UK. Nevertheless, it has not hesitated to make, directly or indirectly, requests of the US, some of which reveal a non-comprehension of US policies and actions and considerations underlying those policies and actions. We have been able to assist in obtaining the services of experts for Ceylon, and are in the process of [Page 2019]extending some assistance under Point IV and through our contributions to UN assistance programs. Ceylon is very much interested in developing its agricultural resources and small industries and in obtaining assistance for that development/Its planning, however, is not effective. In order to ensure maximum usefulness of technical assistance we shall have to examine carefully requests made of us by the Government of Ceylon and coordinate our assistance program with those of the Commonwealth and the United Nations.

We have sought from the Government of Ceylon communications operating rights for the Department of Defense. The Government of Ceylon has failed to act on the original request made in 1949, indicating it wished to defer discussion until after a complete understanding had been reached with the UK on interpretation of the UK–Ceylon Defense Agreement. This understanding has not yet been reached. The Government of Ceylon has not, in any event, demonstrated a sympathetic attitude toward our needs. In order to bring about a more well-disposed attitude we must build up Ceylonese confidence in the US and an understanding of US integrity and the wisdom of its policies.

Ceylon’s relations with the UK and the Commonwealth are close and valued. We have not wished to unbalance that relationship nor have we deliberately taken any actions that might tend to do so. It does not appear that Ceylon needs encouragement in continuing this relationship, though it has appeared at times to be attempting to play the US off against the UK.

The Government of Ceylon, without particular urging from the US but with some assistance as regards information and counterpropaganda, is attempting to strengthen its position vis-à-vis internal Communist encroachments. It has shown itself unsympathetic towards domestic and foreign communism and may be expected to deny the USSR any military support or other assistance.

  1. Department of State Policy Statements comprised a category of documents summarizing the current United States policy toward, the relations of principal powers with, and the issues and trends in a particular country or region. The Statements were intended to provide information and guidance for officers in missions abroad. They were generally prepared by ad hoc working groups in the responsible geographic offices of the Department of State, were referred to the appropriate diplomatic missions abroad for comment and criticism, and were periodically revised.
  2. December 10, 1947; text in Nicholas Mansergh, Documents and Speeches on British Commonwealth Affairs, 1931–1952 (London, Oxford University Press, 1953), vol. ii, p. 751.
  3. The Colombo Plan, a report published on November 28, 1950 by the British Commonwealth Consultative Committee on South and Southeast Asia calling for the economic development of the area.
  4. The text of this agreement is in United States Treaties and Other International Agreements (UST), vol. 1, p. 723.
  5. The text of this agreement is in Mansergh, Documents, vol. ii, p. 750.
  6. Public Law 402, the United States Information and Educational Exchange Act of 1948, approved January 27, 1948; 62 Stat. 6.
  7. The text of this agreement is in Mansergh, Documents, vol. ii, p. 749.
  8. Material on efforts by the U.S. Government to obtain communications operating rights in Ceylon is in Department of State file 711.56346E. An agreement concerning U.S. use of the facilities of Radio Ceylon was effected by an exchange of notes signed at Colombo on May 12 and 14, 1951; see text in 2 UST 1041.
  9. Don Stephen Senanayake.