493.46E/5–851: Telegram

The Ambassador in Ceylon (Satterthwaite) to the Secretary of State

secret

522. On basis London’s 5807, May 8,1 I told Vaithianathan, Permanent Secretary MEA, this morning I had recd what appeared be well founded report that Chi Commie Govt had offered Ceylon quantity rice in return for rubber. While having no instructions discuss matter I hoped GOC wld realize unfortunate reaction its acceptance such proposal wld have on US Govt and people.

He confirmed GOC had recd such proposal and was “toying with it”. He cld not indicate what decision wld be but fact that rice was offered made proposal most tempting. Nevertheless, PriMin wld have rejected it out of hand except for his disappointment over failure Rome rubber talks2 and falling price rubber.

I said I cld not discuss merits Rome talks as we had recd no report on them. I hoped however GOC wld recognize that US as largest rubber consumer had shown its goodwill in suggesting these talks and also formation comites for allocation scarce raw materials. Furthermore, present price rubber was still much higher than cld have been imagined possible at time my arrival here 18 months ago and that Price Planters Association official had indicated few weeks ago wld be satisfactory to planters if long-term agreement cld be reached. He acknowledged this was so.

I also expressed hope PriMin wld not overlook political implications offer this nature. Chi Commies had dollars and were apparently free purchase rubber here on open market. He confirmed this was so. Fact they offered rice, I continued, while Chinese were starving indicated their motives were other than purely economic.

From our standpoint Chi Commies were engaged in flagrant aggression against UN.3 While recognizing Ceylon not UN member this no fault Western powers and I sincerely hoped Ceylon wld not attach greater importance to failure reach agreement on rubber satisfactory to it than in retaining goodwill its friends.

Vaithianathan said he wld inform PriMin my views. While hopeful latter will accept wise counsel, I fear he still holds to view he expressed [Page 2025]to McGhee (Embdes 654, March 8)4 that Ceylon shld not be expected make any major sacrifices re rubber unless major war breaks out.

Black5 has made discreet inquiries among certain key GOC officials who wld normally be consulted on question this matter. Fact they have no knowledge proposed rice-rubber deal indicates discussion being confined few officials at highest level. UKHC office has informed him that channel for offer was Chinese Commie Amb Rangoon6 to Ceylon Minister there;7 that they have informed GOC they wld deplore its acceptance offer; and that they doubt GOC will accept it.

Incidentally Vaithianathan said that formal recognition Commie Chi Govt by GOC has never been completed since GOC has never sent final confirming telegram requested by former.

Dept pass London, sent Dept 522, rptd info London 76.

Satterthwaite
  1. Telegram 5807 from London, May 8, read as follows: “According to Colonial Office here Ceylon has been approached during past few days by Commie China for barter 50,000 tons rice equivalent value rubber. Ceylon requested opinion UK Govt which expressed strong disapproval acceding to such an arrangement.” (493.46E/5–851)
  2. Reference is to a meeting of the International Rubber Conference held in Rome, April 9–21.
  3. On May 18, at its 330th plenary meeting, the U.N. General Assembly adopted resolution 500(V), calling for an embargo on the shipment of arms and strategic materials to areas under the control of the People’s Republic of China and the North Korean authorities. Related documentation is scheduled for publication in volume vii.
  4. Not printed.
  5. Myron L. Black, First Secretary of Embassy in Ceylon.
  6. Yao Chung-ming, Ambassador of the People’s Republic of China in Burma.
  7. Susanta de Fonseka, Minister of Ceylon in Burma.