The Ambassador in Ceylon (Satterthwaite) to the Secretary of State
545. Saw PriMin Senanayake and Perm Secy Vaithianathan yesterday at latter’s request apparently as result my representations on rice–rubber proposal reported Embtel 522 May 9. Perm Secy read me portions ltr being sent by PriMin to unnamed Brit official possibly Attlee,1 in which Senanayake recalled that at 1948 Commonwealth PriMin’s mtg London he had recommended cutting off all trade with USSR and its satellites and that GOC had refused have any dealings with Sov trade mission which came to Ceylon 1949 at instigation local Brit firm. Purpose reading me this portion was apparently demonstrate that UK had only recently adopted policy recommended by Ceylon three years ago. However, Ceylon now seems feel UK has obligation towards Ceylon in implementing this policy to protect it from econ loss.
PriMin then emphasized that Ceylon’s grouse was with UK rather than with US. He did, however, express keen disappointment over failure Rome rubber talks reach agreement and said he cld see little future for rubber in Ceylon in absence such agreement. I then gave them gist certain portions report on these talks contained Apr 30 [Page 2026]issue Current Economic Developments 2 which we recd only yesterday. They seemed impressed by reasonable position we had taken at talks and confirmed that portions relating Ceylon’s position were correct. Our discussion was inconclusive, however, and apparently its main purpose was to emphasize great importance PriMin attaches to maintenance reasonable rubber prices.
With ref to Chi Commie’s proposal for rice-rubber deal, I again emphasized unfortunate reaction their acceptance wld have on US Govt and people. PriMin, while expressing sympathy for our position, shrewdly refused commit himself while Perm Secy remarked they might be compelled accept proposal in order sustain rubber prices. My impression is, however, they are taking this line in hope driving harder bargain with British.
Dept pass London. Sent Dept 545; rptd info London 78.