Foreign Relations of the United States, 1951, Asia and the Pacific, Volume VI, Part 2

846E.2395/8–351

Memorandum of Conversation, by Mrs. Louise Sissman of the Office of South Asian Affairs

secret

[Washington,] August 3, 1951.

Subject: Negotiation of a Possible Rubber Contract with Ceylon.

Participants:	Mr. G. C. S. Corea, Ambassador of Ceylon;
	Mr. G. S. Peiris, Second Secretary of Embassy of Ceylon; Mr. Fluker;1 Mr. Armstrong;2 Mr. Alexander;3 Mr. Kelakos;4 Mrs. Sissman—Department of State

The Ambassador accompanied by Mr. Peiris called on August 3 to discuss further the present status of the talks with respect to negotiations of a possible rubber contract for Ceylon. The Ambassador stated that he was not clear as to what the United States position had been in the meeting with Mr. Peiris on August 2.⁵

Mr. Fluker again explained that the leak to the Ceylonese newspapers had been extremely unfortunate and will prove embarrassing to any negotiators who might be selected by either country. As far as the United States is concerned, Mr. Fluker pointed out, it would now be impossible to send a negotiator since the mere appearance of such person in Ceylon would at once seem to confirm reports of negotiations and might be interpreted by the Trade as an indication that the terms under discussion approached those mentioned in the articles; namely, a contract running from 3 to 5 years and paying from 4 to 6 shillings a pound.

Mr. Fluker said that it appeared necessary to have a complete review of the situation with the Government of Ceylon indicating its position with respect to the basis for negotiation and stating what other channels of negotiation it would prefer. Mr. Fluker reminded the Ambassador that the U.S. had still not received any indication of the position of the GOC with respect to possible terms to be discussed.

Mr. Armstrong pointed out that this leak was particularly embarrassing in view of the fact that the U.S. Government does not consult with its trade on matters dealing with rubber contracts and, in fact, does not even inform them of the existence of such contracts.

The Ambassador expressed regret at the leakage of the news, but said that it was understandable in view of the fact that the GOC had indicated it would be necessary to contact the trade. He asked whether he was correct in understanding that the U.S. felt that in view of the leak it would be impossible for the U.S. to send a representative to Ceylon at this time for the rubber talks. When assured that his understanding was correct, the Ambassador said that he would ask his Government for (1) its position on the bases for negotiation, and (2) what procedures it now proposes. When a reply is received, the Ambassador will inform the Department.

1. J. Robert Fluker, acting officer in charge, Economic Affairs, Office of South Asian Affairs.
2. Willis C. Armstrong, Special Assistant, Office of International Materials Policy.
3. George H. Alexander of the Office of International Materials Policy.
4. Michael G. Kelakos, International Economist, Office of South Asian Affairs.
5. Memorandum of conversation not printed, but see telegram 53 to Colombo, infra.