493.46E9/12–1551: Telegram
The Chargé in Ceylon (Gufler) to the Secretary of State
383. Embtel 382, Dec 15. Emb expressed grave concern to Perm Sec MEA over leak re rubber contract and pointed out original discussions had been suspended as result similar leak. Perm Sec first said story possibly originated with Min Home Affairs who had divulged it without ulterior motive and only in effort be congenial to press. Later Perm Sec expressed view article contained nothing new and story cld have been developed by any good newspaperman as logical sequence to previously published Reuter despatch (Embtel 374, Dec 12).1
Emb rep pointed out Reuter desp did not mention rubber agrmt and today’s article just factual enough to indicate story had GOC [Page 2081] source. Perm Sec agreed publication such arts definitely creates atmosphere unfavorable to negotiating agrmt type contemplated.
Emb recommends US take no further initiative re rubber agrmt and await any proposals GOC may care present. Evidence continues mount re GOC anxiety over dollar position (Embtel 347, Nov 28)2 for which rubber agrmt possible solution. Emb considers because of dollar factor, agrmt definitely more value GOC now than when originally proposed and that pressure from MinFin may ultimately force me take more interest.
Emb has seen little evidence unfriendliness in official circles or on part public toward US as result suspension Point Four assistance altho press has consistently presented situation to our disadvantage. As matter fact Emb considers if Point Four aid were resumed limited Ceylon program possibly might create more disappointment than was caused by program suspension.