892.00–R/4–1051
Memorandum for the Files by Mr. William O. Anderson, Office of Philippine and Southeast Asian Affairs
Subject: Consultation in Department on Thai-ECA Program
Soon after reporting to Mr. Landon and Mr. Shohan,1 I was informed that both State and ECA had faced considerable criticism in the office of the Bureau of the Budget in presenting justifications for the Thai-ECA program. It was explained to me that a representative of the office of the White House had laid down executive policy, in which the Treasury Department concurred, that grant aid for fiscal 1951 and 1952 for Thailand should be cut below the amounts previously considered and the difference should be made up in interest-bearing loans. There was also expressed considerable concern that the whole southeast Asian economic aid program might suffer in Congress if weak spots in the justifications (Thailand grant aid was considered the leading weak spot) were not eliminated. In talks with various Departmental officials I was frequently asked for details of the U.S.Thai economic aid negotiations with a view to clarifying to what extent the prestige of the U.S. Government is now at stake as a result of moral, economic or political commitments.
In tracing the chronology of aid program developments, I emphasized the concern of the Embassy and Ambassador Stanton that action had begun too slowly and that Thai negotiations with both the Embassy and the STEM Mission were frequently confused by what appeared to be a lack of coordination among agencies in Washington. I emphasized that negotiations were first begun (shortly before the arrival of the Griffin Mission in April 1950)2 on a basis of undertaking an economic program on what appeared to be a gamble to obtain a political objective of strengthening Thailand against the inroads of [Page 1607] Communism. Under the circumstances then existing, both the Embassy and the Thai negotiators agreed upon the necessity for acting quickly. From the standpoint of the Embassy, the commitment of funds and expert personnel was justified primarily by the need for immediate action.
I was asked by Mr. Landon and Mr. Shohan to present a chronology to the office of the Assistant Secretary of FE on April 5, 1951.
April 9, 1951. Mr. Landon showed me a joint Embassy–ECA telegram setting forth in strong terms the concern of those agencies that the U.S. risks considerable loss of political prestige as a result of a Washington decision to reduce grant funds for Thailand for fiscal 1951 to $7,000,000 and to direct the Embassy and STEM to encourage the Thai to seek an additional approximate $5,000,000 through loans.3 Mr. Landon asked that I give my frank opinion as regards the impact on Thailand of the Washington decision referred to above. I informed Landon that the insistence upon financing a major portion of the 1951 program from loan funds, when added to the discouragingly slow development of an action program in Thailand, undoubtedly will react strongly to the discredit of the U.S. Government. I expressed an opinion that the Thai, who are in a vulnerable geographic position, would interpret the U.S. move as a unilateral one and one having the effect of penalizing the only country in southeast Asia which has cooperated with the U.S. in many political decisions, including the sending of Thai troops for combat in Korea. I proposed that the U.S. provide grant funds for the entire fiscal 1951 program, but could insist upon loan financing for most, if not all, of the fiscal 1952 program. I then volunteered to discuss the Bangkok telegram on a frank basis with Mr. Griffin of ECA. After some consultation it was decided that Departmental policy was not to take the initiative in approaching Griffin at this time but rather to wait for ECA to take the initiative.
The matter was discussed at length with Mr. Shohan, who explained to me the belief of Mr. Lacy, Mr. Merchant4 and himself that, mechanically, little can be done to attempt to increase grant funds at this time because of the adamant position taken by the Bureau of the Budget, the Treasury Department and the White House. On behalf of Ambassador Stanton I asked that consideration be given to the necessity for supporting a capable career Ambassador and his mission in a sensitive country in a critical time.
- Charles J. Shohan, Officer in Charge, Economic Affairs, Office of Philippine and Southeast Asian Affairs.↩
- Mr. R. Allen Griffin, Director of the Far East Program Division, Economic Cooperation Administration. Mr. Griffin had headed a survey team which visited Southeast Asia in March and April 1950, to develop recommendations regarding initial economic and technical aid to the area. For documentation on the Griffin Mission and related activities, see Foreign Relations, 1950, vol. vi, pp. 1 ff.↩
- Not printed; the telegram under reference is No. 1556, from Bangkok, April 6 (892.00–R/4–651).↩
- Livingston T. Merchant, Deputy Assistant Secretary of State for Far Eastern Affairs.↩