846E.2395/2–1152: Telegram

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


464. Views contained penultimate para Deptel 300, Feb 91 presented to Perm Secy MEA and MinFin. Emb continues maintain position (Embtel 449, Jan 31)2 that rubber contract being discussed at request GOC and therefore GOC unwise to jeopardize agreement by insisting on terms unacceptable to US.

Perm Secy said Corea had been instructed ask US undertaking assist GOC procure development not defense forces items. Perm Secy agreed contract shld stand alone but said question wld be discussed by Cabinet tomorrow and he unable instruct Corea without Cabinet auth.

MinFin said agreement enlargement sought as means making contract more acceptable to Ceylon public and rubber trade and expressed view that gen statement of US friendship and willingness assist in GOC procurement problems wld fill requirement. MinFin said he wld press Cabinet to instruct Corea proceed immed with negots. Principal Cabinet opposition apparently from Min Commerce and Trade.3

  1. Department telegram 300, not printed, reported that Ceylon Ambassador Corea had proposed on Feb. 8 that a rubber agreement be enlarged to include U.S. assistance in procuring for Ceylon certain needed materials including defense items. The Department expressed its belief that the rubber contract should stand on its own feet and should be concluded rapidly if Ceylon were really interested (846E.2395/2–952).
  2. Not printed.
  3. The Minister of Commerce and Trade, Richard G. Senanayake, nephew of the Prime Minister, Don Stephen Senanayake, had been in favor of expanding trade with China at the expense of commercial ties with the United States. He was personally to lead Ceylon’s Delegation to Peking in the fall of 1952 to negotiate the five-year rice rubber agreement with China.