446E.119/7–3052: Telegram
The Chargé in Ceylon (Gufler) to the Department of State1
46. For Emb info only. Dept distribution only. In lengthy conversation with Black and myself today, Goonetilleke, who arrived Colombo yesterday afternoon, made fol points directly bearing on Wash conversations (Deptel 35, July 28):2
- 1.
- Altho he discussed results trip with PriMin he (Goonetilleke) must have firm proposals from Wash on rubber agreement and technical assistance before he can officially take up problems involved with cabinet. He had hoped they wld have been received here already. In reply to direct question, he confirmed he is awaiting proposals from Wash not planning to suggest terms to Wash.
- 2.
- He anticipates Wash will propose purchasing 5,000 tons (50 percent crepe, 50 percent number 1 and 2 sheet) monthly over two-year period according price formula based on Singapore market without premium. Transactions wld be through commercial channels but GOC wld have responsibility provide and US Govt to purchase residual quantities. Ceylon wld stop rubber shipment to Commie Chi on signing agreement. He proposes encouraging output crepe by immediately establishing cooperative factories for small producers.
- 3.
He expects US agreement, subject necessary reservations future Congressional action, participate as equal partner his proposed five-year $100 million program. He appreciates US unable make binding commitment and willing accept necessary reservations.
When queried on discrepancy between his $100 million and Coomaraswamy’s fifty rupee program, he replied benefits of smaller program wld not offset political disadvantage of having US aid mission in Ceylon.
- 4.
- As result UK dollar grant and projected purchases in US he satisfied Ceylon rice position balance 1952.
- 5.
He proposes to increase drastically price subsidized rice ration in order reduce GOC financial burden.
Altho Goonetilleke exuded cordiality and enthusiasm over reception received Wash and made repeated protestations friendship for US he did not fail make clear that other alternative exists. In this connection he mentioned (1) he had been unable persuade colleagues that GOC shld not accept invitation send rice mission to Commie Chi. MinComm favors mission, PriMin as yet undecided.
(2) USSR holding out bait possibility increased rubber purchases and again pressing send three “Inspectors” Colombo to pass on rubber shipments. Thus far, GOC has refused.
(3) In conversations in London with Indonesian Amb and prominent Indians, he detected tendency consider that South and Southeast Asia shld not become involved in political differences between communism and West and that USSR and Chi shld be regarded not as military powers but as economic areas that cld supply Asia’s basic economic requirements.