Foreign Relations of the United States, 1952–1954, Africa and South Asia, Volume XI, Part 2

446E.119/8–1652: Telegram

The Chargé in Ceylon (Gufler) to the Department of State¹

secret

Colombo, August 16, 1952—3 p.m.

72. Dept distribution only. PermSec MEA today orally gave official GOC reply US proposals (Deptel 65, Aug 12)² substance of reply was: GOC

1. Appreciates US assistance in rice procurement. PermSec stated GOC hopes purchase minimum 100,000 tons current US rice crop providing sufficient dollars available.

2. Is continuing to study US terms for rubber agreement.

3. Disappointed small current US appropriation for assistance to Ceylon and particularly that US did not give “greater encouragement” to Ceylon’s requirements for economic aid in future.

4. Considering dim econ outlook and particularly falling prices Ceylon exports, GOC politically, economically unable take step, i.e., embargo rubber to Chi, which wld eliminate premiums now being paid by Chinese and result in throwing out of production estimated 100,000 acres marginal rubber holdings.

5. Regrets exceedingly it must reject US proposals as they fail to give GOC adequate political and economic justification for embargoing rubber to China.

6. Hopes under circumstances US will reconsider proposals, particularly in respect to amount of economic assistance.

7. Wld like US to realize China mission sent at invitation Chinese and GOC took no initiative. Cabinet considered, however, mission necessary from polit view point.

In discussing these points and in reply to direct questions PermSec stated:

a. GOC not vitally concerned with rubber agreement and considers greater economic assistance of more importance. Only rubber agreement plus economic aid would enable GOC justify embargoing rubber to Chi and to make such step acceptable to Parliament and public. (It was obvious during discussion that GOC thinking in terms substantial financial not tech assistance.)

b. Although Cabinet considers possibility conclude agreement with US prior return to Ceylon of Chi mission, it is unlikely GOC cld take any action on any proposals US might make unless they were sufficiently glowing to convince Cabinet they wld be acceptable to public.

We mentioned that prior to PriMin’s death, rubber agreement alone had appeared sufficient justification embargo rubber to Chi and that it appeared evident that GOC had raised its price. We gave no encouragement that further proposals wld be forthcoming from US.

In conversation last night Goonetilleke emphasized to me that GOC reply would be in form which wld enable negots to be kept open. Today acting Gov Central Bank told Black that both bank and MinFin vitally interested in rubber agreement as dollar source. It is possible therefore, but not probable in view what we interpreted as flat rejection that GOC attitude ultimately may change.³

Gufler

1. This telegram was repeated to London for Armstrong, Embassy distribution only, as telegram 10.
2. This reference is incorrect and should be either Deptel 45, Aug. 4, p. 1536, or Embtel 65, Aug. 12, supra.
3. The Department replied in telegram 72, Aug. 29, 1952, that it regretted that the Ceylon Government was not prepared to proceed on the basis of telegram 45 and hoped that it understood the great effort the United States had made in assisting it to overcome the difficulties in stopping rubber shipments to Communist China. The telegram continued that TCA was not prepared to go any further in its Offer of aid than it had already done. (446E.119/8–1652)