446E.9331/10–2052: Telegram
The Ambassador in Ceylon (Satterthwaite) to the Department of State1
181. Min Food Goonetilleke today gave Black in strictest confidence fol details re Chi rice-rubber proposal (Embtel 179, Oct 20).2
- 1.
- Chi will supply 200,000 tons rice annually at cost 56 pounds sterling per ton f.o.b. This will be in addition to 80,000 tons already agreed upon.
- 2.
- Chi will buy any quantities No. 1, 2 and 3 sheet rubber offered up to 50,000 tons annually at average price of Rs 1.75 per pound f.o.b. In event world price rises above Rs 1.75 GOC can renegotiate price. Rubber will continue to be sold through Ceylon commercial channels.
- 3.
- Although agreement theoretically for five years, quantities and prices of both commodities will be negotiated annually.
- 4.
- GOC has no intention permit Chi station either trade or diplomatic reps in Ceylon. Mission chief Senanayake rejected categorically Chi request permit Chi agent reside Colombo to pass on rubber shipments.
Goonetilleke said there is no question whatsoever but that Cab will approve agreement and he himself has recommended such action. He asked that in reporting matter to Wash Emb shld emphasize:
- (a)
- GOC has no alternative but to sign agreement. Providing rice for people is surest way to maintain present govt and there is no danger of opposition parties taking over in Ceylon.
- (b)
- Signing of pact shld not be construed as indicating increase in GOC’s sympathy for Commies. GOC stands and will stand “staunchly on side of West.”
Goonetilleke said US “shld not worry over implications of agreement as we in Ceylon have ways of slightly tricking our enemies.”
According Goonetilleke, Brit Consul General Peking informed mission chief Senanayake that Chi use rubber for civilian purposes is expanding greatly and obviously there is no shortage or restrictions on civilian use wld have been imposed. This made strong impression on Senanayake who used it in presenting proposals to Cab.
[Page 1546]Emb considers such statements re “civilian” consumption in Commie controlled economies to be meaningless. Furthermore, statement inconsistent with Chi willingness contract year in advance pay premium price crude rubber.