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

746E.00/11–1052: Telegram

The Ambassador in Ceylon (Satterthwaite) to the Department of State¹

secret

Colombo, November 10, 1952—1 p.m.

247. Min Food Goonetilleke informed Emb rep that Min Comm Senanayake arrived at Cab meeting Friday night (Embtel 245, Nov 8)² with written and signed resignation which he left with Cab before stalking out of stormy session during which he acted very childishly. He later went to PriMin’s residence and withdrew resignation. Goonetilleke said PriMin getting completely “fed up with Dickie’s antics” and was sorry resignation had been withdrawn. MEA Perm Sec Vaithianathan also told Emb rep that “Dickie behaved very badly and under any other circumstances (i.e., family relationships) wld be finished”.

According Goonetilleke, Min Comm extremely upset at Cab’s decision to “approve in principle” Chinese rice rubber proposals and to send mission to Chi for further negotiations as he feared Cab intended “torpedo” agreement. Min Comm wld like to head mission but with possible exception De Fonseka, Ceylon Min to Burma, mission will be working level. Min Comm apparently convinced there is “secret plot” between Min Fin Jayewardene and US State Dept whereby latter will finance Min Fin’s campaign to become PriMin in return for Min Fin opposing Chinese proposals.

Goonetilleke expressed annoyance over fact Chinese had asked for only 20,000 tons rubber per year and Min Comm himself had proposed 50,000 ton figure. GOC wld have preferred former as it then cld have taken position vis-à-vis democratic countries that amount rubber involved actually less than Chi now purchasing.

Goonetilleke convinced proposals will be approved by both countries within next thirty days as Chinese apparently anxious for agreement. Mission expected depart within one week. Min Comm pressing for GOC establish Govt export corporation to handle Chi rubber shipments but Cab strong opposed.

In reply direct question whether mission wld be authorized sign final agreement, Goonetilleke said that “I propose” have mission carry draft approved by Cab. Mission wld then consult with GOC on any modifications, communications between mission and GOC are carried on in code through commercial telegraph channels. Peking, however, sent Chinese reply to GOC request for clarification in clear through commercial channels direct to Min Comm Senanayake. GOC communicates with Commie Chi Govt thru GOC Min Burma and Chi Amb Rangoon.

Today Vaithianathan informed Emb that GOC mission wld be on “official level” and wld be headed by De Fonseka. Mission will have authority sign long-term rice-rubber agreement “subject to ratification”. In this case, however, ratification will be formality as Cab has already agreed on points involved.

Vaithianathan said principal points to be discussed with Chinese are:

(1) Quantity of rice to be purchased. GOC has now inquired whether Chi able provide 300,000 tons of rice instead 200,000 tons originally proposed.

(2) Rice price. GOC is seeking reduction in price 56 pounds sterling per metric ton proposed by Chinese under long-term agreement (Embtel 210, Oct 29).³

(3) Certain details re mechanics of rubber purchase.

Vaithianathan said GOC members of first Chi mission are optimistic that Chinese will agree on all points and that Chinese so eager for GOC ratification that they will even concede reduction in rice price without demanding corresponding reduction in rubber price.

Satterthwaite

1. This telegram was repeated to London for information as telegram 60.
2. Telegram 245 from Colombo, not printed, reported the local newspaper story that the cabinet, in a meeting on Nov. 7, had approved the rice-rubber proposals in principle, but it had decided to send a working level mission to Peking to seek a lower price for Chinese rice (446E.9331/11–852).
3. Telegram 210 from Colombo, not printed, indicated that the price China would charge for its rice was 56 pounds sterling per metric ton (7.1 U.S. cents per pound of rice) and Ceylon would have to provide gunny sacks for shipment (446E.9331/10–2952). After subsequent negotiations, the Chinese reduced their price to 54 pounds per ton (telegram 309, Dec. 19, 1952; 446E.9331/12–1952). This price would be equivalent to 6.9 U.S. cents per pound, resulting in a total price to Ceylon, including gunny sacks and shipping costs, of 7.6 cents. By way of comparison, the rice Ceylon purchased from the United States in 1952 cost 7.7 cents plus shipping. (U.S. Department of Commerce, Report No. FT 410, 1952, P. 22)