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

746E.13/1–3153: Telegram

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

confidential

Colombo, January 31, 1953—noon.

377. Called on Prime Minister Senanayake yesterday P.M. and handed him aide-mémoire in reply following statement made by Minister of Com R. G. Senanayake during House debate on China Pact January 22 mentioned briefly first sentence fifth paragraph Embtel 367, January 23:²

“We waited for foreign aid, foreign assistance. As you know, Sir, over and over again we made appeals for Point IV aid. We waited four long years. We have got in the form of assistance only a cook for the Kundas All Girls School.”

I pointed out that person referred to as cook must be Mrs. Gladys Simon who is superintendent All Girls Agriculture Schools in Ceylon and is here on Smith-Mundt grant and not under Point IV. It seemed most unfortunate that responsible Minister his government should refer to lady of her unusual qualifications in such derogatory manner. Aide-mémoire also explained Point IV situation and concluded by saying I was making explanation contained therein for purpose setting record straight and also with thought he might wish have error concerning Mrs. Simon’s true status corrected. Am forwarding text by pouch.

Re Mrs. Simon, Prime Minister said at time Minister of Com made statement he couldn’t imagine to whom he was referring and for that reason did not mention matter in his statement in closing debate. After learning from me few days ago who person in question was (meeting him at reception I told him I planned call on him to protest this statement), he said he had already discussed matter with Min Com and told him it was extremely unfortunate he should have made such an irresponsible statement.

In course discussion that ensued, Prime Minister again complained that Ceylon had been given no American assistance while India was receiving huge amounts. This led to discussion Battle Act which made it impossible give Ceylon either technical or financial assistance after first shipment of rubber to China had gone forward. He said Ceylon had requested exemption under Title Two and had offered negotiate and asked why Ceylon could not have been given exemption in same way UK had been. I said in my opinion there were two reasons, first, that UK received in return for rubber it shipped to USSR vitally needed products (Ceylon was receiving nothing from China in return at that time) and, second UK was making large military contributions to common defense free world. We had always listened sympathetically to Ceylon’s arguments defending its actions and had always passed on these arguments to my government. What we could not overlook, however, was fact that rubber they sold to China was going to aggressor which was engaging in warfare with UN and that American and UN forces were dying daily in defending free world.

Re technical assistance, I recalled statement Minister of Food Goonetilleke had made to Gufler and Black on his return from Washington last summer to effect that 50 million dollars was smallest amount which would make it politically expedient justify presence in Ceylon of American aid mission. I also pointed out that this amount had been demanded without submitting any detailed projects. We had nevertheless made offer substantial amount of aid which they had turned down. India, on other hand, had given complete details justifying every project for which it was receiving aid.

Subject then changed to recent criticism Ceylon for selling rubber to China contained in Battle Act report.³ I told him I failed understand rather extreme criticisms being made of this statement locally since it was factually correct and seemed to me to set forth Ceylon’s side of question in a fair light. This statement moreover had not given full account efforts US had made to assist Ceylon in connection with rice. I therefore, handed him statement describing just what we had done based on page 5 January 6 issue “current economic developments”.⁴

I also read Prime Minister excerpts of article appearing in yesterday’s UNP journal which described Battle Act report as slashing attack on Ceylon-China Pact and said it would not of course be difficult for powerful country like US to bully a small country like Ceylon, to starve her out, to ruin her rubber industry, and to establish virtual economic blockade around her vulnerable economy. Article also said that American policy amounts to this “You Ceylonese must sell your rubber to us even if it means total loss to producer and bankruptcy to government. You Ceylonese must starve rather than buy your needed rice from China. You must starve and sell your rubber at a loss in order that the free world may be safe against communism”. I said I was quoting this article as it was published in journal of party of which he was president and wondered if it represented his views. I said it seemed to me there was no basis as claimed by article that US was following policy of economic imperialism and that our assistance with respect to rice would certainly indicate we were not trying to starve Ceylon.

Prime Minister was somewhat apologetic over article which he obviously had not seen. He said it was true UNP now had some responsibility for UNP journal (it was formerly Minister of Transport Kotelawala’s private organ) but that it was still cause of embarrassment to him and even attacked members his government. He said his government was indeed appreciative of assistance we had given Ceylon re rice. He felt, however, that our action in depriving Ceylon of sulphur was a type of economic imperialism. I pointed out that I had informed his father who was Prime Minister at time first rubber shipment left for China that US could not furnish sulphur if rubber was sold to China. As it would be impossible for us to justify to US Congress and public sale to Ceylon of article which was used to grow rubber which was being sold to our enemies. I pointed out at same time that we, nevertheless, did not wish cause any harm to Ceylon’s long-range economy and had offered small amount of sulphur for rubber experimental farm but that GOC had never taken this up.

Prime Minister also criticized statement in Battle Act report saying that controls over shipping and fueling of vessels calling at free world ports might provide one salutary course action. I replied I did not consider this a threat as suggestion was intended apply such controls I was sure only to ships carrying strategic materials and not for purpose depriving Ceylon of food.

Parenthetically it was in my opinion most unfortunate that this sentence was contained in statement as it has been seized on by local press as threat against Ceylon. If MSA had consulted Department, latter could have pointed out that we undertook prevent first shipment rubber to China by employing such controls in September, October 1951 and failed. Since then Soviet and satellite vessels have apparently made all necessary arrangements for fueling in this area by carrying sufficient fuel from Black Sea and by shipping fuel to Chinese ports. Naval Attache tells me that week ago there were 29 Soviet and satellite ships in Indian Ocean.

I then told Prime Minister we had received several reports from our Indonesian, Malayan and Burmese offices indicating that efforts were being made in those countries to ship rubber to Ceylon for premium prices for resale to China. Prime Minister replied he was sure no such shipments were being made and that Ceylon had no intention permitting reexport any strategic material other than rubber. He also specifically reiterated assurances given me by Vaithianathan (Embtel 316, December 22)⁵ re truck tires and tubes.

I asked if he had any information as to when first Chinese might arrive here under arrangements approved in rubber contract (Embtel 374, January 29).⁶ He said no but he thought not soon as Chinese were accepting reports of rubber surveyors for first shipment now being loaded under long term agreement.

Interview was inconclusive in that Prime Minister again said that he regrets this trade with Communist China very much but that in absence US aid Government of Ceylon had no alternative if it were to avoid economic collapse. I think, however, it may have served some purpose in clarifying US position and in bringing out several points of which he was apparently not aware.

On departing I gave him message contained Department’s circular airgram 788, January 9⁷ to effect Secretary Dulles has no present plans to visit Asian countries, et cetera.

Satterthwaite

1. This telegram was repeated to London for information as telegram 110.
2. Telegram 367 from Colombo, not printed, reported the debate on Jan. 22, 1953 concerning the Chinese rice agreement in the Ceylonese House of Representatives (446E.9331/1–2353).
3. The Battle Act report referred to here was the Second Report of Congress on the Mutual Defense Assistance Control Act of 1951 submitted by Administrator Averell Harriman. The portion on Ceylon (pp. 26–27) elicited a highly critical response from some sections of the Ceylon press. (Telegrams 363 and 364 from Colombo, Jan. 21, and 22, 1953; 846.E2395/1–2153, 846E.2395/1–2253)
4. Current Economic Developments is a classified weekly publication of the Department of State. Page 5 of the Jan. 6, 1953 issue provided details of the U.S.–Ceylonese rice negotiations in 1952, noting that the U.S. Government offered Ceylon its entire stock of 7,000 tons of rice when Food Minister Goonetilleke visited Washington in July 1952 (see memoranda of conversation, dated July 21 and 22, 1952, pp. 1529 and pp. 1530). However, Ceylon was unwilling to pay the current free market export price for the rice and subsequently used only part of a later U.S. allocation of rice for Ceylon because the “prevailing market price was higher than it wanted to pay.” (Current Economic Developments, Issue 389, Jan. 6, 1953, p. 5)
5. Not prlnted.
6. Telegram 374 from Colombo, not printed, noted that for the time being the Chinese would not send a mission to Ceylon to oversee their rubber purchases but would accept rubber grade certificates from locally appointed representatives (446E.9331/1–2953).
7. Not found in Department of State files.