646E.93/5–253: Telegram
The Ambassador in Ceylon (Satterthwaite) to the Department of State1
497. I naturally share Department’s concern expressed its A–822 re shift here toward Communist China and away from US as result rubber-rice pact which is inevitably drawing Ceylon and Communist China closer together as regards trade relations. I doubt, however, whether as Department fears there has been any appreciable shift in Ceylon toward Communism. Even Minister Commerce Senanayake has of late been making anti-Communist speeches.
It would, nevertheless, be unrealistic in my view expect Ceylon to break its contract with Communist China as result arguments contained A–82. Rubber-rice pact has worked so smoothly to date and has been so profitable to Ceylon during present financial crisis that even high officials who were most opposed to it would hesitate take any action in present circumstances to end it. Finance Minister Jayewardene for instance in statement in Parliament April 28 on difficult economic conditions prevailing in Ceylon today cited as favorable factor fact that rubber-rice agreement had stabilized for time price paid for Ceylon’s sheet rubber above world price and price Ceylon has to pay for portion its rice imports below world price.
As far as we can judge here any action which might lead to termination rice-rubber agreement in immediate future at least must originate outside Ceylon for example as result Korean truce leading to lifting UN embargo with its resultant effect on rubber prices or seizure by Chinese Nationalists of ship carrying Ceylon rubber to Communist China.
Therefore, arguments set forth in five numbered paragraphs A-82 while indeed strong ones will I fear have little effect as long as rubber shipments continue at present favorable prices. We have of course, used most these arguments in many previous discussions with high government officials and will continue do so. A favorable opportunity might be found by handing Permanent Secretary Vaithianathan advance copy Department’s background paper with explanation in numbered paragraph 1.3 I believe this course would be preferable to letting Ceylon Government learn of its issuance through press even though [Page 1572] we do not ourselves pass it out here. Prime Minister and Vaithianathan will be leaving for London attend Coronation May 25. We could use text transmitted with Kennedy’s letter March 244 unless subsequent changes have been made.
Please let me know when statement will be released.
- This telegram was repeated to London for information as telegram 136.↩
- Supra.↩
- The Department, however, delayed issuance of the background paper to the point where the Embassy questioned whether issuing it at all would still serve any useful purpose. (Telegram 504 from Colombo, May 19, 1953; 446E.9331/51953)↩
- Not found in Department of State files.↩