711.56346E/6–2753

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

top secret
No. 774

Reference:

  • Department’s Instruction No. 15, May 28, 19531

Subject:

  • Possibilities of Obtaining U.S. Military Rights in Ceylon

In the despatch under reference the Department requests my views on behalf of the Department of Defense as to whether the political [Page 1574] situation in Ceylon would permit the opening of negotiations for U.S. Military Rights with the Government of Ceylon at this time, and if not, an estimate as to when such negotiations could be initiated.

I have given the Department’s inquiry careful thought and have reached the conclusion that, for reasons given below in greater detail, the political situation is not at the present time favorable for undertaking such negotiations. The reasons in brief for my views are (a) the present financial crisis which the country is undergoing, which in turn has led (b) to growing fear on the part of the Government of being overthrown by the parliamentary opposition which shows some signs of cooperating and becoming more effective, (c) fear on the part of the Government of the reaction of the Indian Government to giving the United States such rights, and (d) the state of our own relations with Ceylon as a result of Ceylon’s important trade in rubber with Communist China.

Financial Crisis

As has been reported the financial crisis in Ceylon has reached rather serious proportions, primarily as a result of the excessive food subsidies the Government has been paying. For more than a year the Government has been selling rationed rice, which now costs it between 85 and 90 Ceylon cents per measure, at a cost to the public of 25 cents per measure. Originally this large subsidy was paid mainly for political reasons and in order to assure the reelections of the United National Party (UNP). The Government felt at the time that it could afford to pay such a large price. Although rubber prices had declined severely a very unrealistic budget was, for purely political reasons, brought in last year, since when with the decline of tea as well as rubber prices the Government has been reducing its external assets at an alarming rate.

The Government is now faced with the problem of reducing or eliminating the food subsidy in order to survive economically and is apparently about to face up to the issue in the budget which will be presented about the middle of July. The UNP back-benchers, as well as some of the leaders of the party themselves, are fearful of the effect this may have on their political fortunes and there is as a result a distinct possibility that a number of back-benchers may desert the party.

Growing Strength of the Opposition Parties

The parliamentary opposition, made up mainly of the Marxist Communist and Trotskyist (LSSP) Parties and the allegedly nonMarxist Freedom Party, has taken full advantage of the Government’s financial and political ineptitude and has had considerable success in turning public opinion against the Government. Moreover the Communist Party is apparently having some success in convincing the Trotskyists that they should cooperate in forming a common [Page 1575] front. If this should happen and if the Freedom Party, which often seems disposed to cooperate with the Marxist Parties, should form a common front of the opposition, the UNP Government, in spite of now having a substantial paper majority and four more years of political life before the next elections have to be held, might possibly be overthrown through the desertion of some of its present supporters.

As the opposition is unanimous in proposing that Ceylon should leave the Commonwealth, in favoring cooperation with Communist China and the Soviet Union, and in condemning the present policy of the US Government at every opportunity, the Dudley Shenanayake Government would, in my opinion, be very reluctant to undertake any negotiations which might tend to strengthen the opposition. The Government would undoubtedly at this time consider negotiations for United States military rights here to be in this category.

As an indication of the real fear of some of the UNP leaders that the Government may be overthrown, the Minister of Health, Major E. A. Nugawela, told me only a few days ago that he was seriously thinking of getting out of politics and asking to be appointed Ambassador in Washington. He seems to feel that the intrigues of Sir John Kotelawala, Minister of Transport, to oust Lord Soulbury as Governor General in order to fill that position himself, coupled with the Government’s general ineptitude, may well be ruinous to the Party. There seems moreover to be a growing feeling that Sir John is secretly doing everything possible to undermine the Prime Minister, his first cousin. In brief, the political situation is very unsatisfactory indeed.

Ceylon–Indian Relations

The Department in the final paragraph of its Instruction of May 28 asks my views as to the probable effect on Ceylon–Indian relations of the establishment of a United States military base in Ceylon. In my telegram No. 84 of February 2, 1950,2 I reported the feeling of Sir Kanthiah Vaithianathan, the influential Permanent Secretary of the Ministry of Defence and External Affairs, on this subject. Referring to the request we then had pending for permission to station a small United States Naval unit within the existing British Naval communications unit here, Sir Kanthiah asked why the United States Navy could not arrange to obtain the facilities it so badly needed through the British forces already here. He said that there was a historical pattern and necessity for the stationing of British forces in Ceylon and that their presence here could therefore be explained by his Government. [Page 1576] If, however, Ceylon were to grant similar military privileges to the United States, Ceylon was afraid that a great and powerful neighbor whom she feared and distrusted, referring of course to India, would insist on receiving similar privileges.

In spite of superficial indications to the contrary this inherent fear of India still prevails here and will no doubt continue to do so even if the present unsatisfactory relations between the two countries over the question of the citizenship rights of persons of Indian origin residing here should be settled. As an indication that this fear of India is not unreasonable, high Indian military personages are known to have told their friends in the Ceylon Government that India is determined some day to get possession of the great naval base at Trincomalee. Therefore the reaction of India to the granting by Ceylon of military rights to the United States is almost certain to be negative and should be a matter of some concern to the United States Government in view of the predominant position India holds in this area.

Sale of Ceylon Rubber to Communist China

With reference to the unsatisfactory situation arising out of the sale since October 1951 of substantial quantities of Ceylon rubber to Communist China, I shall only comment briefly in view of the Department’s current awareness of the implications of this complicated and troublesome problem. I should, however, like to refer to my telegram No. 497 of May 2, 1953,3 in which I point out that it would in my view be unrealistic to expect Ceylon to break its present rice-rubber contract with Communist China as long as it continues to work so smoothly and so profitably. I also expressed the opinion that any action which might lead to the termination of the rice-rubber agreement in the near future would have to originate outside of Ceylon, and mentioned in this connection the possibility of a truce in Korea, which would presumably lead to the lifting of the UN embargo with its resultant effect on rubber prices, and the raising of the legal restrictions on trade with Communist China imposed by the Battle Act.

The Embassy has of course made the opposition of the US Government to this trade abundantly clear to the Ceylon Government. I am glad to report that in addition to the rather powerful forces in Ceylon always opposed to closer trade ties with China and favoring the maintenance of Ceylon’s historical trade relations with the West, there has recently been developing on the part of the powerful Buddhist Priesthood, as reported in our OM of June 13, 1953,4 from the Public Affairs Officer, a realization that Buddhism is not enjoying in Communist China the freedom which many had believed. This favorable development has resulted in vigorous public attacks on Communist [Page 1577] China at a large Buddhist meeting held at Anuradhapura recently on the occasion of an important Buddhist holiday.

Possibilities of Current Negotiations

The Department’s despatch of May 28 states that the Department would appreciate my views as to whether the Government of Ceylon might at this time be willing to negotiate on the basis of the economic and security benefits which would accrue to Ceylon as a result of the establishment of United States facilities here. While such benefits could indeed in more favorable circumstances play an important role (many still remember the prosperous days of World War II when British and American forces were stationed here), these considerations would not alone in my opinion be sufficient to induce the Government to enter into negotiations. Such benefits may well have been in the mind of Sir Oliver Goonetilleke, Minister of Agriculture and Food, when making his various suggestions for a formal defense agreement with the United States and the stationing of small naval and air force units here. As indicated in my Despatch 312, November 28, 1952,5 to which reference is made in the Department’s Instruction under reference, I am of the belief that Sir Oliver has been less than sincere in making these proposals and has had in mind primarily the bargaining strength which such suggestions might give to the Ceylon Government in any controversy with the United States, and the favorable light which he hoped Ceylon would be placed in as a result of such suggestions in spite of its shipments of rubber to China.

It is my belief, in the light of the factors discussed above and in spite of Sir Oliver’s suggestions, that we would have to offer both economic and military benefits of a substantial character in order to interest the Ceylon Government in our proposals, with the emphasis on the former at the present time. As to the nature and the amount of additional benefits which would have to be offered, I can only say that the economic benefits would probably have to be substantial in nature, as illustrated by the unreasonable feeling so often expressed here that Ceylon should receive from us economic assistance proportionate to that we give to India. This belief is born out in part by Sir Oliver’s insistence during his mission to Washington in July 1952 that the United States should agree to advance a total of 50 million dollars during the next five years.

If we are willing to offer both substantial economic and military aid I think it is indeed possible that the Ceylon Government may, after it has survived the present financial crisis (which I think it is likely to do) be willing to consider granting us the right to construct facilities for global communications which are so badly needed by our Air Force [Page 1578] and Army. There is some doubt, however, in spite of Sir Oliver Goonetilleke’s repeated suggestions to the contrary, whether the Ceylon Government would be willing to consider the establishment of a heavy bomber-staging base, unless we are willing to offer a very substantial quid pro quo indeed, primarily because of its fear of the reaction the granting of such rights would cause in India.

It seems to me that the United States should not seriously enter into a military program in Ceylon of large proportions unless and until it is willing to take over from the British if need be the responsibilities of the defense of the Indian Ocean and to face the probable hostility of the Indian Government in doing so. I would recommend that we limit our target for the present to global communications facilities, and, if we succeed in obtaining these, we could then decide whether to make a proposal for a heavy bomber-staging base.

In the meantime we should, I feel, strongly support the military position here of the British, whose base rights are rather precarious. In fact their legal rights to their bases at Trincomalee and Negombo are so uncertain that the continued use by the British of these bases could possibly be lost if the present Government here were overthrown at a time when a weak Government was in power in England. Therefore it is in our best interest, it seems to me, to continue to cooperate fully with the British in this area and to encourage them to take the lead as far as possible, while at the same time insisting that at all costs they maintain their military rights here.

It may be of interest to report that I have discussed a number of these questions during the past few months with Admiral Radford, General Vandenberg and Vice Admiral Wright during visits they have made here. I have shown them (except General Vandenberg who was here too short a time) a number of the pertinent documents, including the letter dated December 12, 1951, from the Acting Secretary of Defense to the Secretary of State setting forth the position of the former at that time with reference to military rights in Ceylon.

Conclusion

In conclusion I repeat that I do not feel that the political situation in Ceylon at the present is such as to justify the opening of negotiations for military rights here. I venture to make the suggestion therefore that the question be reconsidered within a few months, at which time my successor here may be able to give a more optimistic view of the prospects of success.6

J. C. Satterthwaite
  1. Supra.
  2. The Ceylonese position reported in telegram 84 from Colombo is adequately summarized in this paragraph. Ambassador Satterthwaite went on to state his belief that any attempt to pressure the Government of Ceylon into granting the United States any military concessions would be deeply resented by the Ceylonese people. He, therefore, supported the view, held by Vaithianathan, that the United States attempt to satisfy its defense needs through cooperation with the British forces in Ceylon. (946E.20/2–250)
  3. Ante, p. 1571.
  4. Not found in Department of State files.
  5. See footnote 1, supra.
  6. In a letter to Assistant Secretary of Defense Frank C. Nash, July 28, 1953, in which a copy of this despatch was enclosed, Deputy Under Secretary of State H. Freeman Matthews wrote that the Department of State concurred in Satterthwaite’s recommendation that negotiations for U.S. military rights in Ceylon be postponed (711.5346E/6–2753).