746E.5 MSP/10–653
Memorandum of Conversation, by the Deputy Director of the Office of South Asian Affairs (Smith)
Subject:
- Possible US Assistance to Ceylon
Participants:
- Sir Claude Corea, Ambassador of Ceylon
- Mr. H. Shirley Amerasinghe, Counselor, Embassy of Ceylon
- NEA—Mr. Jernegan
- SOA—Henry T. Smith
Sir Claude called on Mr. Jernegan today at the latter’s request.
Mr. Jernegan first referred to Sir Claude’s conversation with Mr. Byroade on September 141 in which the Ambassador had raised the question of possible US assistance which might enable Ceylon to withdraw from its trade agreement in rice and rubber with Communist China. He then stated that we had learned that the Government of Ceylon had on October 2 approved a new agreement relating to prices on rice and rubber and asked what effect that had on Sir Claude’s approach.
Sir Claude replied that his approach could no longer be considered “on that basis.”
Mr. Jernegan observed that the US Government had given considerable thought and study to the problem and had almost arrived at a number of proposals which he had thought would “fill the bill” for Ceylon. He had thought, however, that the Ceylon Cabinet was not going to consider the rice-rubber contract for some days yet and he was surprised at this early approval.
Sir Claude replied that he had made it clear in his earlier visit that his approach did not emanate from the Government of Ceylon, but had been the result of his evaluation of several considerations which [Page 1586] he had mentioned previously. He continued that he had told Mr. Kennedy some time ago that the Ceylon Cabinet might consider the contract with Communist China within a few days.
Mr. Jernegan referred to our efforts in working up an aid program for Ceylon, and commented that nevertheless our proposals would not have been of a magnitude to equal the profit which Ceylon was making on its trade with China. The US was not impelled by the same political considerations as China, and US policy would not permit such an aid program. He then again asked whether there was anything Sir Claude wanted us to do with regard to his original approach.
Sir Claude again said no, not on that basis. He continued that he was not happy with conditions in Ceylon. The opposition was gaining strength. New elections would come up within a few years and he was concerned about the outcome. He hoped that we could do something to strengthen the present government, regardless of the Battle Act.
Mr. Jernegan asked whether a victorious opposition would be communist.
Sir Claude replied that it probably would be a coalition in which the communists would play a prominent part.
Sir Claude continued that he had observed that there appeared to be some relaxation on trade controls, particularly with regard to Japan, and that even in the beginning under the Kem Amendment and the Battle Act certain trades by some countries had been excused, and he hoped that some exception might be made for Ceylon.
It was explained to Sir Claude that the exceptions which he had noted had not been with regard to Communist China, that there had been no general relaxation of US trade controls, and relaxation of Japanese controls did not relate to strategic materials.
Mr. Jernegan continued that US public opinion would not permit our Government to give aid to a country that was sending rubber to Communist China and that the other rubber producing countries certainly would not understand it. US policy up until now would not permit such assistance and there was no indication that there would be any change during the present fiscal year.