611.46E/12–2353
Memorandum of Conversation, by the Director of the Office of South Asian Affairs (Kennedy)
Subject:
- Various Items Involving U.S./Ceylon Relations
Participants:
- Sir Oliver Goonetilleke, Minister of Finance, Ceylon
- NEA—Mr. Byroade
- SOA—Mr. Kennedy
Sir Oliver Goonetilleke opened the conversation by stating that his Government was strongly anti-Communist. He knew our position with respect to the Chinese Communist rice/rubber deal and understood our legal position re no aid to Ceylon, and hence was not asking for financial assistance. He hoped, however, that it was understood here that this transaction was considered by his Government as merely a question of trade. One bit of evidence that this was so was his Prime Minister’s refusal to accept a goodwill mission from Communist China although Chou-En-lai had made the request during the recent negotiations for the coming year. This request had been discussed in the cabinet meeting at which time de Fonseka (Ceylon’s Ambassador to [Page 1595] Japan and head of the negotiating mission to Peiping) had urged it. The cabinet had decided, however, that they would rather forego the deal (adequate rice was now available in Burma) than accept such a mission.
Sir Oliver next gave an interesting account of the August disturbances caused by the reduction in the rice subsidy. At one point, all rail and road transport was closed down, and there was much looting going on together with the burning of buildings in Colombo. The former Prime Minister (Dudley Senanayake) early in the afternoon of the first day asked Sir Oliver to go to the leaders of the demonstration and ask for terms. Sir Oliver said that Dudley had lost his “guts” and reported that he had told the Prime Minister that such a step would be suicidal and that he, Dudley, should go along to his Council meeting while he, Sir Oliver, undertook additional steps. These included shooting on sight, six o’clock curfew, and no bail. Within two days order was restored.
Mr. Kennedy referred to press stories on military aid to Pakistan and said that he thought Mr. Byroade would be interested in Ceylon’s attitude if such aid were extended. Sir Oliver said in a very positive manner that he hoped we would go through with military aid for Pakistan if we had it in mind. He begged the British to maintain strength in Trincomalee, which they had not done, and he was afraid that some time India might move in on Ceylon with a request for base rights there. With no one in possession in strength, Ceylon would be in a very poor position to resist. Also, he said that he was afraid India’s attitude of neutrality would lead it to neutralize Ceylon in case of war, although Ceylon had always stated that it would be on the side of the West in the event of hostilities. This danger would be all the greater if neither ourselves nor the U.K. were present in strength in the area.
Mr. Byroade inquired how the talks were going at the World Bank. Sir Oliver replied that everything was satisfactory except for one small technicality. The Bank wanted an independent Authority established to administer operations involving electricity. At one time there had been such an Authority but it had not worked satisfactorily. The present Prime Minister, at that time the responsible Ministry in this area, had abolished it and placed operations under the Ministry. It would now be politically impossible for him in so short a time to reverse himself. There was no difference in substance and he, Sir Oliver, was prepared to write Mr. Black, President of the Bank, a letter stating that he would make all the changes in the operating procedure which the Bank wished. (These included matters relating to hiring and firing of personnel, pay scales and budget presentation.) Mr. Byroade said he would look into the question and see if there was anything he could do. If it would be helpful, he would be willing to call Mr. Black.