746E.13/4–2654: Telegram
The Acting Secretary of State to the Embassy in Ceylon
priority
313. Deptel 3111 indicated best line possible with PM at this time. (Embtel 334).2 Considerations leading to this decision were 1) impossible meet annual profit to Ceylon from China deal (estimated at 15 million) and doubt wisdom going even to 50 percent this amount because of effect on other areas such as Indonesia and Malaya now observing embargo without receiving “Price” as quid pro quo and also likelihood any offer from us would be used by Ceylon for purpose bargaining Chinese next negotiation. It quite possible that our relations with Ceylon over long run will be on firmer basis if they come to us for assistance after finding China deal is not for them “utopia”.
[Page 1612]2) Letter from Defense just received3 advises that requirements for heavy bomber staging base deleted and that it anticipated requirement for communication facilities by Air Force will also be deleted. Re certain questions raised by Ambassador, Defense advises it not prepared pay for military rights in Ceylon. Also Defense states that with possible exception US Navy requirement, it not believed possible fill military requirements in Ceylon by arrangement with British. 3) As general rule it not desirable invite top officials foreign governments when there are real problems affecting relations and it pretty certain these officials will have to go home empty handed. It anticipated Sir John’s line would be use his known opposition to communism as basis for pleading forgiveness so far as rubber to Communist China concerned so that Ceylon could have both China deal and US aid. 4) For years high officials have repeatedly said India feared more than any other country. If this so it questionable that Sir John would follow Nehru line simply because he did not get invitation this time. 5) Synthetic rubber price policy currently under review at top level. If price increased this would have beneficial effect on natural rubber prices with result China deal would be less attractive financially to Ceylon and another look at aid to Ceylon would be possible. 6) Believe preferable have results Geneva and Colombo Conferences before deciding whether or not discussions in Washington with Sir John helpful. 7) PM was very helpful re Indochina airlift and Ceylon cooperation in future might be of great importance. This possibility kept in mind in connection desirability invitation later date.
Will keep questions you raise Embtel 334 under constant study.