Foreign Relations of the United States, 1952–1954, Korea, Volume XV, Part 2

795B.5 MSP/12–354: Telegram

The Ambassador in Korea (Briggs) to the Department of State

top secret
priority

Seoul, December 3, 1954—1 a.m.

646. Repeated information priority Tokyo 446. Tokyo pass CINCUNC; CG AFFE/Army 8. Exclusive for Generals Hull and Taylor. Reference Embassy telegram 644¹ repeated Tokyo 444.

President Rhee’s response to our representations went approximately as we anticipated, as did his renewed ploughing up of territory already settled by agreed minute.

Clear from President’s remarks that what Rhee now desires is that we cancel provision calling for sale of U.S. dollars. Quite probable that when we announce return to suspended arrangements for hwan drawings he will initially accept and then soon attempt substitute his proposal for provision of hwan secretly for procedures stipulated in suspended agreements covering hwan drawings. We give little credence to Rhee’s ostensible indifference to rate at which dollar repayment for hwan made.

We visualize three alternative courses of action following Rhee’s violation of agreed minute while ink of initials still damp.

(1) Reversion to former arrangements for hwan drawings, allowing other provisions of agreed minute to stand and continuing program as proposed, ignoring his violation of provision governing sales of dollars.

(2) Declaration by U.S. that because of ROK violation, and until this violation corrected to our satisfaction, aid program of magnitude and nature contemplated by agreed minute impossible of fulfillment. Therefore we consider agreed minute cancelled by ROK actions and situation reverts to that existing prior to initialing of agreement.

(3) Steps pursuant CINCUNC [C] 70209.² These steps might be taken in conjunction second alternative above.

All three alternatives assume abandonment attempt make dollar sales procedure work and issuance public statement in Washington announcing reversion to hwan drawings procedure and explaining our reasons, namely violation of dollar sales agreement made pursuant minute. That statement might precipitate violent reaction from Rhee, indignant denial our accusations, threat to make deal with Communists, etc. In any event however hwan drawings must be resumed promptly if Army’s December requirements now due are to be met.

With reservation we have not yet had time to consult with General Hull, Wood and I believe second alternative should immediately be adopted. We are of opinion that clear violation of agreed minute having occurred at outset of implementation program, further violations are inevitable unless we take prompt decisive action. Failing this we shall have to abandon hope of any loyal performance of obligations assumed by ROK under minute of understanding.

Adoption of alternative (1) would put us back where we were prior to start of negotiations on minute, in that Rhee would have his program and we would have no binding or satisfactory resolution of issues which have plagued us and made successful carrying out of program impossible. Rhee would have violated his agreement with impunity with no serious consequences to him except a public rebuke. He would therefore be confirmed in his conviction he need only hold out long enough against U.S. demands in order to get his own way; that he can dishonor his own commitments without paying any onerous penalty and prove that U.S. has no place to stay in Korea except under Rhee’s tent.

Adoption course (2) would probably have one of three possible consequences: (a) capitulation by Rhee, accompanied by realization that it will be necessary for him to live up to his agreements; (b) rejection of our aid by Rhee; or (c) overthrow of Rhee.

Result (a) would be outcome we are seeking; result (b) might soon develop into (c); but either (b) or (c) would be preferable to situation which existed prior to our decision to precipitate issue by requiring acceptance of minute of understanding. That situation would again exist if we failed take resolute action now and all our efforts since July would be sound and fury, signifying nothing.

Briggs

1. In this telegram, Dec. 2, Briggs reported on a meeting he had with Rhee on Dec. 2 to protest what the United States considered to be an effort by the ROK to influence the sale of U.S. dollars in Korea so as to keep the hwan-dollar rate as close as possible to the old 180 to 1 figure. Briggs noted that this action was contrary to the letter and spirit of the minute of understanding. (611.95B/12–254)
2. According to a copy of telegram C 70209 in Department of Defense files, it was identical to telegram C 70208, Nov. 8, p. 1911.