136. Telegram From the Department of State to the Embassy in Ceylon1

471. For Ambassador. You may inform Prime Minister that on basis firm assurances that Government of Ceylon will restrict rubber shipments to Communist Chinese to 50,000 ton minimum per year required during existing contract (which terminates 1957) and will embargo other strategic commodities to Communist Chinese, United States is prepared grant Ceylon in FY 1956 technical and development assistance. Program will consist projects recommended by Ceylon and approved by United States. In announcing its decision United States will state Government of Ceylon is considered to be cooperating with United States within terms of Battle Act.

Inform soonest when Government of Ceylon would like release information. Draft United States release will be telegraphed in advance for possible use Government of Ceylon in preparing its own statement.2 Due necessity Congressional consultation here Embassy should ensure that no public announcement be made by Ceylon before agreement on simultaneous release Washington and Colombo.

Program will be in order of $5 million with breakdown between technical and developmental assistance to be worked out with Ceylonese. You may inform Prime Minister accordingly.

  1. Source: Department of State, Central Files, 746E.5–MSP/2–956. Secret; Niact. Drafted by Silver on February 8, cleared with Cederic Seager, Regional Director of the Office of Near East, South Asia, and Africa Operations, ICA (for FitzGerald), Allen, Hill, Robertson, and Kalijarvi. Repeated to Karachi, New Delhi, Bangkok, Rangoon, Djakarta, and Singapore.
  2. In telegram 476 to Colombo, February 10, the Department transmitted this draft statement to the Embassy. (Ibid., 746E.5–MSP/2–1056) In telegram 436 from Colombo, February 13, Ambassador Crowe reported that a story carried by the Ceylonese press on February 12 noted that the United States had decided to grant Ceylon an aid program amounting to approximately $5 million. The story explained that the aid program would come within the terms of the Battle Act in view of Ceylon’s cooperation with U.S. international objectives and by Presidential “waiver” of the Battle Act prohibition with respect to Ceylon’s rubber-rice agreement with Communist China. The Ambassador added that he had not made any comment in response to inquiries regarding the authenticity of the press report, and he recommended that a formal announcement regarding the aid program not be made until the end of February or beginning of March. (Ibid., 746E.5–MSP/2–1356)