23. Telegram From the Embassy in Burma to the Department of State1

890. U Kyaw Nyein asked see me yesterday Sunday saying he wanted discuss with me subject raised by U Mo Myit (Embtel 8642). He was relaxed and gave no indication of the depression and frustration from which he was allegedly suffering as reported Embtel 797.3 He said he wanted know what possibilities were of receiving American aid as proposed by Mo Myit. He made it clear that his sounding was informal and unofficial and said he had received no instructions discuss the matter with me.

I told him what we had told Mo Myit, that we desired to be helpful, that it seemed possible something could be worked out with reference to technicians but that our experience at time Prime Minister requested $50 million loan pointed up difficulties in obtaining assistance in large amount he had in mind. (He at no time mentioned any figure but that [had?] suggested 200 million to Mo Myit.)

In connection with these difficulties we discussed Battle Act. I pointed out that whereas India had been careful not to contravene terms of the act U Nu had told me it would be impossible give any assurances that Burma would not ship rubber to Communist China in contravention of UN embargo or even cooperate in preventing shipment of strategic materials such as copper matte coming under Title One. Kyaw Nyein said he and few others in Cabinet were trying persuade Prime Minister to cooperate with us in this respect and he thought that possibly Prime Minister could be brought around. He asked specifically whether if Burma’s rubber were shipped to Czechoslovakia it would contravene Battle Act. I said I believed not provided shipments actually went to Czechoslovakia and came within rubber quota fixed by the Western Powers.

I asked Kyaw Nyein how soon we could expect Soviet technicians arrive here. He said that no agreement had yet been made and would not be prior to arrival here in May of Soviet mission. This [Page 35] mission was originally to have been headed by Mikoyan. He apparently is not coming but mission will include several vice ministers. In meantime Soviets will go ahead however with technological institute which will probably be located in Syria across river from Rangoon.

The Soviet mission will discuss assisting Burma with enlargement of its steel mill project and with establishing fertilizer and tractor factories among others. If a loan from US were available it would not be necessary request Soviet assistance for all these projects. He wanted to make it clear that he was not trying to blackmail the US but his government felt it must go ahead with these projects.

I raised question of assistance from IBRD. Kyaw Nyein said he thought bank might give assistance for the port and also for rehabilitation of railways. Unfortunately bank operated very slowly and he doubted if they would receive loan sooner than four years after their first request.

He then asked if Export Import Bank loans came under Battle Act. I said I would inquire and request Department’s views.

He was pleased learn we are signing PL 480 agreement next Wednesday.4 He said that U Nu had even had doubts about advisability of this form of assistance but had been persuaded accept it. I expressed surprise since agreement is on a straight sales basis except that US was agreeing not to use kyat proceeds in a way which would hurt Burma’s foreign exchange position. He said he and others in the government appreciated this and were grateful.

I also explained our position concerning sale surplus rice to Indo under PL 480. We had satisfied ourselves that sale our rice would not mean that Burma would sell one less ton to Indo and that it was furthermore advantageous to Burma that we should get rid of our surplus which otherwise was a continuing problem for other rice producing countries.

U Kyaw Nyein again made the point reported in Embtel 797 that Burma as Socialist Government is competing with Communist China for the masses of Asia. In this connection I expressed belief that our intervention in Korea had made it possible for Burma to survive as free government. He agreed that this might well be true.

U Kyaw Nyein also emphasized that Burmese Army is presently engaged in full-scale attack on both the White and Red Flag Communist HQ. Thakin Soe5 had had a very narrow escape and Thakin Than Tun6 might well be captured. I asked whether this meant there [Page 36] was no chance of latter accepting Burma’s amnesty terms. He said anything might happen.

In concluding our lengthy conversation U Kyaw Nyein said he hoped he could hear something from us about possibilities of assistance before too long. I said I had informed Department of U Mo Myit’s query and had been informed that the Department was giving these suggestions and others I had made serious consideration. I said I could give him no assurance but hoped we might have something concrete to give him before too long.7

Comment:U Kyaw Nyein has just returned from a trip of several days with U Nu in the delta country in connection with elections which begin toward end of April. He is spending this week with U Nu and U Ba Swe electioneering in Rangoon area and next week the three of them will be off on long trip to the north. This would appear to indicate that rumored differences among the three have been put aside if they in fact exist until election is over and could also mean U Kyaw Nyein may possibly be able to persuade U Nu of desirability of receiving as little Soviet aid as possible.

  1. Source: Department of State, Central Files, 890B.00/2–656. Secret. Repeated to Moscow.
  2. Telegram 864 from Rangoon, January 31, reported an informal inquiry from U Mo Myit, Permanent Secretary of the Ministry of National Planning, as to whether the United States could give Burma “substantial financial assistance”. Mo Myit’s inquiry was made at the suggestion of U Kyaw Nyein, who was thinking in terms of a loan of $200 million. (Ibid., 890B.00/1–3156)
  3. Telegram 797 from Rangoon, January 13, reported that, in a January 11 conversation, U Kyaw Nyein had told Satterthwaite that he was going through a period of frustration, depression, and disillusionment with the West and had stated that Burma would have preferred aid from the United States or the IBRD but had been forced to turn to the Soviet Union for assistance. (Ibid., 890B.00/1–1356)
  4. For text of the agreement, signed at Rangoon on February 8, see 7 UST (pt. 1) 219.
  5. Thakin Soe, head of the Communist Party (Burma), or “Red Flag” Communists.
  6. Thakin Than Tun, head of the Burma Communist Party, or “White Flag” Communists.
  7. Satterthwaite reported in telegram 891, February 6, that in the course of this conversation, he reminded Kyaw Nyein that the United States had offered to help Burma by furnishing arms at favorable prices and said that he thought this could perhaps still be arranged in a way that would not embarrass the Burmese Government. Kyaw Nyein listened with interest but made no comment. (Department of State, Central Files, 890B.00/2–656)