28. Memorandum From the Secretary of State to the Director of the International Cooperation Administration (Hollister)1


  • Countering Communist Bloc Tactics in Burma

I am enclosing for your information a copy of a memorandum2 which I have this date approved outlining a plan of United States operations to counter Communist bloc tactics of economic warfare in Burma. This plan encompasses not only the exchange of Burmese rice for American technicians which was the subject of Mr. Murphy’s memorandum to you of February 20, 1956,3 but also various other steps open to the United States in accomplishing our objective of preventing Burma from falling under Communist domination.

If you concur in this plan, I should appreciate it if you could:

Confirm your finding of December 7, 1955, that Burma’s cooperation is adequate to meet the requirements of the Battle Act. This is required to enable us to agree to lend a portion (about $17 [Page 45] million equivalent) of the local currency proceeds of the P.L. 480 agreement for economic development in Burma. It is also required to cover other proposed assistance to Burma financed from funds outside of Section 401.
Earmark $3.4 million (from funds other than Section 401) to cover the first year’s foreign exchange requirements of the Burmese medical center.
Tentatively earmark a sum not to exceed $20 million from the President’s Emergency Fund (Section 401) for military and police aid to Burma.
Indicate your agreement in principle to authorizing Embassy Rangoon to explore with the Burmese Government the latter’s interest in obtaining a loan to finance the foreign exchange requirements of economic development projects.4

John Foster Dulles
  1. Source: Department of State, Central Files, 411.90B41/2–2856. Secret.
  2. Not attached to the source text, but presumably Robertson’s memorandum of February 9, Document 24.
  3. This memorandum reported that Secretary Dulles had decided that the United States should offer Burma the services of American technicians in exchange for $1 million worth of Burmese rice, which should be used to meet Pakistan’s need for rice, and asked Hollister to make the necessary arrangements. (Department of State, Central Files, 110.4–ICA/2–2056) An undated memorandum from Hollister to Murphy stated that he would do so. (Ibid.,FE Files: Lot 38 D 209, Burma, 1956–57)
  4. In a memorandum of March 5 to Hoover, Hollister wrote that, before he could confirm his finding about Burma’s cooperation under the Battle Act, it would be necessary to get assurances from Burma that it would reduce its rubber shipments to Communist China and discontinue its shipments of strategic materials to Iron Curtain countries. He also pointed out difficulties in finding the funds desired in paragraphs 2 and 3 of Dulles’memorandum and proposed that the Export-Import Bank be considered as the source of funds for the proposed loan to Burma. (Ibid., Central Files, 411.90B41/3–556)
  5. Printed from a copy that bears this stamped signature.