Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

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

Rangoon, April 2, 1956—4 p.m.

1138. Re: Deptel 949² and Bangkok’s 2479,³Embtels 756, December 31⁴ and 1117.⁵ Burma–USSR agreement providing for shipment 400,000 tons Burmese rice annually for 4 years to USSR on barter basis signed here April 1, and announced in official communiqué April 2.⁶ (This implements earlier Russian offer take all rice Burma wants ship to them.) Burma will receive capital equipment, some consumer goods and technical services. In addition, a joint statement by U Nu and Mikoyan⁷ announced GUB acceptance of hospital, theater and “cultural and sports ensemble to include stadium, premises for industrial and agricultural exhibitions with conference hall and hotel.” These are in addition to technological institute.

These agreements guarantee Russians a very substantial long-run economic and commercial foothold in Burma. If Burma actually able deliver total amount, magnitude of Russian deal would be more than $160 million over 4-year period.

U Kyaw Nyein, Minister for Industries, and U Tun Thoung, Secretary that Ministry, told us GUB has calculated it must export 2 million tons rice annually which will exceed by from 600,000 to one million tons the total which Burma can dispose in cash markets. Therefore as matter of policy GUB will try arrange assured market for the excess through 4-year barter deals with the Communist countries.

It seems likely GUB, in arriving at decision to try sell third to half Burma rice exports on barter basis, regarded US PL 480 rice disposal program in Asia (including large US rice sales to Pakistan and Indonesia) and recently announced export sales US rice on bid basis as important factors limiting their own probable cash sales. Thus, rice disposals we have already made have not only irritated Burma but have also contributed to creation this opportunity for Communist countries get sizeable economic foothold in Burma.

Burma evidently knows nothing yet of possibility we will try dispose of a further 500,000 tons in Japan. They had difficulty getting Japan take 250,000 tons this year and would be dismayed by any US proposal sell twice that amount to Japan. Such action I fear could do much more harm to US-Burma relations and give still greater psychological and political opportunities for Communist bloc countries.

Adverse effect on our relations with Burma of any further US rice disposals in Asia will be intensified if we do not carefully pursue policy of advance consultation initiated by Baldwin mission last May. Brief advance notice Pakistan disposal allowed no opportunity for any real consultation with Burma. Furthermore, Baldwin mission told Burma we desired dispose of 230,000 tons in Asia during 1955 marketing year but we have given no indication our goal for present year which obviously much larger than last year. If despite serious adverse results of PL 480 rice disposals we must continue them, I consider it essential we resume advance consultations and give Burma opportunity express their views with regard our present overall goal for sales PL 480 rice in Asia.⁸

Braddock

1. Source: Department of State, Central Files, 411.90B41/4–256. Secret. Repeated to Bangkok, Tokyo, and Karachi.
2. Telegram 949 to Rangoon, March 23, informed the Embassy that U.S.-owned rice was to be offered for sale on a competitive bid basis, because previous U.S. prices had not been competitive with Burmese and Thai prices, but that sales would not be made on a basis that would depress world prices or disrupt markets. (Ibid., 411.0041/3–2356)
3. Reference is presumably to telegram 2749 from Bangkok, March 22, which reported that the Thai Government was disturbed by recent sales of U.S. rice under Public Law 480 and urged the renewal of consultations with Burma and Thailand on this subject. (Ibid., 411.56D41/3–2256)
4. See footnote 3, Document 22.
5. Telegram 1117 from Rangoon, March 29, reported that the Burmese-Soviet agreement described in this telegram was to be signed during Mikoyan’s visit. (Department of State, Central Files, 461.90B41/3–2956)
6. The text of the communiqué was transmitted to the Department with despatch 421 from Rangoon, April 2. (Ibid., 461.90B41/4–256)
7. Transmitted with despatch 421 (see footnote 6 above). The statement also announced that the Soviet Union had accepted a reciprocal Burmese offer of a gift of rice.
8. Telegram 1062 to Rangoon, April 20, informed the Embassy of new proposals for the disposal of surplus rice that were under interdepartmental consideration and stated that the Department’s position reflected the considerations raised by the Embassies in Rangoon and Bangkok. (Department of State, Central Files, 411.90B41/4–256) Telegram 1212 to Rangoon, June 2, reported that a proposed exchange with Japan of 327,000 tons of rice for titanium had been disapproved, primarily because of the political and economic effects of such an arrangement on Burma and Thailand. (Ibid., 490B.9441/6–256)