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

43. Memorandum From the Deputy Assistant Secretary of State for Far Eastern Economic Affairs (Jones) to the Secretary of State¹

Washington, June 14, 1956.

SUBJECT

• U.S. Assistance to Burma

Problem:

How can we implement assistance programs designed to help prevent Burma’s further serious involvement with the Communist bloc?

Discussion:

The Burmese on their own initiative have presented us with two unusual opportunities to help them preserve their independence and forestall further Communist advances in Burma. They have asked for both economic and military assistance on a continuing basis within a frame of reference which we could and should accept if we are to help prevent Burma’s further involvement with the Soviet bloc and if we hope to bring Burma into closer cooperation with the U.S. and the Free World.

These approaches represent an exceptionally significant departure from Burma’s previous attitudes toward relations with the U.S. and are apparently motivated by growing concern over their relations with the Communist bloc and by a desire quickly to re-establish a pro-Western balance to Burma’s neutrality. However, in the absence of prompt and affirmative responses from us, the Burmese Government will feel it has no alternative but to accept the continuing substantial offers of trade and aid from the Communist bloc. U Nu’s resignation may increase rather than diminish the Burmese Government’s desire to develop closer relations with the U.S.

A. Economic Aid:

In response to Burmese requests for development loans, we offered in late March to make available to Burma loans of $25 million and the equivalent of $17.3 million in local currency (Tab A).² The Burma Government rejected these loan proposals because it considered as unacceptable “political conditions” the prior specific assurances which we had sought in connection with Battle Act requirements. Subsequently the Battle Act Administrator found Burma presently eligible for aid (Tab B).³ Prime Minister U Nu’s letter of May 22, 1956 to President Eisenhower confirms Burmese awareness that the U.S. may be required to terminate aid in the future as a result of possible Burmese actions (Tab C).⁴ Inter-agency approval and clearance has now terminate aid in the future as a result of possible Burmese actions (Tab C). Inter-agency approval and clearance has now been obtained to reoffer our loan proposals on a basis which we feel Burma can and will accept.

The only additional issue now requiring decision is the question of grant aid to Burma. U Nu’s letter also requests the reinstitution of a grant aid program in addition to loans. In U Nu’s words, “Let me make no bones about it. We need American assistance.”

FE believes a modest grant aid program should be approved and that funds for this purpose should be in addition to the loan figures already discussed with the Burmese. As there have been only general discussions with the Burmese concerning U.S. assistance, it is difficult to anticipate the projects which might warrant additional grant aid financing. However, we know that the Burmese Government is primarily interested in assurances of sizeable and continuing U.S. aid which can be politically and economically justified as an alternative to Communist bloc assistance. Before beginning negotiations with the Burmese we should have a clear indication of the availability of additional funds for this purpose. Should additional funds not be available, part of the $25 million set aside for loans should be diverted for the establishment of a grant assistance program. A memorandum to Mr. Hollister has been prepared asking his views concerning the availability of additional funds for this purpose (Tab D).⁵

On the basis of Mr. Hollister’s reply, a substantive answer to the U Nu letter incorporating our renewed loan proposals will be prepared for your approval. A high level State approach to Agriculture probably will be necessary to obtain approval of Burmese token repayment in rice for grant aid, which U Nu’s letter stipulates as a basis for grant aid.

B. Military Assistance:

Beginning last January the Department reactivated the 1954 OCB proposal⁶ to supply arms and war materials to Burma. Contrary to its previous attitudes, Defense has now taken a negative attitude toward implementation of this proposal although the general sense of the OCB meeting of May 9, 1956 was to proceed with a $5 to $10 million military assistance program which would be worked out between State and Defense utilizing Section 401 of the Mutual Security Act.

In March the Burmese approached Embassy Rangoon with a request for extensive long-range military assistance.⁷ However, during General Ne Win’s current visit to the United States,⁸ Defense has refused to discuss with him Burma’s needs or our interest in helping to meet some of Burma’s military requirements, although Ne Win is known to have his Government’s authority to enter into such talks. State Department working level discussions with the Ne Win group revealed the Burmese are very interested in obtaining U.S. military assistance to build up a modified ten division army over a period of time and to implement defense plans to withstand an invasion by Communist China. The Burmese are especially interested in training large numbers of their defense services in U.S. military schools.

In view of the importance of Burma to the general security of Asia and especially to our SEATO allies, Pakistan and Thailand, it is believed an attempt should be made to assist Burma develop strong friendly defense forces and preclude possible recourse to the Communist bloc for such assistance. It is therefore proposed that we instruct Embassy Rangoon to begin talks with the Burmese Government to implement a $5 to $10 million military assistance program as suggested by the OCB (Tab E).⁹

To assure the availability of funds for the limited program contemplated, a memorandum should be sent to Mr. Hollister requesting a Presidential determination under the provisions of Section 401 of the Mutual Security Act for the use of $10 million to implement a limited military assistance program (Tab F).¹⁰

There is some doubt that the Burmese will accept a limited program without some indication on our part that the U.S. will continue military aid in the future. Overriding is their fear of antagonizing Communist China without obtaining from the U.S. the wherewithal to counter possible Chinese Communist retaliation. On the other hand, the JCS has formally rejected the proposal for long-range military assistance to Burma. Unless Defense is willing to change its position, this issue should be referred to the highest government authority in order to obtain a directive sympathetic to modest long-range military assistance to Burma.

Recommendations:

1. That you sign the attached memorandum on grant aid to Mr. Hollister (Tab D).

2. That you approve a high level approach to Agriculture to obtain approval to accept an appropriate token payment in rice in return for grant aid.

3. That you approve the outlined operations concerning military assistance and through personal discussions with high level Defense officials, attempt to obtain Defense concurrence and cooperation, and that the matter be referred to the President or the NSC if the Defense position remains negative.¹¹

4. That you sign the memorandum to Mr. Hollister requesting Presidential determination for the use of $10 million under Section 401 of the Mutual Security Act (Tab F).

1. Source: Department of State, FE Files: Lot 58 D 209, Burma, 1956–57. Secret. A note on the source text by Kenneth Young indicates it was read by the Secretary. It was apparently given to him at a June 14 meeting among Dulles, MacArthur, Jones, and other Department officials; plans for the meeting are noted in a memorandum of June 8 from Young to Robertson. (Ibid., Central Files, 790B.5–MSP/6–856)
2. None of the tabs was found attached. Tab A is telegram 989 to Rangoon, Document 31.
3. Tab B consists of documents concerning Burma’s eligibility for aid. Hollister proclaimed the Government of Burma eligible for aid in a memorandum of May 15 to Dulles. (Department of State, Central Files, 460.509/5–1556)
4. Not printed, but see footnote 2, Document 40.
5. The draft memorandum, which was not sent, is in Department of State, FE Files: Lot 58 D 209, Burma, 1956–57.
6. See footnote 4, Document 24.
7. See footnote 2, Document 34.
8. General Ne Win was in the United States, May–June 1956, visiting U.S. Army installations as a guest of Army Chief of Staff Maxwell D. Taylor.
9. Tab E is a draft telegram to Rangoon that was not sent.
10. Tab F is a draft memorandum to Hollister, a copy of which, bearing no indication that it was signed and sent, is in Department of State, FE Files: Lot 58 D 209, Burma, 1956–57.
11. According to a memorandum by Phyllis Bernau of a telephone call made by Dulles on June 15 to Deputy Secretary of Defense Reuben B. Robertson, Jr., Dulles told Robertson that he considered it important from a political standpoint to take advantage of Burma’s change of attitude and urged him to discuss the subject further with Assistant Secretary Walter Robertson. (Eisenhower Library, Dulles Papers, General Telephone Conversations)