468. Telegram From the Embassy in Thailand to the Department of State1

2327. In recent conversation with Phibun2 I referred request for 82 million dollars supplementary assistance for FY 1956 (Tousfo 836, March 173) casually dropped into my lap by Phao prior his departure for UK and US.4 Phibun acknowledged he was vaguely aware some sort proposal under consideration. He attempted exculpate himself by relating that he had in recent Cabinet meeting urged Thai Government demonstrate somewhat more effective performance in economic field prior submitting new request to Americans. Phibun did not, however, assert he was unable prevent submission this request. I assured him President Eisenhower would be greatly interested and pleased to learn personally from Prime Minister that he had given such excellent advice to his government.

Prime Minister added he would much prefer increase in Thai exports to increase grant US assistance and strongly expressed hope it would be possible maintain and increase Thai rice exports to Japanese market which he considers presently being pre-empted by US.

I made following points with regard 82 million dollar request:

We had tried make clear in Bangkok, and Governor Stassen during recent visit5 made it clear to Phao, no additional requests US assistance would be entertained until after Congressional action with regard FY 1956 appropriations.
I assumed this not an official request inasmuch as it had not been transmitted by either Prime Minister or Foreign Minister. I emphasized, however, we are perfectly willing and eager discuss such matters with Phao whom we hope enlist as constructive influence in formulation Thai economic policies.
I would accept this “request” for supplementary assistance as basis future analysis Thai requirements. However, in order be useful this purpose detailed analyses and justifications which are entirely lacking would have to be forthcoming.

I then turned urgent need for prompt implementation reforms in Thai fiscal and economic policies essential to maximum effective utilization Thailand’s own resources as well as US aid. Yesterday I addressed letter prepared jointly by Embassy and USOM to Phibun outlining major reform measures which, in our view, should receive attention Thai Government and in which US prepared assist at Thai request. Copies letter being forwarded by despatch.6

Neither Sessions nor I under any illusions concerning rate at which it will be possible eliminate traditional corrupt practices which constitute not only heavy burden on Thai economy, but fundamental obstacle further effective development. Nevertheless, certain factors in local scene provide basis modest encouragement. Moreover, initiation substantial US economic assistance during current fiscal year provides much more powerful lever for enforcement sound principles than existed when US aid limited technical assistance. Inherent difficulties achieving basic reforms is, of course, immeasurably complicated by far reaching and delicate political implications such program.

Our patience, persistence and good fortune may in time yield rewards. Our persistence at least seems assured.

  1. Source: Department of State, Central Files, 792.5–MSP/3–2355. Confidential.
  2. March 18.
  3. In Tousfo 836 from Bangkok, the U.S. Operations Mission reported that General Phao Sriyanon, Director General of Police and Deputy Minister of Interior, proposed that the United States extend $82.5 million in supplementary assistance to Thailand during fiscal year 1956. Of this amount, Phao suggested that $61.1 million should be used for direct assistance for the Thai military forces, and the remaining $21.4 million should be used for economic projects designed to support the defense establishment in Thailand. (Washington National Records Center,FOA Files: Lot W–130, RG 56 A 632)
  4. General Phao visited the United States in March, but Thai Ambassador Sarasin was informed in Washington that the United States was not prepared to consider additional financial assistance for Thailand at that point, and Phao postponed his discussions with senior American officials until August. For memoranda of Phao’s conversations on August 12 with Secretary Dulles and ICA Director John B. Hollister, see Documents 478 and 477, respectively.
  5. Harold E. Stassen was in the official party which visited Bangkok for the SEATO Council meeting, February 23–25. A copy of Stassen’s report on his visit to Thailand and several other Asian countries, dated March 14, is in Department of State, U/MSA Files: Lot 56 D 551, MSP–Asia File.
  6. Infra.