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

2749. 1. Press announcement last week on conclusion of US PL–480 rice agreement with Indonesia followed within few hours by announcement of United States rice agreement with Pakistan2 has provided unfavorable editorial comment and disturbed Thai Government officials. Both agreements were cited as partial justification by Luen Buasuwan3 for his negotiations with ChiComs. Embtel 2644, March 13.4 They have also been cited by leftist and opposition press as illustrative alleged primacy placed by United States on disposal of its rice without reference to impact on Thai economy.

2. Dodge Council precepts, Baldwin mission visit and Departmental statement (e.g., last para Deptel 1940, December 165) clearly [Page 869] indicate United States Government awareness need avoid impairing relations with Thailand by surplus disposals.

3. However, Department will appreciate extreme sensitivity of Thais to any disposal of United States rice in Asian markets. This sensitivity heightened by pressures on government to relax embargo policy regarding ChiCom.

4. Although Thai rice export sales in 1955 exceeded expectations and resulted in abnormal year-end price rises with below average stock carry-over, total export sales volume and value was approximately 30 percent below previous seven-year average. Export availabilities for 1956 from turn of years harvest estimated at slightly more than 15 million tons or more than 300 thousand tons above 1955. Although Minister Economic Affairs optimistic as to ability in course of year to dispose of 1.3 million tons of this surplus, firm contracts are slow of conclusion. Moreover, Japanese thus far failed place any contracts hoping thereby to induce Thais to reduce prices by 12 and ½ percent from 1955 average. In interim, large quantities paddy are stored on farms. Consequently, increasing nervousness prevails among rice exporters, with government officials being criticized for alleged over-optimism. Sensitivity to press announcements (para 1) is therefore the more acute.

5. It had been our understanding that the United States was prepared fully and frankly to keep Thai Government thoroughly conversant any proposed United States surplus rice sales and justifications therefor.TG officials privately contend we have not done so. Thus, Foreign Office asserts Thai Ambassador at Washington was informed by Department of proposed Pakistan deal only March 1, without any indication of prospective quantities, and only one day before United States agreement publicly announced. Consequently, in Foreign Office view, Thailand not given adequate notice or opportunity to comment. Foreign Office says special Pakistan rice purchasing mission earlier had informed Thai Embassy at Rangoon that it contemplated purchase of 50 thousand tons from Burma and same quantity from Thailand. At Pakistan mission request TG was preparing price quotations when United States announcement made. Nothing further has been heard from Pakistan mission by Foreign Office due, in Foreign Office view, to United States agreement which it considers responsible for loss of potential sale. Deptel 2895, March 96 indicates Thai Ambassador has made initial complaint to Department. Embassy would appreciate comments on validity Foreign [Page 870] Office contention inadequate notice of Pakistan deal and quantities involved given to Thailand.

6. Under Secretary Minister Economic Affairs privately disputes Foreign Office view United States agreement interfered with potential direct Thai sales to Pakistan. (Says Pakistani mission wanted delivery within two weeks of 10 thousand tons special grade parboil rice then available only limited quantity Thailand.) However, he agrees with Foreign Office on the inadequacy of Department’s notification. More importantly, he perturbed by press revelation this week prior receipt any official communications from Thai Embassy, Washington of United States intention purchase 10 thousand tons Burmese rice for delivery to Pakistan. He says 20 thousand tons Thai rice now available for immediate sale to United States for delivery that destination and inquires whether United States willing treat Thailand same fashion as Burma. Embassy would appreciate immediate instructions as to response appropriate to make.7

7. Department will appreciate likelihood acknowledgment to TG or press United States purchases from Burma were partially politically motivated will reenforce those elements in TG who favor a more neutralist foreign policy and expansion of trade and other relations with Soviet bloc as means of extracting greater aid from United States. On other hand, failure to keep TG fully apprised of PL 480 rice sales and special circumstances attending deal with Burma would not be conducive to maintenance of partnership arrangement.

  1. Source: Department of State, Central Files, 411.56D41/3–2256. Confidential. Repeated to Karachi and Rangoon.
  2. See footnotes 2 and 3, Document 487.
  3. Luen Buasuwan, Chief Executive of the Thai National Economic Development Corporation and Managing Director of Taharn Samakki, a company with extensive rice trading interests.
  4. Not printed. (Department of State, Central Files, 492.9341/3–1356)
  5. Not printed. (Ibid., 411.90b41/12–1655)
  6. In telegram 2895 to Bangkok, the Department referred to the complaint lodged by the Thai Ambassador that the rice agreement with Pakistan deprived Thailand of rice sales. (See Document 487.) (Department of State, Central Files, 411.90D41/3–956)
  7. In telegram 3126 to Bangkok, March 30, the Department explained that “overriding political considerations” dictated that the United States purchase rice from Burma rather than Thailand to meet the needs of Pakistan. The Department suggested that the Embassy remind the Thais that the United States had similarly met a Laotian emergency with a purchase of rice from Thailand. (Ibid., 411.56D41/3–2256)