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

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

Rangoon, July 13, 1957—10 a.m.

51. This is a Country Team message. Reference Embassy telegrams 9² and 35.³ Government officials appear believe recommendations enquiry committees, appointed under directives issued by Prime Minister in conjunction his four year plan address of June 8,⁴ will result in increase planned capital expenditures. Seems now principal increase will be for intensified effort establish law and order. Among items mentioned are political equipment and associated facilities such as highway, telecommunications, political buildings. Other increases in education, city and town planning.

GUB accordingly considering possibilities obtaining more outside financial help meet this new gap between planned expenditure and anticipated foreign exchange resources.

Walinsky, Nathan Associates Chief here, told Embassy officer he had been present at Cabinet discussion this problem late in June. Deputy Prime Minister Kyaw Nyein asked him if Burma could get additional loan from US. Walinsky replied unlikely in view fact no project agreements yet signed under March 21 loan agreements⁵ and US now working on Burmese request for additional PL–480 program.⁶ Added that one possibility might be defense support aid. Raschid, Minister Mines, remarked that might be possible but only if Burma agreed join SEATO. (GUB opposed joining SEATO, and Raschid’s intent was presumably to dismiss possibility such aid.)

Subsequently Mo Myit, Secretary Ministry National Planning, approached me saying he thought GUB might be prepared accept grant aid from US. Walinsky also told an Embassy officer that U Thant, Prime Minister’s former secretary and now Ambassador designate to UN, had been trying persuade U Nu that acceptance US grant aid not necessarily inconsistent Burma’s neutrality policy. Thant thought Nu might come around to this view. I told Mo Myit and Embassy officer told Walinsky that as general principle US now reluctant provide grant aid.

Then on June 29 Kyaw Nyein asked McCaffery and me if Burma could get additional assistance from US for strengthening internal security (Embassy telegram 9). Soe Tin, Executive Secretary Foreign Office, was present that meeting. He asked whether still possible propose some changes in project content of current loan program, to which McCaffery replied affirmatively. Soe Tin then asked if Asian development fund might be used assist Burma in multilateral road or telecommunications projects. Also asked if President’s special fund could be used for either bilateral or multilateral projects in support Burma’s internal security. McCaffery said if Asian development fund still available FY 1958, joint projects of demonstrable regional economic significance involving two or more countries might qualify for such assistance. Other funds, such as President’s special fund were apt to be limited in use to extraordinary emergency situations.

There are favorable indications GUB may seriously intend more effective internal security program. Army forming three battalion strength special forces trained in guerrilla tactics and of type which has been most successful of Burmese military units in combatting insurgency. GUB has stepped up psychological warfare activities by establishment directorate of education and psychological warfare in Defense Ministry.

Comment:GUB entering into new phase of fishing around for foreign aid. Preceding phase covered roughly period from Prime Minister’s approach to Ambassador Satterthwaite in August 1955 to signing US loan agreements March 21, 1957. Significant characteristics preceding phase were (1) approach to US, (2) search for alternative sources, (3) lavish Russian offers, (4) Burmese acceptance Russian “gift” projects, (5) Burmese turn-down of Russian loan offer upon receipt US loan proposal in April 1956.

Believe Burmese dissatisfaction Russian barter trade plus uneasiness among key Burmese economic officials about Russian motives behind “gift” project might prevent GUB from actively seeking Russian aid at this juncture. However, as stated Embassy telegram 35, GUB might be strongly tempted accept any seemingly suitable new Russian offer.

Recommendation: Embassy not advocating that, merely to forestall Burmese acceptance possible Russian offer, US provide additional aid each time GUB planners raise level their capital requirements. Embassy believes soundest action for GUB would be selective cut-back planned capital expenditures to level presently available foreign exchange resources.

However, Embassy understands that as result Erskine report, US is moving toward decision offer military aid to Burma on liberal markdown basis. Believe such offer might have maximum impact if made within next two months and suggest that if possible McConaughy be authorized make offer as one of his first official acts. Russians, through recent appointment of two Military Attachés to Burma and invitation to Commodore Than Pe, Chief of Staff of Burma Navy, to visit USSR (Than Pe is there now), are making concerted effort influence Burma militarily. Effectiveness this effort probably enhanced by protracted deliberation of US Government in replying to Burma’s request for US military assistance.

Kyaw Nyein and Soe Tin questions re US aid to strengthen internal security provide first clear openings so far for US aid this field. Burmese military leaders have in past made clear that GUB did not want US aid in internal security field, particularly with reference to police. However, if GUB policy now to be revised, presume we could be prepared respond affirmatively if GUB, subsequent receipt aid offer, requested some equipment be provided thereunder for purely internal security objectives. In addition, if GUB wishes, might agree use some of present loan funds for projects related to internal security, such as telecommunications, highways.

In any event, military aid would strengthen capability army to put down insurgency. Consequently such aid would also help GUB meet additional foreign exchange requirements for new four year program in which intensification drive establish law and order is important element. Thus, by making military aid offer this juncture, we could hope accomplish following:

(1) Strengthen capability Burmese military forces to withstand outside aggression and outside inspired subversive activities and to combat insurgency.

(2) Counter Russian effort influence Burma militarily.

(3) Stimulate firm GUB request for assistance to police, possibly utilizing some of military aid funds for that specific purpose.

(4) Assist GUB in meeting that part of new foreign exchange requirements arising from internal security program and thereby to some extent reduce possibility Burmese acceptance any new Russian aid offer.

Braddock

1. Source: Department of State, Central Files, 790B.5–MSP/7–1357. Secret.
2. Telegram 9 from Rangoon, July 2, reported that U Kyaw Nyein had stated that the Burmese Government’s new policy gave top priority to improvement of internal security and asked if Burma might be able to obtain additional U.S. assistance for such projects as roadbuilding and provision of equipment to the police. (Ibid., 790B.5–MSP/7–257)
3. Telegram 35 from Rangoon, July 8, reported that, although the Burmese Government did not appear to intend to seek a Soviet loan, it might be tempted to accept if the Soviet Union offered a loan with no strings attached. (Ibid., 890B.00-Four Year/7–857)
4. Telegram 1519 from Rangoon, June 10, reported that in Prime Minister Nu’s June 8 address, which set forth policy for the completion of Burma’s Four-Year Plan (begun in 1956), he stated that restoration of law and order was to have priority and that most mining and industrial enterprises should be transferred wholly or partially to private enterprise. A series of directives issued in conjunction with the address appointed eight “enquiry committees” to study specific problems. (Ibid., 890B.00–Four Year/6–1057)
5. For text, see 8 UST (pt. 2) 1862.
6. Ambassador Win had requested a new 3-year $90 million P.L. 480 program on May 15. (Memorandum of conversation by Joseph A. Mendenhall of the Office of Southeast Asian Affairs, May 15; Department of State, Central Files, 411.90D41/5– 1557)