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

1146. Deptel 943.2 During call on Prime Minister 18th he said that inner Cabinet after long discussion recommended to him that GUB request loan from US for continuing economic development program. Final decision however left to Prime Minister and he feels inclined cut back program to conform Burma’s own ability pay rather than seek outside help. He gave as reason that widespread corruption among rank and file politicians and officials makes it impossible insure that funds properly used.

Nu said that contracts with American consultants (mentioned specifically Robert Nathan Associates3 and implied KTAM4 also) would soon expire and that because of shortage dollars might not be possible renew. He therefore asked if US could take surplus Burmese rice in payment. Acly referred to similar proposals made to Ambassador Sebald and said that information received from US Government makes it clear that there little hope such plan feasible within present legislative and political limitations and in view our own substantial rice surplus.

I mentioned that Baldwin group5 would visit Rangoon at end week for express purpose discussing rice marketing problems and urged Prime Minister encourage Minister Trade Development and other officials talk fully and frankly with mission on all phases rice situation. He promised to do [so].

Comment: Although final decision not yet made re request for loan matter clearly involves cleavage among GUB leaders and reconsideration basic development policies. Emotional reaction Prime Minister to evidence widespread corruption among political elements is in conflict with approach Kyaw Nyein and other more realistic leaders who consider development program essential maintain political support.

  1. Source: Department of State, Central Files, 890B.10/5–1955. Secret.
  2. Telegram 943, May 6, responded to telegram 1041 from Rangoon, April 29, which reported Burmese interest in securing a U.S. loan. (Ibid., 890B.10/4–2955) Telegram 943 discussed possible sources for a loan to Burma and suggested that informal discussion should take place before Burma made a formal request for assistance. (Ibid., 890B.10/3–2955)
  3. A U.S. consulting firm providing economic advice to the Burmese Government.
  4. Tippetts, Abbett, McCarthy, and Stratton (formerly Knappen, Tippetts, Abbett, and McCarthy) Engineering Company, a U.S. consulting firm providing engineering advice to the Burmese Government.
  5. See Infra.