183. Telegram From the Embassy in Ceylon to the Department of State1

742. GovGen Sir Oliver Goonetilleke called Ambassador to meeting yesterday at which Prime Minister Bandaranaike, Finance Minister De Zoysa, Treasury Secretary Amerasinghe and acting Permanent Secretary Ministry External Affairs Tennekoon were present.

GovGen stated Ambassador would understand importance meeting by fact top level GOC officials present.

He handed Ambassador aide-mémoire, text of which transmitted separately (Embtel 753)2 and then made presentation along lines of aide-mémoire. GovGen emphasized GOC particularly wanted Ambassador go to Washington to support aid request.

Prime Minister spoke at length on “crucial” nature next budget. Declared political situation critical and government must increase development expenditures immediately or government might fall and “more extreme” government would follow. When asked how crisis could exist with government holding such large parliamentary majority, Prime Minister replied crisis was extra-parliamentary. The country was fraught with tensions, unemployment and underemployment were pressing problems and government must act or be forced go to people for new elections. Declared large development projects would relieve communal tensions as well as unemployment, et cetera.

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Prime Minister re-emphasized political trend had been sharply to left, UNP had no real support and government must act or country would go Communist for lack any other way to go. Government believed trend must be checked. Government therefore had made “unanimous” decision to make public declaration there would be no question of nationalizing foreign investments for next ten years. Nationalization existing plantations would not be considered for five years.

Prime Minister declared he had resisted suggestions of obtaining aid from other governments because GOC wished not to be obligated to “extreme elements”. He believed that $50 million in assistance would take GOC through crisis.

In course questioning it became apparent that GOC believes substantial developmental projects must be begun now in order for results be visible by next elections three years hence.

At end discussion GovGen and Prime Minister decided instruct Ambassador RSS Gunewardene make initial call on Department next Wednesday to present aid request.3

Comment: We believe that present government has lost popularity, political situation is critical, government is in financial straits and substantial progress must be made before next elections or new political coalition will take power. Present position of GOC is precarious, but if it shows progress next year it should at least hold its present support.

We will make recommendations after receiving report Gunewardene’s presentation to meet next week. [sic]

Ambassador presently prefers not go to Washington to support request. Canadian HICOMCavell immediately followed Ambassador to receive similar request from GovGen, Prime Minister and others. Ambassador expects to discuss with Cavell today.4

  1. Source: Department of State, Central Files, 746E.5–MSP/5–1758. Confidential.
  2. Telegram 753 from Colombo, May 17, transmitted the text of the aide-mémoire from the Government of Ceylon. The aide-mémoire gave specific budgetary figures to illustrate Ceylon’s need for economic assistance. (Ibid., 746E.5–MSP/5–1758)
  3. On May 21, Ambassador Gunawardene called at the Department of State to discuss the proposed visit of a financial mission from the Government of Ceylon to discuss the question of additional U.S. assistance to Ceylon. (Memorandum of conversation by Rufus Burr Smith; ibid., 746E.5–MSP/5–2158)
  4. Telegram 796 from Colombo, May 19, reported the results of the discussion between Ambassador Gluck and Canadian High Commissioner Nik Cavell. The Embassy noted that Cavell believed it important for the United States and Canada to make a significant response to Ceylon’s request for aid. (Ibid., 846E.10/5–1958)