Foreign Relations of the United States, 1958–1960, South and Southeast Asia, Volume XV

479. Memorandum From the Director of the Office of Southeast Asian Affairs (Kocher) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)¹

Washington, May 26, 1958.

SUBJECT

• Thai Request for Increased Grant Aid

Discussion:

The Thai Ambassador, Thanat Khoman, will call on you on Tuesday, May 27, at 3 p.m.² in order to discuss additional grant aid to Thailand in connection with Field Marshal Sarit’s memorandum “Development Projects in Thailand”,³ a copy of which was handed to you on May 12 (Tab A).⁴ Following his call on you on May 16,⁵ Field Marshal Sarit met with Mr. Dillon on May 19⁶ to discuss the projects in his memorandum. A follow-up discussion took place on May 21 between Ambassador Thanat and Mr. Palmer.⁷ In addition, Ambassador Thanat spoke with Mr. Whittington on May 22.⁸

As you know, the Thai have been repeatedly informed that we are not in a position to make commitments at this time for increased aid. However, Ambassador Thanat in his meeting with you is expected to press for increased grant aid to Thailand in the form of an “agreement in principle” to projects listed in the May 12 memorandum for the development of Northeast Thailand. We surmise his pitch will be political based on weaknesses in neighboring Laos.

In the May 19 talk (Tabs B and C) Mr. Dillon informed Field Marshal Sarit that United States economic aid to Thailand since 1951 amounted to $163.8 million of which approximately $50 million is accounted for by the Northeastern area. Mr. Dillon also informed the Field Marshal that it is unlikely appropriations for FY 1959 will permit an increase in aid levels. Mr. Dillon referred to the Development Loan Fund as a possible source for the financing of suitable projects and observed that the present defense support aid program ($20 million), plus that which might come from the Development Loan Fund and/or Ex-Im Bank, would approximate the level of assistance which Thailand received two or three years ago. In response to the Field Marshal’s request for an “understanding in principle” regarding the proposed projects, Mr. Dillon reiterated that the United States is not in a position to make any plans for which the Congress has not provided funds. He suggested, however, that since the projects could be funded over a period of several years it might be possible to finance some of them within the framework of the present aid program to Thailand. He stated that the United States intended to continue the defense support program in Thailand on the same scale as this year.

Throughout the talk with Mr. Palmer (Tabs D and E), Ambassador Thanat again pressed for an “agreement in principle” on the projects listed in Field Marshal Sarit’s memorandum. Each time the Ambassador was referred to what Mr. Dillon had informed Field Marshal Sarit, that it is unlikely we can provide larger defense support aid than is now being given; if, however, the projects could be funded over several years, it is possible that some of them can be worked out within the framework of the present defense support program. It was repeatedly stated, within the context of Mr. Dillon’s remarks, that these projects should be discussed with the USOM–Bangkok in order to establish their priorities in relation to the present aid program.

On May 22 Ambassador Thanat spoke on the telephone with Mr. Whittington (Tab F). The Ambassador asked if the talks on the development projects were considered as having come to an end, and whether the position taken by Mr. Palmer on May 21 with regard to the projects was the final United States position. He was informed that Mr. Palmer’s position followed that taken by Mr. Dillon in his talk with Field Marshal Sarit. The Ambassador said it would be a sad and unhappy report for him to make to his government that the United States had turned down all of the projects listed in Field Marshal Sarit’s memorandum.

Recommendation:

That you inform Ambassador Thanat

(1) that it is unlikely that increased grant aid can be extended to Thailand in FY 1959;

(2) that we are unable to agree in principle to the commitment of funds which have not been appropriated by or requested of the Congress;

(3) that the Thai Government explore with the USOM-Bangkok the possibility of financing some of the projects within the framework of the present program.

(4) that Thailand consider the DLF and the Export-Import Bank of the U.S. as possible means of financing projects for which funds are not now adequate from defense support appropriations nor readily available from domestic or private sources of capital.

1. Source: Department of State, Central Files, 792.5–MSP/5–2658. Secret. Sent through Gardner Palmer.
2. See infra.
3. See footnote 3, supra.
4. None of the tabs was found attached to the source text.
5. See Document 477.
6. See footnote 2, supra.
7. See supra.
8. Presumably reference is to the telephone conversation summarized in the last paragraph of this memorandum, preceding the recommendation; no record of a meeting has been found.