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

3373. Reference Deptel 2963.2 After consultation with Country Team I have following comments and suggestions as to Department’s final position re Sarit aid request as well as for press statement which might be issued summarizing talks.


Defense Support and Technical Cooperation.

Over 8 year period US aid has totaled $170 million or over $20 million per year. Of this, 30% has been used for direct benefit Northeast Thai. US has hope that subject favorable annual Congressional action it would be possible continue DS and TC aid at about current level of $24 million during next few years with continued attention to problems of Northeast. Regarding Sarit request, particularly 3 items mentioned reference telegram, point out that Korat–Ubol highway, according present Highway Department master plan, scheduled for funding FY 1963–66; that Banphai–Ubol highway not part of primary highway system; and that Northeast tank irrigation program with TTEC concurrence dropped from US aid projects on grounds US technical assistance no longer required and TG could carry on program within normal budgetary framework. Present plans give higher priority to Korat–Udorn highway. Nevertheless state that subject resolution of priorities, availability of funds and further studies economic and military aspects may be possible make start on Korat–Ubol road during CY 1959 possibly funding portion engineering cost in FY 1959 and begin funding actual construction cost in FY 1960. Point out that according master plan cost this highway including engineering estimated at $24.5 million as contrasted Sarit memo costing of $12.5 million. FYI. Master plan figure does not include construction equipment needs. Sarit figure also believed too low and to be based on [Page 1028] standard of construction too inferior for US-financed highway. Obviously undesirable make a commitment expressed in financial terms. End FYI. State unable consider Banphai–Ubol highway at present as not in primary highway system and appears have low economic priority and little military justification. Decline assistance re tank irrigation for reason given above. With respect to other projects, could consider self-help land settlement, land improvement cooperative, could probably adjust current program to include Ranong–Takuea bridges. Also possible, subject considerable staff work, develop mutually acceptable projects in fields farm credit, paddy and farm product marketing cooperatives. Also happy cooperate in home industry development. USOM activity interested in agricultural, livestock, fishery and forestry development and promotion and except for forestry has given substantial assistance in all these fields. Always glad discuss feasibility of new projects.


DLF projects.

Congress deliberately reduced overall funds available for DS and effectively limited use funds to projects with military justification. At same time it created DLF to provide for financing worthwhile economic development projects. Thus while impossible for US increase DS level and difficult find DL projects meeting current stringent criteria, Thai economic development projects such as Bangkok distribution and power, dredge and water supply, as well as other projects eligible consideration financing this source. Express optimism re approval Bangkok distribution and thermal power, indicate dredge approval and interest in Bangkok waterworks when application forthcoming.


Military Assistance Program.

JUSMAG review detailed proposals re additional military assistance indicates that number of items in request already programmed previous years; that number of others included in proposed future program; certain other items may be considered but require further Thai-US staff study; some items do not appear meet MAP criteria. Items approved or for which approval requested include following:

Navy: One DE (in ship loan bill now before Congress), two AMS’s, three LSM’s, a number of shore establishment items.

Air Force: One squadron fighter bombers to replace F–8–F’s, one squadron C–47s, considerable logistical support, welfare and medical equipment.

Army: Proposed reorganization RTA involving deactivation certain units and addition others to MAP-supported units has been under discussion at staff level for some time. Agreement this subject not yet reached. Military industrial projects including ammunition plant, rebuild line for major assemblies and some assistance to shoe and uniform plants have been programmed. Other items in fields of welfare, [Page 1029] communications programmed. Entire proposal receiving careful consideration by JUSMAG which will forward recommendations through channels when study completed.


PL 480.3

Indication US willingness conclude new PL 480 tobacco sale would be timely (Embtel 3366).4 Indicate that portion local currency derived from this and previous sales available for loans for industrial development purposes.


AEDF projects.

AEDF projects in which Thai participates, notably regional telecommunications, Mekong development, SEATO skilled labor, and regional English, provide additional resources of which Thailand’s share around $20 million.


Promotion private investment.

Express gratification re attitude Sarit and staff re promotion private investment in Thailand; US will continue to assist wherever possible in this activity. Suggest mention my recent offer finance study tour of group Thai leaders to countries where successful investment promotion programs now going on.

FYI: Department’s reports re Sarit meetings did not include any indication his attitude to questions raised by oil companies re future their operations in Thailand. Continue feel oil company problem key to private investment climate here. Consider Sarit should be pressed some more on this point, not as concession to US but in enlightened self-interest Thailand. End FYI.

This particularly desirable in view General Narong’s presence Washington.

Press statement.

While recognizing that foregoing does not really include many items that represent genuine additives to current programs, nevertheless feel Department can and should develop from positive items in foregoing a rather full press statement along lines indicated mytel 33305 and including mention of some of the items indicated above.

Sarit memo on “ways and means defend against and combat Communist threats Thailand” obviously of little help in drafting statement. Expression mutual satisfaction over continuing strengthening SEATO as anti-Communist shield and necessity remaining vigilant in face Communist threat should be sufficient. There would be difficulty [Page 1030] in going much beyond this in light thesis Sarit memo that Thailand needs large quantities US aid to wage anti-Communist fight more effectively.

  1. Source: Department of State, Central Files, 792.551/6–658. Confidential; Priority.
  2. See footnote 5, Document 483.
  3. Agricultural Trade Development and Assistance Act of 1954, as amended.
  4. Dated June 6. (Department of State, Central Files, 411.9241/6–658)
  5. Document 483.