106. Telegram From the Embassy in Thailand to the Department of State 1

1108. Subject: PL–480. Ref: A. State 012354;2 B. State 012350.3

1.
I made presentation to Prime Minister this afternoon following closely reftel A. PriMin was accompanied by FonMin Thanat and Minister in Prime Minister’s office General Sawaeng. I was accompanied by political and economic counselors.
2.
In my presentation, I laid particular stress on: a) joint interest of our two governments in Indonesia’s economic and financial stability. This importantly furthered by IGGI efforts, in context of which U.S. PL–480 and other assistance provided. b) Opportunity for additional commercial sales which may be presented if GOI decides to forgo 50,000 tons of PL–480 rice in favor of other PL–480 commodities; and c) Evidence that our activity has not been disruptive of commercial opportunities provided by fact that 400,000 tons of rice commercially imported by Indonesia in their FY 1969–70 (almost double the 1965–66 total).
3.
Thai side argued extensively with all three of these points, with Thanat carrying the attack.
4.
PriMin did not argue against aid to Indonesia, but made one point in this respect which he held to politely but persistently—the U.S. should aid Indonesia, but with commodities other than rice or with cash. He said that the amount of money involved in 400,000 tons rice sale meant little to the U.S., but was fundamentally important to Thailand.
5.
Thanat, nominally acting as interpreter but in fact presenting most of the argumentation himself, said “the IGGI has nothing to do with U.S. Simply because it is a member of IGGI, the United States cannot arrogate to itself the right to take actions seriously detrimental to this country.” He said Thailand is trying hard to stand on its own feet, as Marshall Green in a recent speech was quoted as saying they should do. Then he added their ability to do so is seriously affected when the United States unfairly disrupts its markets for its principal export, rice.
6.

I said that the U.S. had not disrupted Thailand’s market, but that our actions had greatly helped Indonesia, a country badly in need.

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Like Thailand, Indonesia was a very important country in Southeast Asia, its security, stability and financial health was very important to the area, including to Thailand, as well as to the U.S. Therefore we were working with others to try to restore Indonesia’s economic health, at the same time minimizing the ill effects on the export markets of others. I said the fact that Indonesia’s commercial imports were up showed both that the program was in fact contributing to the health of the Indonesian economy and that our program had not interfered with commercial markets. (Thanat picked this point up somewhat later.)

7.
A second point stressed by PM was that if we had to use rice as a commodity in aid program for Indonesia, we should do as Japan did, i.e., buy some of the rice in Thailand to give to Indonesia. Thanat added that Japan had much larger rice stocks than the U.S., yet found it possible to take account of the interest of countries such as Thailand and to forestall the ill effects of its “politically motivated” sales.
8.
I said I was happy that the Japanese had been able to take this action. I said that in making comparisons with this action and that of the U.S., however, we must remember that Thailand’s heavy trade imbalance with Japan, which was not offset in any other way, contributed importantly to Thailand’s balance of payments problems. By contrast, the total effect of U.S. activities and direct assistance made an important positive contribution to Thailand’s overall balance of payments. Thus I could understand why the Japanese would be especially concerned to compensate at least in some small measure for the overall effect of their role.
9.
Thanat then said that if we are going to compare Japan and the U.S., we must remember that Thailand is not extending the same cooperation to Japan and opening the same facilities to Japan that it is to the U.S. He said the Thai contribution to the security of this area and to U.S. interests in particular was persistently overlooked by some in Washington. I said I did not in the least minimize the Thai contribution, but that if we were going to look at the matter in the perspective he had suggested we should also round out the picture and recall the enormous expenditures which the U.S. had made and the enormous role it had played in other respects in Southeast Asia to contribute to the security of the countries of the area.
10.
On the question of the commercial opportunity being open to Thailand, Thanat was thoroughly scornful of the 600,000 ton figure originally requested by the Indonesians (“Only a bargaining figure”; “They may just as well have asked for a million tons”). He was equally scornful of the possibility of a further 50,000 ton increase from the 400,000 ton planning figure. He said that 50,000 tons of rice was “an almost ridiculous amount,” and said that if we were to say we were cutting that 350,000 tons had already been shipped or was in the late [Page 222]stages of preparation for shipping and therefore the 50,000 tons were all that could be cut from the program. He said (referring to the Vietnamese case of last year) that “ships can be diverted”. He asked “What makes you think they will buy the 50,000 ton balance from us anyway?” I replied that they have been pressing us for more rice, and that we will be supplying other kinds of needs if they decide to forgo the rice which should free the necessary foreign exchange. Thus the possibility seemed good.
11.
Picking up my point about the 400,000 tons of commercial sales in FY 69–70, he denied that Indonesia had purchased that much, saying he did not question that I had been told that, but that I had been “misled” by Washington. He said in any case it was “specious reasoning” to say that commercial imports of rice had gone up as the result of our PL–480 sales. I responded firmly that I had not argued that, but had said that the total effect of our activities, including the PL–480 sales, had obviously not been disruptive when commercial purchases by Indonesia were double the 1965–66 level. I said we thus saw no evidence that our activities had been disruptive. He said if we would stop our sales we would see immediately how disruptive they had been because Thai export sales would immediately rise. I responded by raising again the question of why Thailand had not obtained more of the rising commercial purchases Indonesia was making. Thanat then challenged me saying did I mean to say that PL–480 has not disrupted normal commercial sales: what about sales which Thailand in the past has been on the point of making which were cancelled at the last minute because of this program. I said I was addressing the present case of Indonesia.
12.
Thanat again spoke of “intrusion into a perfectly normal market”. I asked why Germany and others couldn’t just as well use such an argument to prove that we were “interfering” with their market in Thailand for equipment, weapons, etc. He simply said that was up to the Germans to raise with us. He said it was up to us to prove we were not causing disruption, not the other way around. He said everyone in Thailand, including the people on the streets, knew that disruption was being caused. I said these people were of course guided by what they were being told by the newspapers and others. I said I knew there was a problem, but the question was why. In the face of the large Indonesian commercial imports in the past year, I was still uncertain why Thailand did not get more of that market. Thanat again took the position that our figures were simply wrong.
13.
I said our actions have shown that we do mean to work closely with the Thais to avoid damaging their interests. I said the USG has many commitments, including to Indonesia, but we attempted to discharge them without disrupting the markets of others. I recalled again the two reductions already made in the figure for PL–480 rice for Indonesia, and that we were now proposing another.
14.
Thanat denied that we had taken their interests into account. He said we had not really consulted them, but simply presented them with faits accomplis. He said Ambassador Sunthorn has been treated with “arrogance” in his talks on this subject in Washington. I said I was very surprised to hear him say that, pointing out I had seen no reflection of it in my talks in Washington.
15.
Thanat then said the U.S. does not raise rice for consumption but only to dump on the markets of the world, and asked why we don’t do something about production. I pointed out that we had increased rice production to meet a grave world shortage starting in 1965, and that we had thereby saved many people from starvation. We recognized that the supply situation had changed and we had cut back acreage in the past two years, but such an adjustment takes time. He said I was “evading” the U.S. domestic political element. I said of course that element was there, but it was there largely because of the investments American farmers had made to gear up production where it was needed. He said the American economy could adjust more quickly than it was doing.
16.
At the end I agreed to report the views I had heard to Washington and again urged them to be prepared to follow up on the commercial opportunity that might open. This earned a scornful “thanks” from Thanat.
17.
Comment: While Thanat carried the ball and did most of the talking, Thanom obviously agreed with him on at least a couple of basic points, i.e., that Thailand is being hurt, and that they got previous little from us in response to his appeal through SecDef.
18.
It is worth noting in particular that to reinforce one point about PL–480 rice sales Thanat cited (and obviously endorsed) a highly critical Malaysian comment about our rubber disposal program.
19.
We are withholding any press release or comment until we see how RTG plays that aspect but are preparing for a substantial effort to get our side of story told if they go on the offensive again.
Unger
  1. Source: National Archives, RG 59, Central Files 1970–73, AID (US) 15–8 INDON. Secret; Priority.
  2. Dated January 23. (Ibid.)
  3. Dated January 23. (Ibid.)