Foreign Relations of the United States, 1952–1954, Africa and South Asia, Volume XI, Part 2

411.46E31/7–1852

Memorandum by the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Byroade) to the Secretary of State¹

secret

[Washington,] July 18, 1952.

Subject:

• Appointment at 3:30 P.M., July 21, with Ambassador Corea and Sir Oliver Goonetilleke, Minister of Agriculture and Food of Ceylon

Sir Oliver Goonetilleke’s call will be in the nature of a courtesy call, and Sir Claude Corea, who has been Ambassador of the United States since 1948, wishes to present new credentials from Her Majesty, Queen Elizabeth.

Sir Oliver arrived in the United States on July 17 from Ceylon via England. During a brief stay in England he discussed with representatives of the British Government Ceylon’s needs for rice and dollars. The British are reported to consider Ceylon’s rice position precarious and to be prepared to authorize dollars for purchases in the United States.

All four matters on the agenda suggested by the Ceylon Government for discussion with the United States are related to our rubber problem with Ceylon. Rubber is Ceylon’s main dollar earner. It is also an irritant to smooth relations between Ceylon and this Government, because Ceylon has not embargoed rubber shipments to Communist China.

Ceylon has refrained from embargoing rubber shipments to Communist China despite continued pressure from the United States. It has evidenced a desire to do so if an embargo could be accompanied by some measure to provide a politically acceptable rationale, since certain important groups in Ceylon would be adversely affected.

Sir Oliver and his delegation had brief talks with the Secretary of Agriculture,² Assistant Secretary Thorp and me on Friday, July 18. Other appointments have been made with the Technical Cooperation Administration and other groups for substantive discussions of the subjects on the agenda. Following is a brief statement of each problem:

1. United States supplies of rice and flour for Ceylon: The United States is probably the only feasible source of supply for 100,000 tons of rice and flour which Ceylon needs by February 1953. A small portion of this is needed in Ceylon by October of this year. Ceylon is also requesting aid and advice on an agreement with United States producers for a supply of rice over the next five years.

The Department of Agriculture is prepared to give Ceylon’s needs every consideration. There is a relatively small quantity of rice available from last year’s US crop, but it is of higher quality and price than the rice Ceylon ordinarily imports. This year’s crop, now being harvested will permit some exports to Ceylon. The details involved in meeting Ceylon’s requests will be discussed with the Ceylonese delegation on Tuesday, July 22.

2. A long-term agreement for the purchase of Ceylon rubber: After earlier discussions had been interrupted, the United States—through the General Services Administration—replied to the Ceylon Government’s overtures by offering a rubber purchases contract. This offer expired on April 30. Since our offer expired, GSA has continued to purchase rubber elsewhere and has been using up its appropriated funds. It is now reluctant to make any additional intergovernmental contracts.

3. An exemption for Ceylon under the provisions of the Battle Act: The Battle Act requires (a) that, for countries recipient of United States economic assistance, negotiations be held on the control of such exports as rubber, destined for the Soviet Bloc, and (b) the fullest support of the UN resolution relating to the shipment of certain strategic materials to Communist China. The latter requirement makes it impossible to extend Point 4 aid to Ceylon while Ceylon rubber moves to Communist China.

4. An agreement for the provision of economic and financial aid to Ceylon: Point 4 aid to Ceylon was suspended in October 1951 because Ceylon was not embargoing rubber shipments to China, and hence was not eligible for aid. The Government of Ceylon has indicated that it wishes to embargo rubber shipments to Communist China, but that an embargo would need to be accompanied by some measures which would provide an acceptable rationale for internal political purposes. Representatives of the Ceylon Government suggested informally that such a rationale would be provided in part if the Ceylon Government could announce a joint US–Ceylon economic development program of a magnitude considerably in excess of the $300,000 now contemplated for fiscal year 1953.

This matter is now under discussion with TCA, with particular attention being given to the possibility of arriving at some language which might meet the Ceylonese desire to be able to refer to a joint program of a given magnitude and covering several years.

Recommendations:

Should Sir Oliver raise any questions on the above numbered points, you may wish to reply along the following lines:

1. The Department understands that there is a small amount of high grade rice available now in the United States and that the Department of Agriculture has arranged for detailed discussions on United States rice availabilities from the coming crop.

2. The United States will be glad to examine any rubber purchase proposal made by Ceylon, although we are not confident that the United States can now conclude an agreement.

3. The United States knows and appreciates the Ceylon Government’s understanding of the communist threat to democracy throughout the world. Ceylon’s stand at the Japanese Peace Treaty Conference in San Francisco is a fine example of that understanding. We have earnest hopes that, since the recent favorable elections, the Ceylon Government will find it possible to embargo the shipment of rubber to Communist China.

4. The United States is desirous of helping Ceylon with its task of economic development. You may wish to note that we are looking forward to the time when Ceylon has taken action to meet the requirements of the Battle Act and the United States will be able to extend aid.

Sir Claude Corea is convalescing from an illness that proved almost fatal and has not been able to carry on his official duties since last April. He was knighted in June 1952. You may wish to congratulate him on his knighthood and express an interest in the recovery of his health.

1. This memorandum was drafted by Yenchius, Fluker, and Delaney of the Office of South Asian Affairs and received concurrences from representatives from the Office of International Materials Policy (OMP), the Agricultural Products Staff (APS), the Office of Economic Defense and Trade Policy (EDT), the Economic Defense Staff (EDS), and the Technical Cooperation Administration (TCA).
2. Charles F. Brannan.