Some time has been spent in study of the program and consultation in
the other Embassy offices to get their views. I have found it
necessary first to set down certain general considerations
concerning our
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program in
Burma and am forwarding these now. Further analysis along the lines
set forth in the enclosure to Assistant Secretary Rusk’s letter will
follow.2
[Enclosure]
American Aid Program in Burma
Burma is receiving economic and technical assistance from the
United States but has not been willing to accept military aid
from the United States on a continuing grant or reimbursable
program basis.
For these notes on the American program of economic aid, comment
on the general nature of the program and factors which limit the
scope of potential direct American aid may be helpful.
A description of the various individual projects would require
much space and would duplicate material already submitted by
STEM in some detail. Parts
VII and VIII of STEM’s
despatches Toeca D–575 of
August 31, 1951,3
appraising program prospects for the fiscal years 1952 and 1953
and despatch Toeca D–615 of
September 28, 1951,3 on the revised FY 1952 program for Burma contain useful outlines
of all ECA projects formulated
thus far.
It is believed unnecessary to elaborate here on often stressed
limitations imposed on economic aid projects by insurgent
activities outside the main towns in most of central and lower
Burma and a part of upper Burma and on foreign aid in particular
by the desire of Burmese to avoid any commitments that they
suspect might eventually place them under foreign control. For
economic recovery and full use of foreign aid, lawlessness must
cease and suspicions of hidden motives be dispelled.
[Page 320]
General observations
In a predominantly agricultural economy torn first by war then by
insurrection the first needs have been rehabilitation of farming
and transportation. The poor living conditions which most of the
people endure in common with the rest of the area have called at
the same time for basic measures of social welfare to build up
the people’s confidence in their government and their will to
make sacrifices, if necessary, for their independence and
individual rights. In the formulation of an aid program that
would start with these fundamental requirements and accord with
the Burmese Government’s socialist philosophy, stress was laid
on agriculture, transportation, health, education and native
crafts. Most of the ECA projects
already launched or being formulated are for assistance in these
fields. At the same time ECA is
to pay part of the cost of the services of a firm of American
engineers Knappen, Tippetts, Abbett, McCarthy, which is under
contract with the Burmese Government as consultants to survey
mineral and industrial potentialities. It may prove feasible to
make a start on mining lignite deposits and on hydroelectric
power.
The aid projects are long term. They have not had an immediate
impact except for transitory appreciation of commodities like
raw cotton, cotton yarn, newsprint and medicines which ECA shipped to Burma to meet
essential requirements, generate counterpart funds, and provide
some immediate tangible benefit.
A portion of American aid in Burma meshes with and supports
UN programs initiated at
Burma’s request by WHO, UNICEF, FAO, ILO, UNESCO and ECOSOC. In general ECA furnishes supplies which UN technical assistants need for
their programs.
Wherever desirable, the aid projects call for training of Burmese
at home and abroad to carry on improvements in the years to
come.
The aid program is in its early stages. The ECA agreement was signed on
September 13, 1950.4 The STEM mission was established in
the latter part of 1950 and is only now reaching full strength.
The first half of 1951 was largely devoted to formulating aid
projects with Burmese officials and securing the approval of the
Burmese and American Governments. Some projects are still in the
embryo stage. American technical assistants have been in Burma a
relatively short time. A number have not arrived and some have
not yet been recruited. It has been undesirable that they come
before arrival of the supplies they need. The flow of supplies
in any quantity is only just beginning. The arrival of members
of the mission and technicians has entailed numerous difficult
administrative problems which have taken up a large share of the
time of the Embassy and the Mission. A large
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part of the time of STEM officers has been spent on
detailed budget reporting requirements and housing problems.
Administrative matters and personnel problems have so dominated
the picture that it has been difficult to put these out of sight
and objectively measure and evaluate the progress of the program
in terms of our foreign policy. The program is so new that it is
perhaps too early to draw conclusions as to its success.
The dollar allocation to the ECA
program in FY 1951 was
$10,400,000. The expected allocation for FY 1952 is $14,000,000. The tentative figure for
FY 1953 is $21,000,000. The
figures for 1952 and 1953 must cover Point IV educational
projects, five of which were drawn up early in 1951 but not
acted upon because of the Burmese Government’s reluctance to
exchange notes. These proposals were closely related to ECA projects. They have now been
turned over to STEM for such
action as proves feasible. Their total estimated cost is
$354,000. The dollar costs do not include non-program
expenditures for the compensation, travel outside of Burma, and
administration of the STEM
mission. Over and above the $14,000,000 which represents the
estimated dollar cost of the FY
1952 program, it is estimated that there will be expenditures in
Burmese rupees equivalent to $29,083,000. Burma’s share of
program expenditures will thus be about twice the American
share. About 16% of local currency costs in FY 1952 will be met with counterpart
funds. The rest will be from Burmese Government appropriations.
This shows that the aid program is a joint venture to which the
Burmese Government will make a large contribution and in which
Burma has an important stake.
The projects are balanced and cover a broad front. If they prove
successful individually their benefits should react favorably
upon the whole economy producing gains outside the immediate
sphere of each project. Early experience has shown that one
project cannot make much headway alone. Preventive and curative
health measures produce only limited and temporary benefits if
the people concerned do not receive some education and training
at the same time and if they cannot produce more to increase
their earnings and gradually improve their standard of
living.
It should be a source of satisfaction that a real effort has been
made to development with the sums that are being made available
a program that is sound from this point of view. It is
questionable, however, whether the program contributes to our
political objectives at this time. To reach the masses and lift
the dead weight of centuries of low living standards is a
tremendous undertaking. The benefits may not be very widely felt
for years. Is there time? Before an attempt to answer this and
see if a few quick action projects with strictly limited
objectives of immediate political value would not be more
effective in
[Page 322]
the
present critical state of affairs it is necessary to review
factors which limit and retard the program other than the
internal strife and prevailing fears and suspicions mentioned at
the outset.
Limiting factors
Only projects requested by the Burmese Government can be
undertaken. The Government may reject or modify our proposals in
a sense which damages their effectiveness from our point of
view. There is a possibility that a new government of more
leftist tendencies will terminate the economic aid agreement and
hence the entire program.
The Government’s lack of experienced personnel places an extra
burden on STEM which has to
draft the project proposals and await the time consuming process
of review, amendment, and approval before sending the projects
to Washington for approval there.
Attacks by the Communist opposition and fear that publicity will
make Communist China and Russia think that Burma has abandoned
neutrality and sided with the “Anglo American bloc” have damned
up the flow of information and deprived the program of the
political benefits that might be derived if the Burmese leaders
who recognize the needs and the advantages were to make a
genuine and continuing effort to support the program publicly,
explain it to their people, and defend it against unwarranted
attacks and misrepresentation. As it is the publicity is reduced
to a trickle of official handouts and the program is not widely
known or understood. Our information officers are continually
striving to make the program better known and to eradicate
misconceptions but the number of Burmese who are helping or want
to help appears small to the officers of the Embassy who have
been studying and trying to analyze the effectiveness of the aid
program.
While not precisely a restricting factor, the following
considerations have a bearing on the scope and psychological
impact of the aid programs. Burmese officials working on the aid
program with STEM concur in the
principle that imports of commodities to generate counterpart
funds should be not merely consumer goods but supplies which
will stimulate constructive development projects. Raw cotton for
the government spinning and weaving factory will be the
principal item in this category in FY 1952. In FY 1951
commodities imported for sale were cotton yarn, raw cotton,
newsprint, and antibiotics. The importation of raw cotton has
been criticized as an artificial stimulus to an uneconomic
enterprise. The costly government spinning and weaving factory
is one of the major undertakings of the Socialist government. It
pays for its raw cotton and its payments for ECA American cotton are turned over
to the counterpart funds but
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the factory has been operating at a loss.
Another sound principle observed which may nevertheless prove a
delaying or limiting factor is that, the program should not, in
general, include projects which will produce revenue. It is
thought that such projects should properly be financed by loans.
Burma has now joined the World Monetary Fund and the IBRD. Well planned revenue
producing projects might eventually be financed by an IBRD loan or even a loan from the
Import-Export Bank. But for the present these are only somewhat
remote possibilities.
A portion of program dollars is allocated to projects undertaken
or to be undertaken by UN
agencies at Burma’s request. These include WHO and UNICEF health and maternity and child welfare,
FAO forestry and livestock
disease control, ILO technical
or vocational training, UNESCO educational or training projects, an ECOSOC technical assistance to
handicraft and cottage industries. The ECA contribution, apart from coordinating its work
with the UN agencies, is mainly
supplies. To the extent that UN
aid is sought by Burma and granted the sphere of exclusively
American aid is reduced and the prospects of appreciation of the
American contribution, direct and indirect, correspondingly
diminished. It is doubtful if the extent of America’s
contribution to UN projects is
widely known in Burma. Helpful as the projects may be and much
as they may strengthen Burma’s faith in the UN there is the question of whether
the UN projects contribute to our
current political objectives. It is important to remember,
however, that if the UN proves an
effective source of aid the Burmese Government could turn to it
more freely than it feels it can to any single nation or group
of nations such as the British Commonwealth in whose Colombo
plan Burma does not wish to participate. The UN might prove the most effective
agency for the long range activities necessary to give Burma the
strength and unity to preserve her independence.
Military aid aspect
The Burmese are willing to buy arms and military equipment from
us (or receive them as grants). They are unwilling to admit
controls such as inspections and end use checks. They have the
British Military Mission and do not desire an American one. The
Government is unwilling to give any undertaking that might be
interpreted as a political commitment although it recognizes its
need of aid. Its attitude toward military as well as other aid
is governed by a determination not to receive help in a volume
or of a type which would allow leftist opposition elements to
come to power or China to demand a showdown on an allegation of
a sell-out to the “capitalist imperialists”.
[Page 324]
Consequently our aid program
cannot for present be expected to include much military
assistance or economic aid of military value to the United
States.
Note on Burmese viewpoint
Marshall Green5 wrote Bob Acly on
November 19 from Stockholm about a conversation he had there
with U Aung Than6 (Bo Set
Kya). The paragraph below is quoted as illustrative of the
Burmese attitude. U Aung Than was one of the first Burmese
leaders to appreciate possible benefits of economic aid from the
United States and was instrumental in the prodding of Burmese
officials to get together, draw up tentative proposals for a
program, and cooperate with the economic mission which came to
Rangoon in March 1950 under the leadership of the Honorable R.
Allen Griffin.7 Mr.
Green wrote as follows:
General Aung said that Burma needs ECA assistance but will not compromise her
neutrality in order to continue to receive such assistance. He
later remarked that the State Department would surely be able to
hit on some formula for continuing ECA aid without Burma having to compromise her
present policy or having to restrict her present negligible
trade with China.
