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

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

Bangkok, October 13, 1960—1 p.m.

652. Regret reply to Deptel 498² delayed because of overwhelming work connected Parsons and Passman³ visits.

Consider general concept of letter excellent but on reflection and study draft, withdraw my previous recommendation it contain specific reference to Laos. Fear that such specific linking Laos and Thai economic development leaves letter too open to interpretation that our interest in increased Thai economic development aroused only because events in Laos. Believe juxtaposition events in Laos and letter speak well enough for themselves.

Therefore suggest deletion numbered paras 3 and 4. (While there no opportunity full discussion with Parsons, he saw Department’s draft and concurred in desirability deletion specific reference to Laos.)

Numbered paragraph 1. Suggest rewording first two sentences as follows:

“The recent visit of Their Majesties the King and Queen to the United States was a major milestone in the long and happy history of relations between our two countries and I believe it was extraordinarily successful. At that time I had the pleasure of a cordial conversation with His Majesty the King on international developments.”

Foregoing change is only stylistic and designed to get away from conventional “commuiqué-type” language. No changes suggested paragraph 2.

Paragraph 5. Delete phrase “as regards relations between Thailand and the United States”. Insert following sentence between first and second sentences:

“I entirely agree with Your Excellency’s recent statement that we must preserve the strong bond of cordial friendship between our two countries and use our concerted efforts in overcoming the world crisis as though we are now in the same boat sailing on a rough and dangerous sea heading toward safety and welfare.”

In the last sentence I am inclined to prefer “bulwark” for “mainspring”.

Paragraph 6. Reword this paragraph to read as follows:

“Our continuing military and economic assistance programs to constitute firm evidence of our intentions in this respect. I am particularly pleased in this connection to be able to inform you that although our aid programs are again being decreased in many countries, the total level of aid programs for Thailand for fiscal year 1961, including military as well as economic assistance, is higher than that provided in fiscal year 1960. I know of Your Excellency’s own interest in this subject and trust that this will serve to reaffirm the importance which we attach to the continued strength and stability of Thailand.”

Paragraph 7. Reword this paragraph to read as follows:

“I also want you to know that looking to the future, the United States is fully prepared to explore with the Royal Thai Government measures by which economic development can be accelerated in Thailand and its self-sustained economic growth achieved. I have accordingly requested the appropriate departments of the government to undertake a careful review of the ways in which these objectives can be achieved by additional assistance from my government combined with additional steps by your government to mobilize the resources of Thailand. In this connection I am impressed with Thailand’s favorable prospects for more rapid development and its potential ability to profit from external capital investment as the emphasis in United States assistance programs shifts from a grant to a loan basis, and as the opportunities for private investment in Thailand become increasingly well-known.”

Paragraph 8. Substitute “cooperation” for “alliance” in the latter part of the sentence.

Following keyed to numbered points last paragraph reftel (FYI portion).

1. Soonest (see number 4 following).

2. Projects we recommend include:

(A) Three irrigation projects already submitted would have greatest impact Thai economy and could help revolutionize Thai agriculture by permitting double cropping some areas, increased productivity others.

(B) Agricultural productivity and diversification assistance to maximize benefit foregoing and improve techniques throughout Thailand.

(C) More roads. Need here, while finite, almost limitless. Good roads needed north, east, south, west, e.g., to complete east-west lines Pakse Mae Sod, projected Asian Highway, all-weather through route Bangkok to Malaya, Bangkok to Chiengmai and north to Burma.

(D) Additional grant funding required complete regional telecommunications project.

(E) Provincial electric power.

(F) Emphasis on surveys as spelled out FY 62 country program book submitted by Country Team.

3. The quid pro quo should include TG affirmation continue certain existing policies and commitments in addition new steps designed augment capital accumulation. For example, existing items where reaffirmation desirable:

(A) Financial and monetary measures to assure continued stability baht, including reaffirmation pledge of type given IBRD to avoid inflationary deficit financing in excess 300 million baht any year.

(B) More vigorous TG emphasis on private enterprise direction of economy including orderly action by government divest self of present commercial and industrial holdings and abstinence enter NEA fields which private capital can finance.

(C) Continued emphasis industrial promotion. (New law should become effective imminently since it now lacks only signature.)

(D) Promulgation national plan using guidelines IBRD 1959 report.

(E) Continued budgetary emphasis education, agriculture and other features advance socio-economic progress of country. Foregoing illustrative listing, plus successful policies recent years (such as maintenance baht stability, lack serious inflation, attraction foreign investment, growing tourism) indicate that Thai quid pro quo in large part would involve continuation what being done.

Among new actions suggested are:

(A) Revision revenue code not necessarily to raise tax rates, but in effort simplify and rationalize code.

(B) Improved tax administration, especially to collect taxes due but not now being paid.

(C) Implementation those Beitzel Mission recommendations not yet acted upon.⁴

(D) Identification, recruitment where necessary, and utilization of skilled personnel resources, which now unnecessarily haphazard in TG. This may require alteration civil service salary scale to give incentive to technically skilled and short supply occupations.

4. On my return from US I told PriMin that I had many discussions on economic matters in Washington and as soon as time was available desired to discuss with him. This has been prevented up to now by pressure Lao events on both of us. However, this gives me excellent opening to hold discussions with him along lines our thinking as set forth above, including quid pro quos we would have in mind from Thai side. Believe it probably be preferable hold such general discussion with him and obtain presumably positive general response prior to delivery of letter. Believe in this way may minimize possibility Sarit will seize upon mention in letter of increased assistance while slurring over quid pro quo aspects, and thus reduce possibility of our having appeared to have entered into any open-end commitment. Would be prepared quickly see him upon receipt Department’s instructions and views and should be able deliver letter a week or so thereafter. Will advise later on composition and timing of proposed Washington team in light of Thai reaction to foregoing steps.

Johnson

1. Source: Department of State, Central Files, 792.11/10–1360. Secret; Priority; Limit Distribution. Repeated to CINCPAC for POLAD.
2. Supra.
3. Otto E. Passman (D–La.), member of the House Appropriations Committee.
4. Reference is to a report entitled “Expanding Private Investment for Thailand’s Economic Growth,” prepared by a six-man U.S. investment survey team headed by George B. Beitzel, Director of Pennsalt Chemicals, Inc., of Philadelphia and released on November 29, 1959. The report recommended that the Thai Government improve its already favorable investment climate by making a strong effort to streamline government procedures, negotiate certain treaties affecting investment, and reduce government participation in commercial enterprises. For text of a press release concerning the report, see Department of State Bulletin, December 21, 1959, p. 909.