214 Chifley to Williams

Letter CANBERRA, 8 February 1949

TOP SECRET

I wish to refer to your letter of 1st February regarding the approach made to the United Kingdom Government by the Government of Burma for financial assistance.

Our view is that the situation in Burma cannot be remedied by financial assistance only, and that some of the fundamental issues should first be discussed with the Burmese Government. For instance, in a situation in which various communist factions are causing disruption to Burmese economic life, there is no excuse for communal war between the Burmese Government and the Karen Nationalists, both of whom are fundamentally anti-communist.

One of the great problems arises out of the presence of many Indian business and financial interests which have not assisted in bringing about financial stability. India, Pakistan, Siam and China have been watching developments in Burma for some time and some of these countries clearly hope to gain objectives in Burma as a result of the maladministration which exists. The co- operation of these countries has to be sought if the Burmese situation is not to lead to a serious international dispute.

For the present, therefore, we could not accept any obligation to share in any form of financial assistance to the Burmese Government.

We have been considering for some time the sending of an official representative to Burma, as the Burmese have frequently sought advice and assistance from us on constitutional and administrative problems. We will hasten the despatch of our representative and ask him to report fully on the position.

[AA: A6537, SEATS 4/1]