( April 9, 2013, Colombo, Sri Lanka Guardian) ‘Mrs Gandhi had asked privately: " Why are your people suspicious of us?". Mrs Bandaranaike had replied it was not matter of a suspicion of India but rather a suspicion of south India,’ revealed in a latest WikiLeaks cable published yesterday.
Full text of cable is follows;
PAGE 01 COLOMB 01147 01 OF 02 070511 Z
20
ACTION NEA-12
INFO OCT-01 EUR-25 ADP-00 AID-20 CIAE-00 COME-00 EB-11
FRB-02 INR-10 NSAE-00 RSC-01 TRSE-00 XMB-07 OPIC-12
CIEP-02 LAB-06 SIL-01 OMB-01 NSC-10 SS-15 STR-08
CEA-02 DODE-00 PM-09 H-02 L-03 PA-03 PRS-01 USIA-12
INT-08 IO-12 RSR-01 /197 W
--------------------- 121427
R 041300 Z MAY 73 ZFG
FM AMEMBSSY COLOMBO
TO SECSTATE WASHDC 9472
INFO AMEMBASSY DACCA
AMEMBASSY ISLAMABAD
AMEMBASSY KABUL
AMEMBASSY KATHMANDU
AMEMBASSY LONDON
AMEMBASSY NEW DELHI
AMCONSUL MADRAS
C O N F I D E N T I A L SECTION 1 OF 2 COLOMBO 1147
E. O. 11652/ GDS
TAGS: PFOR, CE, IN
SUBJ: CONVERSATION WITH PM BANDARANAIKE: SRI LANKA- INDIAN
RELATIONS
REF 1139
1. SUMMARY: PRIME MINISTER BANDARANAIKE SEEMS QUITE PLEASED
WITH RESULTS OF HER RECENT CONVERSATIONS WITH PRIME MINISTER
GANDHI. FORMULA FOR ACCELERATING REPATRIATION OF INDIAN
TAMILS, IF EFFECTIVELY IMPLEMENTED, SHOULD INSURE THAT ALL
525,000 UNDER 1964 AGREEMENT ARE RETURNED TO INDIA. A
SRI LANKA- INDIA COMMITTEE HOPEFULLY WILL COME UP WITH
FORMULA ON 150,000 TAMILS WHOSE DISPOSITION WAS UNRESOLVED
BY 1964 AGREEMENT. COMMITEEE WILL ALSO EXPLORE POSSIBLE
CONFIDENTIAL
PAGE 02 COLOMB 01147 01 OF 02 070511 Z
RESOLUTION OF THE KACHCHATIVU ISLAND DISPUTE WHERE SOME
COMPROMISE SEEMS POSSIBLE, AND THERE IS ROOM FOR INCREASE
IN SRI LANKA- INDIA TRADE. MRS BANDARANAIKE BELIEVES PRIME
MINISTER GANDHI SINCERELY WANS TO DISPEL OR REDUCE SRI LANKA' S
SUSPICIONS REGARDING INDIAN INTENTIONS. THESE SUSPICIONS
STEM FROM THE SOUTH INDIAN- TAMIL PROBLEM RATHER THAN BROADER
ASPECTS OF INDIA' S RELATIONS WITH SRI LANKA. END SUMMARY.
2. DURING MY MAY 1 MILLION MIGHT BE
NEEDED TO SET UP A TIRE PRODUCTION PLANT. SINCE SRI LANKA
ALREADY HAD A NUMBER OF WHITE ELEPHANTS, ON ITS HAND, BEFORE
MAKING A LARGE- SCALE INVESTMENT IT WOULD WANT TO MAKE
CERTAIN INDIA WOULD GURANTEE TO BUY NUMBER OF TIRES OVER
EXTENDED PERIOD.
8. I ASKED PM WHETHER SHE THOUGHT MRS GANDHI HAD SINCERELY
TRIED TO DISPEL SOME OF SRI LANKA' S SUSPICIONS TOWARD INDIA
WHICH HAD BEEN INTENSIFIED BY BANGLADESH CRISIS. SHE REPLIED SHE
THOUGHT THIS WAS ONE OF MRS GANDHI' S PRIMARY PRUPOSES. MRS
GANDHI HAD ASKED PRIVATELY: " WHY ARE YOUR PEOPLE SUSPICIOUS OF US?".
MRS BANDARANAIKE HAD REPLIED IT WAS NOT MATTER OF A
SUSPICION OF INDIA BUT RATHER A SUSPICION OF SOUTH INDIA.
FOR EXAMPLE SRI LANKA' S SUSPCIONS WERE AROUSED WHEN THERE
WERE CELEBRATIONS IN SOUTH INDIA ON THE OCCASION OF THE
75 TH BIRTHDAY OF S. J. B. CHELVANAYAKAM, THE LEADER OF THE
FEDERAL PARTY IN SRI LANKA. HE PUBLICLY ADVOCATED FEDERATION BETWEEN
THE SINHALESE AND TAMIL AREAS BUT HIS ULTIMATE GOAL,
MANY THOUGHT, WAS PARTITION OF SRI LANKA. NOTING PRESSURES
FOR SEPARATISM IN TAMIL NADU, MRS BANDARANAIKE SAID SHE HAD
FRANKLY TOLD MRS GANDHI THAT MANY PEOPLE IN SRI LANKA WERE
CONCERNED ABOUT THE POSSIBILITY OF SOME TYPE OF INDEPENDENT
OR TAMIL NADU EMERGING WHICH WOULD THEN TRY TO ANNEX TAMIL
AREAS OF NORTHERN SRI LANKA. MRS GANDHI HAD APPEARED
SURPRISED AT THESE CONCERNS. SHE SAID SHE WAS UNAWARE OF
THE CHELVANAYAKAM BIRTHDAY CELEBRATIONS IN SOUTH INDIA AS
WELL AS THE OTHER ACTIONS AND STATEMENTS OF SOUTH INDIANS
WHICH GSL CONSIDERED PROVOCATIVE. SHE ASKED FOR AND WAS
GIVEN A FILE OF NEWSPAPER CLIPPINGS AND OTHER MATERIAL
WHICH HAD AROUSED GSL' S SUSPICIONS.
9. MRS BANDARANAIKE SAID SHE HAD NOT MENTIONED 1971 INDO-
SOVIET TREATY BECAUSE MRS GANDHI HAD EXPLAINED BACKGROUND
OF TREATY IN MANNER WHICH MADE CLEAR SHE FULLY RECOGNIZED
GSL' S CONCERNS ON THIS POINT. I TOOK OPPORTUNITY TO ASK
PM WHETHER MRS GANDHI HAD PROPOSED SOME TYPE OF SECURITY
OR FRIENDSHIP TREATY DURING HER VISIT, RECALLING
CONFIDENTIAL
PAGE 03 COLOMB 01147 02 OF 02 070348 Z
SIMILAR TREATIES INDIA HAD TRIED TO PROMOTE PREVIOUSLY.
SHE REPLIED MRS GANDHI HERSELF HAD NOT RAISED SUCH TREATY.
HOWEVER, SHORTLY BEFORE GANDHI VISIT, SH AND MINISTER
FELIX DIAS BANDARANAIKE HAD BEEN INVITED TO SMALL DINNER
BY INDIAN HIGH COMMISSIONER COELHO AT WHICH TIME COELHO
HAD SUGGESTED SOME TYPE OF FRIENDSHIP TREATY MIGHT BE
SIGNED BY TWO PRIME MINISTERS. SHE HAD TOLD COELHO SUCH
A TREATY WAS UNNECESSARY BECAUSE, IF FRIENDLY RELATIONS
EXISTED BETWEEN TWO COUNTRIES, IT WOULD BE UNNECESSARY
TO FORMALIZE THAT RELATIONSHIP IN A TREATY. THIS WAS
PARTICULARLY TRUE IN CONTEXT OF SRI LANKA' S NON- ALIGN
POLICY. IF SRI LANKA SHOULD SIGN A TREATY WITH INDIA, SUCH
ACTION WOULD OBVIOUSLY AROUSE QUESTIONS AND CONCERNS IN
OTHER COUNTRIES , SUCH AS PAKISTAN AND CHINA.
VAN HOLLEN
CONFIDENTIAL
NMAFVVZCZADP000
PAGE 01 COLOMB 01147 02 OF 02 070348 Z
15
ACTION NEA-12
INFO OCT-01 EUR-25 ADP-00 AID-20 CIAE-00 COME-00 EB-11
FRB-02 INR-10 NSAE-00 RSC-01 TRSE-00 XMB-07 OPIC-12
CIEP-02 LAB-06 SIL-01 OMB-01 NSC-10 SS-15 STR-08
CEA-02 DODE-00 PM-09 H-02 L-03 PA-03 PRS-01 USIA-12
INT-08 IO-12 RSR-01 /197 W
--------------------- 121118
R 041300 Z MAY 73
FM AMEMBSSY COLOMBO
TO SECSTATE WASHDC 9473
INFO AMEMBASSY DACCA
AMEMBASSY ISLAMABAD
AMEMBASSY KABUL
AMEMBASSY KATHMANDU
AMEMBASSY LONDON
AMEMBASSY NEW DELHI
AMCONSUL MADRAS
C O N F I D E N T I A L SECTION 2 OF 2 COLOMBO 1147
6. MRS BANDARANAIKE ADDED SHE AND MRS GANDHI HAD NOT TALKED
ABOUT OIL QUESTION AT ANY LENGTH WHILE DISCUSSING KACHCHATIVU.
HOWEVER, POSSIBILITY OF OIL IN KACHCHATIVU AREA WAS ON MINDS
OF BOTH GOVTS. SOVIETS, WHO HAD BEEN UNDERTAKING OIL
EXPLORATIONS IN NORTHERN SRI LANKA, BELIEVED THERE MIGHT BE
OIL NEAR KACHCHATIVU. BUT THEY WERE RELUCTANT TO EXPLORE
THE AREA UNTIL THE SRI LANKA- INDIAN DISPUTE WORKED OUT. SAME
WAS TRUE IN CASE OF EARLIER CANADIAN EXPLORATIONS.
7. TURNING TO THE QUESTION OF EXPANDED TRADE BETWEEN SRI
LANKA AND INDIA, PRIME MINISTER SAID THERE HAD BEEN SOME
GENERAL EXCHANGED ON THIS SUBJECT. REAL PROGRESS, IF ANY ,
WOULD HAVE TO AWAIT TECHNICAL LEVEL DISCUSSIONS WHICH WILL
OPEN SOON. AREAS OF ECONOMIC COOPERATION INCLUDED MANUFACTURE
BY SRI LANKA OF RUBBER TIRES AND OTHER RUBBER PRODUCTS, AN
CONFIDENTIAL
PAGE 02 COLOMB 01147 02 OF 02 070348 Z
ARRANGEMENT WHEREBY SRI LANKA COULD IMPORT AUTOMOTIVE SPARE
PARTS FROM INDIA DUTY FREE AND EXPANDED TRADE IN GRAPHITE.
TIRE PRODUCTION BY SRI LANKA MIGHT OFFER FAVORABLE PROSPECT
BUT IT WAS ESTIMATED INVESTMENT OF RS OUR RELATIVE COMPETITIVE POSITION. AND THAT PROCESS, I WOULD
NOT ARGUE, HAS BEEN COMPLETED YET.
I WOULD INTERJECT THAT SO FAR AS EXCHANGE RATE CHANGES ARE CON-
CERNED, I HOPE AND EXPECT IT' S BEEN COMPLETED WITH THE FURTHER
CHANGES MADE IN FEBRUARY OF THIS YEAR.
BUT ITS BEEN A LONG AND TORTUOUS PROCESS. THAT PROCESS HAS BEEN
IN THE NATURE OF A CHANGE FROM A COMPETITIVE SITUATION THAT EXISTED
TO A NEW AND MORE EQUAL COMPETITIVE POSITION-- A NECESSARY
CHANGE. IT DOES NOT SOLVE THE PROBLEMS OF THE SYSTEM AS WE LOOK
AHEAD.
HOW DO WE BUILD AND REBUILD AND STRENGTHEN A MONETARY SYSTEM AND
A TRADING SYSTEM SO THAT YOU CAN MAKE AN ADJUSTMENT MORE SMOOTHLY,
OR KEEP AN ADJUSTMENT, WITHOUT GOING THROUGH THE KIND OF CONVUL-
SION, RELATIVELY SPEAKING, THAT WE' VE HAD TO GO THROUGH THE PAST
COUPLE OF YEARS? AND I THINK THIS IS THE CHALLENGE AHEAD OF US,
AND WHAT WE ARE TRYING TO DO IN THESE MONETARY AND TRADE NEGOTI-
ATIONS. HOW CAN WE REBUILD A MONETARY AND TRADING SYSTEM THAT
MAINTAINS AN EQUILIBRIUM, THAT AVOIDS SHARP CHANGE, SHART CONVUL-
SION IN THE FUTURE, AND THEREFORE HELPS TO SUPPORT A MOVEMENT
TOWARD FREER TRADE, TOWARD MORE LIBERAL TRADE, AND RESI XS
TENDENCIES, WHICH I THINK EXIST IN MOST COUNTRIES- THEY CERTAINLY
EXIST IN THE UNITED STATES-- TO TURN INWARDS, TO RETREAT FROM
THE WORLD, AND TO BUILD WALLS.
THIS IS NOT AN EASY PROCESS, PARTLY BECAUSE ITS TECHNICALLY
DIFFICULT. BUT LET ME FORGET ABOUT THE TECHNICAL DIFFICULTIES
OF FLOATING RATES AND FIXED RATES THAT CHANGE AND FIXED RATES
THAT ARE UNCHANGED, AND HOW YOU CREATE RESERVES, AND ALL THE
REST, AND LOOK THROUGH THAT TO WHAT I THINK IS A MORE FUNDAMENTAL
PART OF THE DIFFICULTY.
I REFER TO THIS WORLD OF MORE EQUALS. AND YOU EXPECT COUNTRIES
-- THE NATURAL STATES OF HUMAN INSTINCT, I SUPPOSE, IS TO COMPETE,
AND COMPETION IS HEALTHY, AND IT BRINGS PROGESS . BUT IT
ALSO CAN BRING SOME DANGERS, AS PEOPLE COMPETE IN CERTAIN WAYS
ON AN INTERNATIONAL SCALE IN A NATIONALISTIC KIND OF WAY. HOW
DO YOU CONSTRUCT, HOW DO YOU PROJECT, PUSH THE COMPETITION
INTO HEALTHY AND CONSTRUCTIVE CHANNEL S? THAT, IN A SENSE, IS
UNCLASSIFIED
UNCLASSIFIED
PAGE 03 SYDNEY 01123 02 OF 02 070520 Z
WHAT WE' RE TRYING TO DO.
BUT, IN DOING THIS, WE HAVE TO RECOGNIZE, I THINK, THAT THERES
NO BOSS OF THE WORLD ANY MORE, IN THE SENSE THAT THERES NO
COUNTRY THAT CAN SIT THERE AND BE THE WORLD POLICEMAN. YOU CANT
PUSH THIS OFF ON AN INTERNATIIONAL INSTITUTION. YOU CAN INFORM-,
AND YOU DO INFORM, IN THE MONETARY AREA, THE INTERNATIONAL MONE-
TARY FUND, BUT YOU HAVE TO HAVE A HEALTHY RECOGNITION THAT AN
INTERNATIONAL INSTITUTION IS NOTHING MORE THAN THE COUNTRIES OF
WHICH IT IS MADE UP.
SOMEONE IN AUSTRALIA-- NO, IT WASN' T IN AUSTRALIA, IT WAS IN
INDONESIA, SOMEONE TOLD ME A STORY ABOUT WHAT THEY THOUGHT ABOUT
INTERNATIONAL INSTITUTIONS. YOU JOIN AN INTERNATIONAL INSTITUTION
IF YOU' RE A SMALL COUNTRY, AND IF YOU DISAGREE WITH A BIG COUNTRY,
IN THE INSTITUTION YOU GET IN LINE. BUT IF TWO BIG COUNTRIES IN
THE INSTITUTION DISAGREE, ITS THE INSTITUTION THAT DISAPPEARS.
AND THERES A CERTAIN AMOUNT OF TRUTH IN THAT STORY.
BUT THE POINT IS THAT THE INSTITUTION ITSELF AND THE RULES THAT
INSTITUTION HAS TO " ENFORCE" HAVE TO BE RULES, I THINK, THAT
MAKE SENSE TO ALL THE PARTICIPANTS, AND IT WILL WORK SO LONG
AS IT MAKES SENSE TO ALL THE MAIN PARTICIPANTS, AND THEY CONCEIVE
ITS IN THEIR INTEREST TO MAINTAIN THE RULES AND THE CODES OF
CONDUCT. AND THEYRE NOT GOING TO LAST VERY LONG IF THE MAIN
PARTICIPANTS DONT CONCEIVE IT IN THEIR INTEREST.
NOW THIS TAKES AN ENLIGHTENED VIEW ON THE PART OF, I SUPPOSE,
THE LEADING PARTICIPANTS, OF WHICH THERE ARE MANY. IT ALSO
TAKES A GOOD DEAL OF SKILL AND SOPHISTICATION IN DECIDING WHICH
RULES ARE ESSENTIAL, WHICH ONES REALLY ARE ESSENTIAL, TO PREVENT
THAT COMPETITIVE INSTINCT FROM BECOMING DESTRUCTIVE, AND CHAN-
NELLING IT INTO CONSTRUCTIVE AREAS. AND EQUALLY IMPORTANT, I
THINK, WHICH RULES ARENT ESSENTIAL , SO THAT INTERNATIONAL
COMMERCE, INTERNATIONAL RELATIONSHIPS BETWEEN COUNTRIES DONT
BECOME CLUTTERED UP WITH A LOT OF RULES THAT ARENT ESSENTIAL
RECOGNIZING THAT WHEN YOU HAVE DISAGREEMENTS BETWEEN COUNTRIES
OVER THE APPLICATION OF RULES, YOURE IN DIFFICULTIES.
NOW THIS, I WOULD LIKE TO THINK, IS THE PROCESS WE ARE ENGAGED
UNCLASSIFIED
UNCLASSIFIED
PAGE 04 SYDNEY 01123 02 OF 02 070520 Z
IN IN A RELATIVELY UNDERSTAINDING AND SOPHISTICATED WAY--
DRAWING UP THAT KIND OF SET OF RULES, AND NOT DOING TOO MUCH,
BUT DOING WHAT IS ESSENTIAL AND GAINING THE SUPPORT OF THE
WORLD COMMUNITY AT LARGE TO A SET OF RULES THAT LOOK SENSIBLE,
LOOK REASONABLE, THEREFORE WILL BE ENFORCED, ALMOST SELF-
ENFORCED, AND WILL PROVIDE AN ENVIRONMENT IN WHICH BUSINESS
CAN CONTINUE TO LOOK OUTWARDS, WITH MORE CHAMBERS OF COMMERCE
FLOURISHING, WITH LARGER MEMBERSHIP, BECAUSE BUSINESS WILL BE
EXTENDING EVEN MORE VIGOROUSLY ACROSS NATIONAL LINES.
IF WE CAN ACHIEVE THAT, I THINK WE CAN MEASURE OUR SUCCESS BY
THE DEGREE OF MEMBERSHIP THAT WE HAVE IN INTERNATIONAL CHAMBERS
OF COMMERCES IN VARIOUS COUNTRIES, AND I THINK THAT IS OUR REAL
OBJECTIVE.
ITS TERRIBLY EASY WHEN YOURE ENGAGED IN THESE NEGOTIATIONS TO
GET ALL BOUND UP WITH LOOKING AT ONE ASPECT OR ANOTHER AS AN
END IN INSELF-- FIXED EXCHANGE RATES, OR FLEXIBLE EXCHANGE RATES,
OR SDRS, OR CONTROLS, AND THATS A GOOD EXAMPLE-- AND FORGET THAT
WHAT YOURE TRYING TO DO IS CREATE CONDITIONS IN WHICH BUSINESS
FLOURISHERS, NOT IN WHICH BUREAUCRATS FLOURISH.
AND WE HAVE TO KEEP COMING BACK AND REMAINING IN COMMUNICATION,
I THINK, WITH THE BUSINESSMAN, AND IN SHAPING THESE RULES OF
WHICH I SPEAK, REALLY ASKING OURSELVES WHICH ONES ARE ESSENTIAL
TO KEEP INTERNATIONAL BUSINESS GOING AND FLOURISHING. HANNAH
UNCLASSIFIED
NMAFVVZCZ
<< END OF DOCUMENT >>
WITH RESULTS OF HER RECENT CONVERSATIONS WITH PRIME MINISTER
GANDHI. FORMULA FOR ACCELERATING REPATRIATION OF INDIAN
TAMILS, IF EFFECTIVELY IMPLEMENTED, SHOULD INSURE THAT ALL
525,000 UNDER 1964 AGREEMENT ARE RETURNED TO INDIA. A
SRI LANKA- INDIA COMMITTEE HOPEFULLY WILL COME UP WITH
FORMULA ON 150,000 TAMILS WHOSE DISPOSITION WAS UNRESOLVED
BY 1964 AGREEMENT. COMMITEEE WILL ALSO EXPLORE POSSIBLE
CONFIDENTIAL
PAGE 02 COLOMB 01147 01 OF 02 070511 Z
RESOLUTION OF THE KACHCHATIVU ISLAND DISPUTE WHERE SOME
COMPROMISE SEEMS POSSIBLE, AND THERE IS ROOM FOR INCREASE
IN SRI LANKA- INDIA TRADE. MRS BANDARANAIKE BELIEVES PRIME
MINISTER GANDHI SINCERELY WANS TO DISPEL OR REDUCE SRI LANKA' S
SUSPICIONS REGARDING INDIAN INTENTIONS. THESE SUSPICIONS
STEM FROM THE SOUTH INDIAN- TAMIL PROBLEM RATHER THAN BROADER
ASPECTS OF INDIA' S RELATIONS WITH SRI LANKA. END SUMMARY.
2. DURING MY MAY 1 MILLION MIGHT BE
NEEDED TO SET UP A TIRE PRODUCTION PLANT. SINCE SRI LANKA
ALREADY HAD A NUMBER OF WHITE ELEPHANTS, ON ITS HAND, BEFORE
MAKING A LARGE- SCALE INVESTMENT IT WOULD WANT TO MAKE
CERTAIN INDIA WOULD GURANTEE TO BUY NUMBER OF TIRES OVER
EXTENDED PERIOD.
8. I ASKED PM WHETHER SHE THOUGHT MRS GANDHI HAD SINCERELY
TRIED TO DISPEL SOME OF SRI LANKA' S SUSPICIONS TOWARD INDIA
WHICH HAD BEEN INTENSIFIED BY BANGLADESH CRISIS. SHE REPLIED SHE
THOUGHT THIS WAS ONE OF MRS GANDHI' S PRIMARY PRUPOSES. MRS
GANDHI HAD ASKED PRIVATELY: " WHY ARE YOUR PEOPLE SUSPICIOUS OF US?".
MRS BANDARANAIKE HAD REPLIED IT WAS NOT MATTER OF A
SUSPICION OF INDIA BUT RATHER A SUSPICION OF SOUTH INDIA.
FOR EXAMPLE SRI LANKA' S SUSPCIONS WERE AROUSED WHEN THERE
WERE CELEBRATIONS IN SOUTH INDIA ON THE OCCASION OF THE
75 TH BIRTHDAY OF S. J. B. CHELVANAYAKAM, THE LEADER OF THE
FEDERAL PARTY IN SRI LANKA. HE PUBLICLY ADVOCATED FEDERATION BETWEEN
THE SINHALESE AND TAMIL AREAS BUT HIS ULTIMATE GOAL,
MANY THOUGHT, WAS PARTITION OF SRI LANKA. NOTING PRESSURES
FOR SEPARATISM IN TAMIL NADU, MRS BANDARANAIKE SAID SHE HAD
FRANKLY TOLD MRS GANDHI THAT MANY PEOPLE IN SRI LANKA WERE
CONCERNED ABOUT THE POSSIBILITY OF SOME TYPE OF INDEPENDENT
OR TAMIL NADU EMERGING WHICH WOULD THEN TRY TO ANNEX TAMIL
AREAS OF NORTHERN SRI LANKA. MRS GANDHI HAD APPEARED
SURPRISED AT THESE CONCERNS. SHE SAID SHE WAS UNAWARE OF
THE CHELVANAYAKAM BIRTHDAY CELEBRATIONS IN SOUTH INDIA AS
WELL AS THE OTHER ACTIONS AND STATEMENTS OF SOUTH INDIANS
WHICH GSL CONSIDERED PROVOCATIVE. SHE ASKED FOR AND WAS
GIVEN A FILE OF NEWSPAPER CLIPPINGS AND OTHER MATERIAL
WHICH HAD AROUSED GSL' S SUSPICIONS.
9. MRS BANDARANAIKE SAID SHE HAD NOT MENTIONED 1971 INDO-
SOVIET TREATY BECAUSE MRS GANDHI HAD EXPLAINED BACKGROUND
OF TREATY IN MANNER WHICH MADE CLEAR SHE FULLY RECOGNIZED
GSL' S CONCERNS ON THIS POINT. I TOOK OPPORTUNITY TO ASK
PM WHETHER MRS GANDHI HAD PROPOSED SOME TYPE OF SECURITY
OR FRIENDSHIP TREATY DURING HER VISIT, RECALLING
CONFIDENTIAL
PAGE 03 COLOMB 01147 02 OF 02 070348 Z
SIMILAR TREATIES INDIA HAD TRIED TO PROMOTE PREVIOUSLY.
SHE REPLIED MRS GANDHI HERSELF HAD NOT RAISED SUCH TREATY.
HOWEVER, SHORTLY BEFORE GANDHI VISIT, SH AND MINISTER
FELIX DIAS BANDARANAIKE HAD BEEN INVITED TO SMALL DINNER
BY INDIAN HIGH COMMISSIONER COELHO AT WHICH TIME COELHO
HAD SUGGESTED SOME TYPE OF FRIENDSHIP TREATY MIGHT BE
SIGNED BY TWO PRIME MINISTERS. SHE HAD TOLD COELHO SUCH
A TREATY WAS UNNECESSARY BECAUSE, IF FRIENDLY RELATIONS
EXISTED BETWEEN TWO COUNTRIES, IT WOULD BE UNNECESSARY
TO FORMALIZE THAT RELATIONSHIP IN A TREATY. THIS WAS
PARTICULARLY TRUE IN CONTEXT OF SRI LANKA' S NON- ALIGN
POLICY. IF SRI LANKA SHOULD SIGN A TREATY WITH INDIA, SUCH
ACTION WOULD OBVIOUSLY AROUSE QUESTIONS AND CONCERNS IN
OTHER COUNTRIES , SUCH AS PAKISTAN AND CHINA.
VAN HOLLEN
CONFIDENTIAL
NMAFVVZCZADP000
PAGE 01 COLOMB 01147 02 OF 02 070348 Z
15
ACTION NEA-12
INFO OCT-01 EUR-25 ADP-00 AID-20 CIAE-00 COME-00 EB-11
FRB-02 INR-10 NSAE-00 RSC-01 TRSE-00 XMB-07 OPIC-12
CIEP-02 LAB-06 SIL-01 OMB-01 NSC-10 SS-15 STR-08
CEA-02 DODE-00 PM-09 H-02 L-03 PA-03 PRS-01 USIA-12
INT-08 IO-12 RSR-01 /197 W
--------------------- 121118
R 041300 Z MAY 73
FM AMEMBSSY COLOMBO
TO SECSTATE WASHDC 9473
INFO AMEMBASSY DACCA
AMEMBASSY ISLAMABAD
AMEMBASSY KABUL
AMEMBASSY KATHMANDU
AMEMBASSY LONDON
AMEMBASSY NEW DELHI
AMCONSUL MADRAS
C O N F I D E N T I A L SECTION 2 OF 2 COLOMBO 1147
6. MRS BANDARANAIKE ADDED SHE AND MRS GANDHI HAD NOT TALKED
ABOUT OIL QUESTION AT ANY LENGTH WHILE DISCUSSING KACHCHATIVU.
HOWEVER, POSSIBILITY OF OIL IN KACHCHATIVU AREA WAS ON MINDS
OF BOTH GOVTS. SOVIETS, WHO HAD BEEN UNDERTAKING OIL
EXPLORATIONS IN NORTHERN SRI LANKA, BELIEVED THERE MIGHT BE
OIL NEAR KACHCHATIVU. BUT THEY WERE RELUCTANT TO EXPLORE
THE AREA UNTIL THE SRI LANKA- INDIAN DISPUTE WORKED OUT. SAME
WAS TRUE IN CASE OF EARLIER CANADIAN EXPLORATIONS.
7. TURNING TO THE QUESTION OF EXPANDED TRADE BETWEEN SRI
LANKA AND INDIA, PRIME MINISTER SAID THERE HAD BEEN SOME
GENERAL EXCHANGED ON THIS SUBJECT. REAL PROGRESS, IF ANY ,
WOULD HAVE TO AWAIT TECHNICAL LEVEL DISCUSSIONS WHICH WILL
OPEN SOON. AREAS OF ECONOMIC COOPERATION INCLUDED MANUFACTURE
BY SRI LANKA OF RUBBER TIRES AND OTHER RUBBER PRODUCTS, AN
CONFIDENTIAL
PAGE 02 COLOMB 01147 02 OF 02 070348 Z
ARRANGEMENT WHEREBY SRI LANKA COULD IMPORT AUTOMOTIVE SPARE
PARTS FROM INDIA DUTY FREE AND EXPANDED TRADE IN GRAPHITE.
TIRE PRODUCTION BY SRI LANKA MIGHT OFFER FAVORABLE PROSPECT
BUT IT WAS ESTIMATED INVESTMENT OF RS OUR RELATIVE COMPETITIVE POSITION. AND THAT PROCESS, I WOULD
NOT ARGUE, HAS BEEN COMPLETED YET.
I WOULD INTERJECT THAT SO FAR AS EXCHANGE RATE CHANGES ARE CON-
CERNED, I HOPE AND EXPECT IT' S BEEN COMPLETED WITH THE FURTHER
CHANGES MADE IN FEBRUARY OF THIS YEAR.
BUT ITS BEEN A LONG AND TORTUOUS PROCESS. THAT PROCESS HAS BEEN
IN THE NATURE OF A CHANGE FROM A COMPETITIVE SITUATION THAT EXISTED
TO A NEW AND MORE EQUAL COMPETITIVE POSITION-- A NECESSARY
CHANGE. IT DOES NOT SOLVE THE PROBLEMS OF THE SYSTEM AS WE LOOK
AHEAD.
HOW DO WE BUILD AND REBUILD AND STRENGTHEN A MONETARY SYSTEM AND
A TRADING SYSTEM SO THAT YOU CAN MAKE AN ADJUSTMENT MORE SMOOTHLY,
OR KEEP AN ADJUSTMENT, WITHOUT GOING THROUGH THE KIND OF CONVUL-
SION, RELATIVELY SPEAKING, THAT WE' VE HAD TO GO THROUGH THE PAST
COUPLE OF YEARS? AND I THINK THIS IS THE CHALLENGE AHEAD OF US,
AND WHAT WE ARE TRYING TO DO IN THESE MONETARY AND TRADE NEGOTI-
ATIONS. HOW CAN WE REBUILD A MONETARY AND TRADING SYSTEM THAT
MAINTAINS AN EQUILIBRIUM, THAT AVOIDS SHARP CHANGE, SHART CONVUL-
SION IN THE FUTURE, AND THEREFORE HELPS TO SUPPORT A MOVEMENT
TOWARD FREER TRADE, TOWARD MORE LIBERAL TRADE, AND RESI XS
TENDENCIES, WHICH I THINK EXIST IN MOST COUNTRIES- THEY CERTAINLY
EXIST IN THE UNITED STATES-- TO TURN INWARDS, TO RETREAT FROM
THE WORLD, AND TO BUILD WALLS.
THIS IS NOT AN EASY PROCESS, PARTLY BECAUSE ITS TECHNICALLY
DIFFICULT. BUT LET ME FORGET ABOUT THE TECHNICAL DIFFICULTIES
OF FLOATING RATES AND FIXED RATES THAT CHANGE AND FIXED RATES
THAT ARE UNCHANGED, AND HOW YOU CREATE RESERVES, AND ALL THE
REST, AND LOOK THROUGH THAT TO WHAT I THINK IS A MORE FUNDAMENTAL
PART OF THE DIFFICULTY.
I REFER TO THIS WORLD OF MORE EQUALS. AND YOU EXPECT COUNTRIES
-- THE NATURAL STATES OF HUMAN INSTINCT, I SUPPOSE, IS TO COMPETE,
AND COMPETION IS HEALTHY, AND IT BRINGS PROGESS . BUT IT
ALSO CAN BRING SOME DANGERS, AS PEOPLE COMPETE IN CERTAIN WAYS
ON AN INTERNATIONAL SCALE IN A NATIONALISTIC KIND OF WAY. HOW
DO YOU CONSTRUCT, HOW DO YOU PROJECT, PUSH THE COMPETITION
INTO HEALTHY AND CONSTRUCTIVE CHANNEL S? THAT, IN A SENSE, IS
UNCLASSIFIED
UNCLASSIFIED
PAGE 03 SYDNEY 01123 02 OF 02 070520 Z
WHAT WE' RE TRYING TO DO.
BUT, IN DOING THIS, WE HAVE TO RECOGNIZE, I THINK, THAT THERES
NO BOSS OF THE WORLD ANY MORE, IN THE SENSE THAT THERES NO
COUNTRY THAT CAN SIT THERE AND BE THE WORLD POLICEMAN. YOU CANT
PUSH THIS OFF ON AN INTERNATIIONAL INSTITUTION. YOU CAN INFORM-,
AND YOU DO INFORM, IN THE MONETARY AREA, THE INTERNATIONAL MONE-
TARY FUND, BUT YOU HAVE TO HAVE A HEALTHY RECOGNITION THAT AN
INTERNATIONAL INSTITUTION IS NOTHING MORE THAN THE COUNTRIES OF
WHICH IT IS MADE UP.
SOMEONE IN AUSTRALIA-- NO, IT WASN' T IN AUSTRALIA, IT WAS IN
INDONESIA, SOMEONE TOLD ME A STORY ABOUT WHAT THEY THOUGHT ABOUT
INTERNATIONAL INSTITUTIONS. YOU JOIN AN INTERNATIONAL INSTITUTION
IF YOU' RE A SMALL COUNTRY, AND IF YOU DISAGREE WITH A BIG COUNTRY,
IN THE INSTITUTION YOU GET IN LINE. BUT IF TWO BIG COUNTRIES IN
THE INSTITUTION DISAGREE, ITS THE INSTITUTION THAT DISAPPEARS.
AND THERES A CERTAIN AMOUNT OF TRUTH IN THAT STORY.
BUT THE POINT IS THAT THE INSTITUTION ITSELF AND THE RULES THAT
INSTITUTION HAS TO " ENFORCE" HAVE TO BE RULES, I THINK, THAT
MAKE SENSE TO ALL THE PARTICIPANTS, AND IT WILL WORK SO LONG
AS IT MAKES SENSE TO ALL THE MAIN PARTICIPANTS, AND THEY CONCEIVE
ITS IN THEIR INTEREST TO MAINTAIN THE RULES AND THE CODES OF
CONDUCT. AND THEYRE NOT GOING TO LAST VERY LONG IF THE MAIN
PARTICIPANTS DONT CONCEIVE IT IN THEIR INTEREST.
NOW THIS TAKES AN ENLIGHTENED VIEW ON THE PART OF, I SUPPOSE,
THE LEADING PARTICIPANTS, OF WHICH THERE ARE MANY. IT ALSO
TAKES A GOOD DEAL OF SKILL AND SOPHISTICATION IN DECIDING WHICH
RULES ARE ESSENTIAL, WHICH ONES REALLY ARE ESSENTIAL, TO PREVENT
THAT COMPETITIVE INSTINCT FROM BECOMING DESTRUCTIVE, AND CHAN-
NELLING IT INTO CONSTRUCTIVE AREAS. AND EQUALLY IMPORTANT, I
THINK, WHICH RULES ARENT ESSENTIAL , SO THAT INTERNATIONAL
COMMERCE, INTERNATIONAL RELATIONSHIPS BETWEEN COUNTRIES DONT
BECOME CLUTTERED UP WITH A LOT OF RULES THAT ARENT ESSENTIAL
RECOGNIZING THAT WHEN YOU HAVE DISAGREEMENTS BETWEEN COUNTRIES
OVER THE APPLICATION OF RULES, YOURE IN DIFFICULTIES.
NOW THIS, I WOULD LIKE TO THINK, IS THE PROCESS WE ARE ENGAGED
UNCLASSIFIED
UNCLASSIFIED
PAGE 04 SYDNEY 01123 02 OF 02 070520 Z
IN IN A RELATIVELY UNDERSTAINDING AND SOPHISTICATED WAY--
DRAWING UP THAT KIND OF SET OF RULES, AND NOT DOING TOO MUCH,
BUT DOING WHAT IS ESSENTIAL AND GAINING THE SUPPORT OF THE
WORLD COMMUNITY AT LARGE TO A SET OF RULES THAT LOOK SENSIBLE,
LOOK REASONABLE, THEREFORE WILL BE ENFORCED, ALMOST SELF-
ENFORCED, AND WILL PROVIDE AN ENVIRONMENT IN WHICH BUSINESS
CAN CONTINUE TO LOOK OUTWARDS, WITH MORE CHAMBERS OF COMMERCE
FLOURISHING, WITH LARGER MEMBERSHIP, BECAUSE BUSINESS WILL BE
EXTENDING EVEN MORE VIGOROUSLY ACROSS NATIONAL LINES.
IF WE CAN ACHIEVE THAT, I THINK WE CAN MEASURE OUR SUCCESS BY
THE DEGREE OF MEMBERSHIP THAT WE HAVE IN INTERNATIONAL CHAMBERS
OF COMMERCES IN VARIOUS COUNTRIES, AND I THINK THAT IS OUR REAL
OBJECTIVE.
ITS TERRIBLY EASY WHEN YOURE ENGAGED IN THESE NEGOTIATIONS TO
GET ALL BOUND UP WITH LOOKING AT ONE ASPECT OR ANOTHER AS AN
END IN INSELF-- FIXED EXCHANGE RATES, OR FLEXIBLE EXCHANGE RATES,
OR SDRS, OR CONTROLS, AND THATS A GOOD EXAMPLE-- AND FORGET THAT
WHAT YOURE TRYING TO DO IS CREATE CONDITIONS IN WHICH BUSINESS
FLOURISHERS, NOT IN WHICH BUREAUCRATS FLOURISH.
AND WE HAVE TO KEEP COMING BACK AND REMAINING IN COMMUNICATION,
I THINK, WITH THE BUSINESSMAN, AND IN SHAPING THESE RULES OF
WHICH I SPEAK, REALLY ASKING OURSELVES WHICH ONES ARE ESSENTIAL
TO KEEP INTERNATIONAL BUSINESS GOING AND FLOURISHING. HANNAH
UNCLASSIFIED
NMAFVVZCZ
<< END OF DOCUMENT >>
Raw content
PAGE 01 COLOMB 01147 01 OF 02 070511 Z
20
ACTION NEA-12
INFO OCT-01 EUR-25 ADP-00 AID-20 CIAE-00 COME-00 EB-11
FRB-02 INR-10 NSAE-00 RSC-01 TRSE-00 XMB-07 OPIC-12
CIEP-02 LAB-06 SIL-01 OMB-01 NSC-10 SS-15 STR-08
CEA-02 DODE-00 PM-09 H-02 L-03 PA-03 PRS-01 USIA-12
INT-08 IO-12 RSR-01 /197 W
--------------------- 121427
R 041300 Z MAY 73 ZFG
FM AMEMBSSY COLOMBO
TO SECSTATE WASHDC 9472
INFO AMEMBASSY DACCA
AMEMBASSY ISLAMABAD
AMEMBASSY KABUL
AMEMBASSY KATHMANDU
AMEMBASSY LONDON
AMEMBASSY NEW DELHI
AMCONSUL MADRAS
C O N F I D E N T I A L SECTION 1 OF 2 COLOMBO 1147
E. O. 11652/ GDS
TAGS: PFOR, CE, IN
SUBJ: CONVERSATION WITH PM BANDARANAIKE: SRI LANKA- INDIAN
RELATIONS
REF 1139
1. SUMMARY: PRIME MINISTER BANDARANAIKE SEEMS QUITE PLEASED
WITH RESULTS OF HER RECENT CONVERSATIONS WITH PRIME MINISTER
GANDHI. FORMULA FOR ACCELERATING REPATRIATION OF INDIAN
TAMILS, IF EFFECTIVELY IMPLEMENTED, SHOULD INSURE THAT ALL
525,000 UNDER 1964 AGREEMENT ARE RETURNED TO INDIA. A
SRI LANKA- INDIA COMMITTEE HOPEFULLY WILL COME UP WITH
FORMULA ON 150,000 TAMILS WHOSE DISPOSITION WAS UNRESOLVED
BY 1964 AGREEMENT. COMMITEEE WILL ALSO EXPLORE POSSIBLE
CONFIDENTIAL
PAGE 02 COLOMB 01147 01 OF 02 070511 Z
RESOLUTION OF THE KACHCHATIVU ISLAND DISPUTE WHERE SOME
COMPROMISE SEEMS POSSIBLE, AND THERE IS ROOM FOR INCREASE
IN SRI LANKA- INDIA TRADE. MRS BANDARANAIKE BELIEVES PRIME
MINISTER GANDHI SINCERELY WANS TO DISPEL OR REDUCE SRI LANKA' S
SUSPICIONS REGARDING INDIAN INTENTIONS. THESE SUSPICIONS
STEM FROM THE SOUTH INDIAN- TAMIL PROBLEM RATHER THAN BROADER
ASPECTS OF INDIA' S RELATIONS WITH SRI LANKA. END SUMMARY.
2. DURING MY MAY 1 MILLION MIGHT BE
NEEDED TO SET UP A TIRE PRODUCTION PLANT. SINCE SRI LANKA
ALREADY HAD A NUMBER OF WHITE ELEPHANTS, ON ITS HAND, BEFORE
MAKING A LARGE- SCALE INVESTMENT IT WOULD WANT TO MAKE
CERTAIN INDIA WOULD GURANTEE TO BUY NUMBER OF TIRES OVER
EXTENDED PERIOD.
8. I ASKED PM WHETHER SHE THOUGHT MRS GANDHI HAD SINCERELY
TRIED TO DISPEL SOME OF SRI LANKA' S SUSPICIONS TOWARD INDIA
WHICH HAD BEEN INTENSIFIED BY BANGLADESH CRISIS. SHE REPLIED SHE
THOUGHT THIS WAS ONE OF MRS GANDHI' S PRIMARY PRUPOSES. MRS
GANDHI HAD ASKED PRIVATELY: " WHY ARE YOUR PEOPLE SUSPICIOUS OF US?".
MRS BANDARANAIKE HAD REPLIED IT WAS NOT MATTER OF A
SUSPICION OF INDIA BUT RATHER A SUSPICION OF SOUTH INDIA.
FOR EXAMPLE SRI LANKA' S SUSPCIONS WERE AROUSED WHEN THERE
WERE CELEBRATIONS IN SOUTH INDIA ON THE OCCASION OF THE
75 TH BIRTHDAY OF S. J. B. CHELVANAYAKAM, THE LEADER OF THE
FEDERAL PARTY IN SRI LANKA. HE PUBLICLY ADVOCATED FEDERATION BETWEEN
THE SINHALESE AND TAMIL AREAS BUT HIS ULTIMATE GOAL,
MANY THOUGHT, WAS PARTITION OF SRI LANKA. NOTING PRESSURES
FOR SEPARATISM IN TAMIL NADU, MRS BANDARANAIKE SAID SHE HAD
FRANKLY TOLD MRS GANDHI THAT MANY PEOPLE IN SRI LANKA WERE
CONCERNED ABOUT THE POSSIBILITY OF SOME TYPE OF INDEPENDENT
OR TAMIL NADU EMERGING WHICH WOULD THEN TRY TO ANNEX TAMIL
AREAS OF NORTHERN SRI LANKA. MRS GANDHI HAD APPEARED
SURPRISED AT THESE CONCERNS. SHE SAID SHE WAS UNAWARE OF
THE CHELVANAYAKAM BIRTHDAY CELEBRATIONS IN SOUTH INDIA AS
WELL AS THE OTHER ACTIONS AND STATEMENTS OF SOUTH INDIANS
WHICH GSL CONSIDERED PROVOCATIVE. SHE ASKED FOR AND WAS
GIVEN A FILE OF NEWSPAPER CLIPPINGS AND OTHER MATERIAL
WHICH HAD AROUSED GSL' S SUSPICIONS.
9. MRS BANDARANAIKE SAID SHE HAD NOT MENTIONED 1971 INDO-
SOVIET TREATY BECAUSE MRS GANDHI HAD EXPLAINED BACKGROUND
OF TREATY IN MANNER WHICH MADE CLEAR SHE FULLY RECOGNIZED
GSL' S CONCERNS ON THIS POINT. I TOOK OPPORTUNITY TO ASK
PM WHETHER MRS GANDHI HAD PROPOSED SOME TYPE OF SECURITY
OR FRIENDSHIP TREATY DURING HER VISIT, RECALLING
CONFIDENTIAL
PAGE 03 COLOMB 01147 02 OF 02 070348 Z
SIMILAR TREATIES INDIA HAD TRIED TO PROMOTE PREVIOUSLY.
SHE REPLIED MRS GANDHI HERSELF HAD NOT RAISED SUCH TREATY.
HOWEVER, SHORTLY BEFORE GANDHI VISIT, SH AND MINISTER
FELIX DIAS BANDARANAIKE HAD BEEN INVITED TO SMALL DINNER
BY INDIAN HIGH COMMISSIONER COELHO AT WHICH TIME COELHO
HAD SUGGESTED SOME TYPE OF FRIENDSHIP TREATY MIGHT BE
SIGNED BY TWO PRIME MINISTERS. SHE HAD TOLD COELHO SUCH
A TREATY WAS UNNECESSARY BECAUSE, IF FRIENDLY RELATIONS
EXISTED BETWEEN TWO COUNTRIES, IT WOULD BE UNNECESSARY
TO FORMALIZE THAT RELATIONSHIP IN A TREATY. THIS WAS
PARTICULARLY TRUE IN CONTEXT OF SRI LANKA' S NON- ALIGN
POLICY. IF SRI LANKA SHOULD SIGN A TREATY WITH INDIA, SUCH
ACTION WOULD OBVIOUSLY AROUSE QUESTIONS AND CONCERNS IN
OTHER COUNTRIES , SUCH AS PAKISTAN AND CHINA.
VAN HOLLEN
CONFIDENTIAL
NMAFVVZCZADP000
PAGE 01 COLOMB 01147 02 OF 02 070348 Z
15
ACTION NEA-12
INFO OCT-01 EUR-25 ADP-00 AID-20 CIAE-00 COME-00 EB-11
FRB-02 INR-10 NSAE-00 RSC-01 TRSE-00 XMB-07 OPIC-12
CIEP-02 LAB-06 SIL-01 OMB-01 NSC-10 SS-15 STR-08
CEA-02 DODE-00 PM-09 H-02 L-03 PA-03 PRS-01 USIA-12
INT-08 IO-12 RSR-01 /197 W
--------------------- 121118
R 041300 Z MAY 73
FM AMEMBSSY COLOMBO
TO SECSTATE WASHDC 9473
INFO AMEMBASSY DACCA
AMEMBASSY ISLAMABAD
AMEMBASSY KABUL
AMEMBASSY KATHMANDU
AMEMBASSY LONDON
AMEMBASSY NEW DELHI
AMCONSUL MADRAS
C O N F I D E N T I A L SECTION 2 OF 2 COLOMBO 1147
6. MRS BANDARANAIKE ADDED SHE AND MRS GANDHI HAD NOT TALKED
ABOUT OIL QUESTION AT ANY LENGTH WHILE DISCUSSING KACHCHATIVU.
HOWEVER, POSSIBILITY OF OIL IN KACHCHATIVU AREA WAS ON MINDS
OF BOTH GOVTS. SOVIETS, WHO HAD BEEN UNDERTAKING OIL
EXPLORATIONS IN NORTHERN SRI LANKA, BELIEVED THERE MIGHT BE
OIL NEAR KACHCHATIVU. BUT THEY WERE RELUCTANT TO EXPLORE
THE AREA UNTIL THE SRI LANKA- INDIAN DISPUTE WORKED OUT. SAME
WAS TRUE IN CASE OF EARLIER CANADIAN EXPLORATIONS.
7. TURNING TO THE QUESTION OF EXPANDED TRADE BETWEEN SRI
LANKA AND INDIA, PRIME MINISTER SAID THERE HAD BEEN SOME
GENERAL EXCHANGED ON THIS SUBJECT. REAL PROGRESS, IF ANY ,
WOULD HAVE TO AWAIT TECHNICAL LEVEL DISCUSSIONS WHICH WILL
OPEN SOON. AREAS OF ECONOMIC COOPERATION INCLUDED MANUFACTURE
BY SRI LANKA OF RUBBER TIRES AND OTHER RUBBER PRODUCTS, AN
CONFIDENTIAL
PAGE 02 COLOMB 01147 02 OF 02 070348 Z
ARRANGEMENT WHEREBY SRI LANKA COULD IMPORT AUTOMOTIVE SPARE
PARTS FROM INDIA DUTY FREE AND EXPANDED TRADE IN GRAPHITE.
TIRE PRODUCTION BY SRI LANKA MIGHT OFFER FAVORABLE PROSPECT
BUT IT WAS ESTIMATED INVESTMENT OF RS OUR RELATIVE COMPETITIVE POSITION. AND THAT PROCESS, I WOULD
NOT ARGUE, HAS BEEN COMPLETED YET.
I WOULD INTERJECT THAT SO FAR AS EXCHANGE RATE CHANGES ARE CON-
CERNED, I HOPE AND EXPECT IT' S BEEN COMPLETED WITH THE FURTHER
CHANGES MADE IN FEBRUARY OF THIS YEAR.
BUT ITS BEEN A LONG AND TORTUOUS PROCESS. THAT PROCESS HAS BEEN
IN THE NATURE OF A CHANGE FROM A COMPETITIVE SITUATION THAT EXISTED
TO A NEW AND MORE EQUAL COMPETITIVE POSITION-- A NECESSARY
CHANGE. IT DOES NOT SOLVE THE PROBLEMS OF THE SYSTEM AS WE LOOK
AHEAD.
HOW DO WE BUILD AND REBUILD AND STRENGTHEN A MONETARY SYSTEM AND
A TRADING SYSTEM SO THAT YOU CAN MAKE AN ADJUSTMENT MORE SMOOTHLY,
OR KEEP AN ADJUSTMENT, WITHOUT GOING THROUGH THE KIND OF CONVUL-
SION, RELATIVELY SPEAKING, THAT WE' VE HAD TO GO THROUGH THE PAST
COUPLE OF YEARS? AND I THINK THIS IS THE CHALLENGE AHEAD OF US,
AND WHAT WE ARE TRYING TO DO IN THESE MONETARY AND TRADE NEGOTI-
ATIONS. HOW CAN WE REBUILD A MONETARY AND TRADING SYSTEM THAT
MAINTAINS AN EQUILIBRIUM, THAT AVOIDS SHARP CHANGE, SHART CONVUL-
SION IN THE FUTURE, AND THEREFORE HELPS TO SUPPORT A MOVEMENT
TOWARD FREER TRADE, TOWARD MORE LIBERAL TRADE, AND RESI XS
TENDENCIES, WHICH I THINK EXIST IN MOST COUNTRIES- THEY CERTAINLY
EXIST IN THE UNITED STATES-- TO TURN INWARDS, TO RETREAT FROM
THE WORLD, AND TO BUILD WALLS.
THIS IS NOT AN EASY PROCESS, PARTLY BECAUSE ITS TECHNICALLY
DIFFICULT. BUT LET ME FORGET ABOUT THE TECHNICAL DIFFICULTIES
OF FLOATING RATES AND FIXED RATES THAT CHANGE AND FIXED RATES
THAT ARE UNCHANGED, AND HOW YOU CREATE RESERVES, AND ALL THE
REST, AND LOOK THROUGH THAT TO WHAT I THINK IS A MORE FUNDAMENTAL
PART OF THE DIFFICULTY.
I REFER TO THIS WORLD OF MORE EQUALS. AND YOU EXPECT COUNTRIES
-- THE NATURAL STATES OF HUMAN INSTINCT, I SUPPOSE, IS TO COMPETE,
AND COMPETION IS HEALTHY, AND IT BRINGS PROGESS . BUT IT
ALSO CAN BRING SOME DANGERS, AS PEOPLE COMPETE IN CERTAIN WAYS
ON AN INTERNATIONAL SCALE IN A NATIONALISTIC KIND OF WAY. HOW
DO YOU CONSTRUCT, HOW DO YOU PROJECT, PUSH THE COMPETITION
INTO HEALTHY AND CONSTRUCTIVE CHANNEL S? THAT, IN A SENSE, IS
UNCLASSIFIED
UNCLASSIFIED
PAGE 03 SYDNEY 01123 02 OF 02 070520 Z
WHAT WE' RE TRYING TO DO.
BUT, IN DOING THIS, WE HAVE TO RECOGNIZE, I THINK, THAT THERES
NO BOSS OF THE WORLD ANY MORE, IN THE SENSE THAT THERES NO
COUNTRY THAT CAN SIT THERE AND BE THE WORLD POLICEMAN. YOU CANT
PUSH THIS OFF ON AN INTERNATIIONAL INSTITUTION. YOU CAN INFORM-,
AND YOU DO INFORM, IN THE MONETARY AREA, THE INTERNATIONAL MONE-
TARY FUND, BUT YOU HAVE TO HAVE A HEALTHY RECOGNITION THAT AN
INTERNATIONAL INSTITUTION IS NOTHING MORE THAN THE COUNTRIES OF
WHICH IT IS MADE UP.
SOMEONE IN AUSTRALIA-- NO, IT WASN' T IN AUSTRALIA, IT WAS IN
INDONESIA, SOMEONE TOLD ME A STORY ABOUT WHAT THEY THOUGHT ABOUT
INTERNATIONAL INSTITUTIONS. YOU JOIN AN INTERNATIONAL INSTITUTION
IF YOU' RE A SMALL COUNTRY, AND IF YOU DISAGREE WITH A BIG COUNTRY,
IN THE INSTITUTION YOU GET IN LINE. BUT IF TWO BIG COUNTRIES IN
THE INSTITUTION DISAGREE, ITS THE INSTITUTION THAT DISAPPEARS.
AND THERES A CERTAIN AMOUNT OF TRUTH IN THAT STORY.
BUT THE POINT IS THAT THE INSTITUTION ITSELF AND THE RULES THAT
INSTITUTION HAS TO " ENFORCE" HAVE TO BE RULES, I THINK, THAT
MAKE SENSE TO ALL THE PARTICIPANTS, AND IT WILL WORK SO LONG
AS IT MAKES SENSE TO ALL THE MAIN PARTICIPANTS, AND THEY CONCEIVE
ITS IN THEIR INTEREST TO MAINTAIN THE RULES AND THE CODES OF
CONDUCT. AND THEYRE NOT GOING TO LAST VERY LONG IF THE MAIN
PARTICIPANTS DONT CONCEIVE IT IN THEIR INTEREST.
NOW THIS TAKES AN ENLIGHTENED VIEW ON THE PART OF, I SUPPOSE,
THE LEADING PARTICIPANTS, OF WHICH THERE ARE MANY. IT ALSO
TAKES A GOOD DEAL OF SKILL AND SOPHISTICATION IN DECIDING WHICH
RULES ARE ESSENTIAL, WHICH ONES REALLY ARE ESSENTIAL, TO PREVENT
THAT COMPETITIVE INSTINCT FROM BECOMING DESTRUCTIVE, AND CHAN-
NELLING IT INTO CONSTRUCTIVE AREAS. AND EQUALLY IMPORTANT, I
THINK, WHICH RULES ARENT ESSENTIAL , SO THAT INTERNATIONAL
COMMERCE, INTERNATIONAL RELATIONSHIPS BETWEEN COUNTRIES DONT
BECOME CLUTTERED UP WITH A LOT OF RULES THAT ARENT ESSENTIAL
RECOGNIZING THAT WHEN YOU HAVE DISAGREEMENTS BETWEEN COUNTRIES
OVER THE APPLICATION OF RULES, YOURE IN DIFFICULTIES.
NOW THIS, I WOULD LIKE TO THINK, IS THE PROCESS WE ARE ENGAGED
UNCLASSIFIED
UNCLASSIFIED
PAGE 04 SYDNEY 01123 02 OF 02 070520 Z
IN IN A RELATIVELY UNDERSTAINDING AND SOPHISTICATED WAY--
DRAWING UP THAT KIND OF SET OF RULES, AND NOT DOING TOO MUCH,
BUT DOING WHAT IS ESSENTIAL AND GAINING THE SUPPORT OF THE
WORLD COMMUNITY AT LARGE TO A SET OF RULES THAT LOOK SENSIBLE,
LOOK REASONABLE, THEREFORE WILL BE ENFORCED, ALMOST SELF-
ENFORCED, AND WILL PROVIDE AN ENVIRONMENT IN WHICH BUSINESS
CAN CONTINUE TO LOOK OUTWARDS, WITH MORE CHAMBERS OF COMMERCE
FLOURISHING, WITH LARGER MEMBERSHIP, BECAUSE BUSINESS WILL BE
EXTENDING EVEN MORE VIGOROUSLY ACROSS NATIONAL LINES.
IF WE CAN ACHIEVE THAT, I THINK WE CAN MEASURE OUR SUCCESS BY
THE DEGREE OF MEMBERSHIP THAT WE HAVE IN INTERNATIONAL CHAMBERS
OF COMMERCES IN VARIOUS COUNTRIES, AND I THINK THAT IS OUR REAL
OBJECTIVE.
ITS TERRIBLY EASY WHEN YOURE ENGAGED IN THESE NEGOTIATIONS TO
GET ALL BOUND UP WITH LOOKING AT ONE ASPECT OR ANOTHER AS AN
END IN INSELF-- FIXED EXCHANGE RATES, OR FLEXIBLE EXCHANGE RATES,
OR SDRS, OR CONTROLS, AND THATS A GOOD EXAMPLE-- AND FORGET THAT
WHAT YOURE TRYING TO DO IS CREATE CONDITIONS IN WHICH BUSINESS
FLOURISHERS, NOT IN WHICH BUREAUCRATS FLOURISH.
AND WE HAVE TO KEEP COMING BACK AND REMAINING IN COMMUNICATION,
I THINK, WITH THE BUSINESSMAN, AND IN SHAPING THESE RULES OF
WHICH I SPEAK, REALLY ASKING OURSELVES WHICH ONES ARE ESSENTIAL
TO KEEP INTERNATIONAL BUSINESS GOING AND FLOURISHING. HANNAH
UNCLASSIFIED
NMAFVVZCZ
<< END OF DOCUMENT >>
 ‘Mrs Gandhi had asked privately: " Why are your people suspicious of us?". Mrs...){kind=link}