Chapter 7
Washington Opts Out
On the eve of the Korean War, the US Department of State declared it “to the interest of the US that there be a stable government in Burma, oriented toward the US and the [British] Commonwealth and capable of restoring internal order, of resisting Communist pressures and of advancing the social and economic rehabilitation of the country.” Washington’s stated policy was to pursue relations with Burma that complemented British efforts.1 That policy statement, issued June 16, 1950, identified three admirable objectives: (1) overcome Rangoon’s suspicion of American foreign assistance and American advice, (2) strengthen Burma’s central government, and (3) strengthen Burmese capabilities to defeat communist insurgents and protect its border with China.
Less than a year later, Washington’s high principles had fallen collateral damage to its support of Li Mi’s army in Burma that was destabilizing a democratically elected, non-communist government. Instead of persuading the GUB of the value of Washington’s advice and strengthening Rangoon’s democratic government, the open secret of American support for Li Mi’s army sowed a legacy of mistrust and gave U Nu’s political opponents an issue with which to challenge his government’s moderate, pro-Western policies. Rather than increasing Burma’s ability to defeat communist insurgents, American actions forced Rangoon to divert scarce resources to fighting Taipei’s army instead of homegrown communist and ethnic insurgencies posing direct threats to the new nation’s existence.
As Li Mi prepared to attack Yunnan in the spring of 1951, the US intelligence community’s “National Intelligence Estimate (NIE) 36” concluded that the U Nu government’s political weaknesses threatened the survival of any non-communist government in Rangoon. The ongoing struggle for control of the armed forces between cabinet civilians and military chief Ne Win raised the specter of a destabilizing coup d’état even as the government struggled to contain stubborn insurgencies by an estimated 6,000 communists, 4,000 Karens, and several smaller groups. The Burma Army’s 43,000 regulars and auxiliaries were too few and too poorly equipped to cope with its many enemies. The authors of NIE 36 acknowledged that a British Services Mission (BSM) was then training and equipping the Tatmadaw but noted that Ne Win and his senior officers mistrusted their former colonial masters and routinely ignored BSM advice.
A revised NIE-36/1 in November 1951, following Li Mi’s failed attack into Yunnan, predicted communist insurgents would control large portions of northern Burma within 12 to 18 months and raised the possibility of a leftist, possibly pro-communist government gaining power in Rangoon. That pessimistic projection reflected in part Peking’s support for the underground Communist Party of Burma (CPB) that was forging alliances with leftist Karens, Kachins, and other ethnic minorities. Moreover, the aboveground leftist Burma Workers and Peasants Party was unifying the government’s political opponents and interfering with counter-insurgency efforts.2
State Department and CIA assessments placed much of the blame for Burma’s perilous circumstances on the destabilizing presence of Li Mi’s army. Ironically, those same two agencies had set in train the covert operations that abetted that army’s presence. While Washington bemoaned the uncertainty of the U Nu government’s future, its support of Taipei’s army in Burma undermined that very government and engendered broader regional suspicion of policies. Given the closely held knowledge of American involvement, working-level analysts drafting NIE-36 and associated papers may not have known of covert US support for Li Mi and his army. Senior officials that approved those papers, however, were certainly privy to such knowledge.
London Gets the Goods on Washington
Even as Li Mi’s Yunnan incursion was underway, London was attempting to persuade its American ally to end its involvement with Taiwan’s army in Burma. The Foreign Office instructed its diplomatic posts to gather detailed information from non-intelligence sources with which to confront the Americans.3 Two senior officers from the British Embassy in Washington, on July 31, called on Livingston Merchant, acting assistant secretary of state for Far Eastern affairs and an early advocate for Li Mi’s army. The British diplomats stated their concerns that the Nationalist Chinese presence was forcing Rangoon to divert resources from internal communist and rebellious Karen threats in politically and economically important Central Burma. They prophetically warned of the possibility of Chinese Communist and Burmese forces cooperating to expel the intruders. In Merchant’s words, his visitors made “it inescapably clear that the British Government like the Burmese Government is convinced that the United States Government is involved in equipping the Kuomintang contingents.”4
In a performance described by his British visitors as “most earnest,” Merchant persuaded them that the Nationalist Chinese presence was causing Washington anxiety but that he had no knowledge of Americans, official or otherwise, being involved with Li Mi’s forces. He insisted that Washington had done everything possible to persuade Taipei to order Li Mi and his troops out of Burma and that its failure in that effort showed that Taipei had no control over those troops. Regardless, Merchant continued, London should be pleased with what he touted, firmly in the face of reality, as Li Mi’s recent successes against communist forces in Yunnan. He promised to gather and share all available information on the KMT situation. Merchant impressed the British diplomats as both “very honest” and speaking with “complete sincerity.”5
In London, the Foreign Office was clearly unhappy that its diplomats had allowed Merchant to hoodwink them. London expressed particular astonishment at the assertion that no Americans were involved with ROC troops in Burma.6 Rebuked, one of the two British diplomats met with Merchant again on August 8 to discuss the Foreign Office’s skeptical response to Merchant’s denials. The British officer proposed that they lay their “cards frankly on the table with each other” because London feared the U Nu government would take the KMT matter to the United Nations and embarrass all concerned. Apologizing for not following up after their earlier meeting, Merchant promised to look into the matter further.7
As the British diplomat departed, he left a paper outlining London’s knowledge of American support for the ROC army in Burma8 since early that year and of American military officers serving with those troops. It described accurately the routes and modes of transport for weapons and other materials sent, with Thai police cooperation, from Bangkok to Möng Hsat. London knew of arms shipped by sea as well as those from Okinawa in “unmarked CAT planes.” The paper acknowledged that some of those shipments could be intended for Thai police being trained and equipped by the “American undercover organization called ‘The SEA Supply Company,’” but went on to say that there was “little doubt that a considerable portion” of those arms were diverted to Li Mi’s army through the Thai police. The British paper noted as well that Thai police reconnaissance teams with American radios established radio nets inside Yunnan as Li Mi’s forces moved toward the Yunnan border. It also described Major Stewart, a second American, and four Thai signals experts accompanying Li Mi into Yunnan to manage airdrops of weapons and supplies.9
Two days later, on August 10, Merchant told the British that he had checked on the information they had provided and “had been unable to unearth the slightest evidence of official United States complicity.” Merchant did, however, acknowledge that arms were passing through Thailand in private channels. Those statements were consistent with Director of Central Intelligence (DCI) Walter Bedell Smith’s earlier assurances to the same two British diplomats that there was no USG involvement with Li Mi and that any involved Americans were freelancing private citizens, perhaps tied to Claire L. Chennault and Civil Air Transport.10 Smith presumably neglected to mention that his CIA owned that airline.
The State Department buttressed its disinformation effort on August 24 by showing British diplomats a personal telegram from Assistant Secretary Rusk to Ambassador Key in Rangoon that had been approved at a joint State-CIA meeting. It instructed Key to deny categorically to the Burmese that the USG had ties to KMT troops in Burma. The British remained unconvinced, but believed there was nothing they could do aside from continuing information exchanges with Washington and stressing the dangers of provoking Peking’s intervention.11
Washington Decides to Cut Its Losses
As Li Mi’s retreating troops straggled back into Burma and US officials dissembled with their British allies, Ambassador Key told Washington bluntly that, as he predicted, the Yunnan invasion had failed and returning KMT troops were destabilizing much of Northeast Burma. Key described field reports of Americans operating with Li Mi’s army and of American aerial supply missions. Burma’s diplomats in Bangkok could not help but see Li Mi’s US-supported supply system operating from Thailand, he said, calling denials of official USG involvement meaningless to the Burmese. Key concluded that American support for Li Mi’s army had brought chaos to northeastern Burma, flagrantly violated Burmese sovereignty, and made a mockery of Washington’s expressed policy of strengthening Burma’s stability and independence. Whatever their original justification, Key said, the KMT operations from Burmese soil had “failed to achieve useful results commensurate with the harm they have done to our interests in Burma.” He called for a halt to any further American participation.12
In an August 22 meeting, Merchant and CIA officers13 agreed that Li Mi’s continued presence “would constitute a festering sore” in US-Burmese relations and serve as a pretext for PRC intervention in Burma. It was time to end US support for that operation and, with Thai cooperation, evacuate Li Mi’s regular units, his 93rd and 193rd divisions, through Thailand.14 The call for withdrawal did not specifically address Li Mi’s far larger and more troublesome force of irregulars. Participants in that meeting also approved the draft telegram to Key from Assistant Secretary Rusk that Merchant would show to British diplomats two days later in an effort to mislead both Embassy Rangoon and the British.
The personal telegram from Assistant Secretary Rusk approved at the August 22 meeting instructed Key, based upon the State Department’s investigation of “rumors” of US involvement with Li Mi’s army, to “categorically deny” any official or unofficial USG connection with the ROC army in Burma. The telegram instructed Key to discourage Rangoon from referring its complaint to the United Nations and assure the GUB that steps had been taken to guard against any future involvement of private American citizens. Washington continued, Key was to say, to encourage Taipei to order Li Mi and his army to remain in Yunnan and not again violate Burma’s borders. As Washington knew, that army had long since been ejected from Yunnan and was back in Burma.
Key’s first opportunity to meet with U Nu was August 29, at the latter’s request. Before Key could carry out his instructions, U Nu handed him a War Office summary of its interrogation of a recently captured CNA major general sent by Taipei in April by “American aircraft,” to organize KMT guerrillas in Burma. After a month with Li Mi in Bangkok, the general had set out for Yunnan. En route, Burmese authorities at Lashio arrested him and seized his American-manufactured radio transmitter/receiver. The captured officer told interrogators that from April 1951 onward Li Mi’s army had received regular supplies of American arms, ammunition, and rations to support its invasion of Yunnan. U Nu told Key that, in view of the prisoner’s statements, he no longer had any choice but to agree to Ne Win’s insistence on raising at the United Nations the issue of Taipei’s army in Burma. When Key dutifully carried out his August 22 instructions, an openly skeptical U Nu brushed his words aside. Upon receiving Key’s account of his meeting with U Nu, Washington ceased its efforts to dissuade Rangoon from going to the United Nations.15
Meanwhile, the British consulted with India’s Prime Minister Nehru, to whom U Nu often turned for advice. Like the British, Nehru feared that going to the United Nations would force Rangoon to acknowledge publicly that it could not control its territory, thereby inviting Peking to assume that responsibility.16 As an alternative, the British proposed that Burmese diplomats suggest to the Americans that they ask London to join in an Anglo-American démarche asking the Thai to block transit of arms to the KMT. A few days later, Burmese Foreign Minister Hkun Hkio suggested such a démarche to Key. Washington promptly accepted.17
By mid-September, British Ambassador Wallinger and American Chargé d’affaires William Turner in Bangkok had their instructions for a joint démarche to the Thai about arms “smuggling” in Burma. Wallinger had reservations. He told London of an earlier conversation in which Prime Minister Phibun volunteered that he had granted an American intelligence officer’s request for Thai cooperation in supporting Li Mi. Phibun said he would agree to help the Americans or anyone else kill communists. When Wallinger raised his eyebrows, Phibun asked “Why are you surprised? Aren’t you just as interested in killing Communists as I am, or as the Americans are?”18 Wallinger speculated that “there must presumably be some pay off for Siamese [Thai] complicity in supply service and there is plenty of evidence Phao is running the racket. Whether Phibul [Phibun] gets his rake off or not, he will not want to aggravate any difficulty he may be having with Phao.”19
Phibun’s matter-of-fact acknowledgment of American involvement frustrated Wallinger. He described an American suggestion that resolution of the KMT issue be left to the Asians as a “dangerous prevarication which anybody with any knowledge of the business can see through . . . and Phibul [Phibun] has been quite open about it being an American affair.” It was “useless to discuss all of this with the American Embassy,” Wallinger said, “who do not hesitate to show their bitter resentment of Willis H. Bird and his SEA Supply Company but are obviously powerless to intervene in their affairs.” Turning to the proposed joint UK-US démarche to the Thai, Wallinger opined that the sooner everyone accepted that only the highest government levels in Washington had the resources to clean up the mess, the better. Meanwhile, Wallinger would do as instructed.20
London had by that point concluded that a joint UK-US approach to the Thai would be seen as “ludicrous” absent prior steps to curb SEA Supply’s activities. As instructed, its diplomats in Washington provided the Americans a written summary of the latest British intelligence detailing SEA Supply operations. The paper British diplomats left with the State Department noted that Li Mi was then in Bangkok talking both to Bird and Thai police about supporting a guerrilla force as large as the Royal Thai Army. Li Mi was asking enough arms and related items to equip a British army corps.21
As they discussed their coming démarche, Wallinger told Turner of a recent golf conversation with Phibun in which he had mentioned his instructions to join the Americans in asking the RTG to stop the flow of Li Mi’s arms through Thailand. Phibun replied that the supply of arms going to Li Mi’s army was a matter for the Americans, as “everything was being done in conjunction” with them. Wallinger made it clear to Turner that the British knew the source of KMT arms. He described flights of multi-engine supply aircraft, a crashing helicopter, “Major Stewart” accompanying Phao Siyanon on flights to the north, involvement of Willis Bird and SEA Supply, and the “huge profits” made by Phao, and possibly Phibun, on the opium carried on CAT flights from North Thailand. Wallinger noted that he had discretion to back out of the démarche if Turner so wished. In Wallinger’s words, Turner “tacitly admitted that the activities of Mr. Bird’s outfit were an embarrassment to the United States Embassy” but preferred to go ahead with the démarche, however disingenuous, rather than to engage in further back and forth with Washington.
Wallinger took the lead when he and Turner met on October 1, 1951, with Foreign Minister Worakan Bancha, one of the original architects of SEA Supply’s presence and activities. Wallinger emphasized Anglo-American concerns over the destabilizing effects of the Nationalist Chinese in Burma and the use of Thailand as a conduit for US-manufactured weapons for that army. Wallinger and Turner left parallel memoranda asking the Thai to stop the flow of US weapons and warning that if the Burmese took the issue to the United Nations it would embarrass everyone involved. The Foreign Minister duplicitously stated that he had learned of the arms smuggling only six months before from Burmese Ambassador U Hla Maung and, after taking “appropriate steps,” assumed that it had ceased. He promised to raise the matter with Phibun. As the two diplomats were leaving, Worakan commented that Turner must surely be aware of certain Americans involved in the arms shipments. Turner made no comment.22
Theater of the absurd that the joint démarche was, it did help avoid a UN debate. Hkun Hkio told the British on October 4 that the GUB had postponed its UN appeal pending results from the Wallinger-Turner meeting with Worakan and further American efforts with Taipei.23
In an October 12 private meeting, Phibun told Wallinger that he had willingly acceded to a request from “an American clandestine organization” to help supply Li Mi’s forces as part of the West’s overall containment policy to stop Chinese Communist expansionism. Phibun attributed Li Mi’s defeat in Yunnan to inadequate supplies and insisted that initial failure should not lead to abandoning the effort. Any such decision, however, was up to the Americans. When Wallinger reminded Phibun that American Chargé Turner had told Worakan of Washington’s opposition to supplying the KMT through Thailand, Phibun “did not seem (or perhaps wish) to consider Mr. Turner’s action to be final.” Wallinger let the issue drop rather than raise the “embarrassing problem of two American organizations [State Department and CIA] saying different things.” Wallinger opined that Phibun was placing his faith in his “American organization” rather than the State Department.24 As of November 14, the Thai had not responded to the October 1 Anglo-American démarche and British intelligence reported that SEA Supply continued to channel arms to KMT troops in Burma through Thailand.25
In conjunction with the Wallinger-Turner démarche in Bangkok, American diplomats in Taipei and in New York at the United Nations again pressed the ROC to remove its troops from Burma. Chargé Rankin in Taipei asked that Li Mi be recalled to Taiwan and his army ordered to leave Burma or accept internment. A senior Taipei MFA official responded to Rankin in a thinly veiled threat that public discussion of this affair would not be in the best interest of the United States.26 At the United Nations, American delegates told Taipei’s ambassador Dr. T. F. Tsiang27 that Washington was ceasing its efforts to dissuade Rangoon from asking the UN for help. When asked whether Taipei had given further thought to withdrawing Li Mi’s troops, Dr. Tsiang acknowledged that Rangoon raising the Li Mi issue at the United Nations would be embarrassing for all concerned (another reference to the USG role). He reminded the Americans that both Thailand and French Indochina had refused to accept those troops, and that they would not surrender to the Burmese unless assured they could be withdrawn rather than interned. The best course, he said, would be to arm and send Li Mi’s army back into Yunnan.28
While diplomatic exchanges dragged on, the State Department, apparently without a sense of irony, informed Embassy Rangoon on October 27 of its growing concern over the threat to Burma’s independence from insurgent groups aided and abetted from abroad. Recalling its “helpful friendship and coop[eration]” with Rangoon, the State Department instructed its Embassy to transmit Washington’s concern for Burmese political and economic security. Those views were to be given to U Nu in a formal aide-mémoire in the spirit of friendship. If asked for advice, Embassy Rangoon was to suggest that Washington might assist GUB to improve the training and morale of its armed forces and encourage it to reach accommodation with its non-communist ethnic minorities.
In Rangoon, Chargé Henry B. Day29 delivered Washington’s message to Foreign Minster Hkun Hkio. Clearly surprised at its audacity, Hkun Hkio bluntly replied that the most helpful action Washington could take would be to end to all communications with and support for Taipei’s army in Burma. Were it not necessary to commit resources against a KMT well-armed with American weapons, Hkun Hkio said, Burma’s Tatmadaw would make rapid progress against communists and other insurgents alike.30
1. FRUS 1950, Volume VI, “United States Relations with Burma,” pp. 233–234.
2. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 279–285 and 312–313.
3. FO to Bangkok, Tel. 236, 6/21/1951, FO 371/92141, UK National Archives.
4. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 277–279.
5. Washington to FO, Tel. 2357, 7/31/1951, FO 371/92141, UK National Archives.
6. FO to Washington, Saving Tel. 3897, 8/4/1951, FO 371/92141, UK National Archives.
7. FRUS 1951, Volume VI, “United States Relations with Burma,” p. 286.
8. As well as “South China,” a reference to other ongoing covert operations against the Mainland.
9. FO to Washington, Saving Tel. 3898, 8/4/1951, FO 371/92141, UK National Archives.
10. Washington to FO, Saving Tel. 808, 8/11/1951, FO 371/92141, UK National Archives. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 287–288.
11. Washington to FO, Tel. 2667, 8/24/1951, FO 371/92141, UK National Archives. FO, Internal Minute by S. J. L. Oliver, 8/28/1951, FO 371/92142, UK National Archives.
12. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 288–289.
13. OPC Far Eastern Division chief Col. Richard G. Stilwell, his deputy Desmond Fitzgerald, and Col. William E. De Puy.
14. Memo. for the Record, 8/23/1951, RG 59, US National Archives.
15. FRUS 1951, Volume VI, “United States Relations with Burma,” p. 292. Rangoon to FO, Tel. 294, 6/19/1951, FO 371/92140; Rangoon to FO, Tel. 425, 9/4/1951; Tel. 431, 9/8/1951, FO 371/92142 UK National Archives. Rangoon to DOS, Des. 203, 8/30/1951, RG 59, US National Archives.
16. FO to Rangoon, Tel. 409, 9/6/1951; Rangoon to FO, Tel. 431, 9/8/1951; Rangoon to FO, Letter, 9/8/1951; High Commission New Delhi to Commonwealth Relations Office, Tel. 1432, 9/18/1951; FO to Washington, Tel. 1408, 9/19/1951, FO 371/92142, FO 371/92142, UK National Archives. Rangoon to DOS, Tel. 267, 9/9/1951, RG 84, Rangoon Embassy and Consulate, Confidential File 1945–52, Box 10, US National Archives.
17. DOS to New Delhi, Tel. 646, 9/20/1951; New Delhi to DOS, Tel. 1088, 9/22/1951, RG 84, Bangkok Embassy and Consulate, Confidential File Box 26 and DOS, Memo. 9/19/1951, RG 84, Rangoon Embassy and Consulate, Confidential File 1950–52, Box 10, US National Archives. Washington to FO, Tel. 3026, 9/19/1951, FO 371/92142, UK National Archives. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 296–297.
18. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 316–317. Bangkok to DOS, Tel. 683, 9/21/1951, RG 84, Rangoon Embassy and Consulate, Confidential File 1945–52, Box 10, US National Archives.
19. Bangkok to FO, Tel. 411, 9/10/1951; Bangkok to FO, Tel. 425, 9/21/1951, FO 371/92142, UK National Archives.
20. Bangkok to FO, Letter, 9/22/1951, FO 371/92143, UK National Archives.
21. FO to Washington, Saving Tel. 4841, 9/27/1951; Saving Tel. 4842, 9/27/1951, FO 371/92142, UK National Archives.
22. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 298–299. Bangkok to FO, Tel. 439, 10/1/1951, FO 371/92143, UK National Archives.
23. Bangkok to FO, Tel. 440, 10/1/1951; Bangkok to FO, Tel. 441, 10/2/1951; Bangkok to FO, Letter, 10/3/1951; Bangkok to FO, Tel. 478, 10/4/1951, FO 371/92143, UK National Archives.
24. Bangkok to FO, Tel. 450, 10/13/1951, FO 371/92143, UK National Archives. Bangkok to FO, Letter, 10/13/1951, FO 371/92143, UK National Archives.
25. FRUS 1951, Volume VI, “United States Relations with Burma,” p. 306. Washington to FO, Saving Tel. 1055, 10/16/1951; FO to Washington, Letter, 11/1/1951; FO to Bangkok, Tel. 11/14/1951, FO 371/92143, UK National Archives.
26. FRUS 1951, Volume VI, “United States Relations with Burma,” p. 300.
27. Tingfu Fuller Tsiang.
28. USUN to DOS, Tel. 383, 9/26/1951; Tel. 417, 10/4/1951, US National Archives.
29. Ambassador Key had by then transferred to a Washington assignment in preparation to serve on the US delegation to the upcoming UN General Assembly session in Paris.
30. FRUS 1951, Volume VI, “United States Relations with Burma,” pp. 306–310 and 311–312. Rangoon to DOS, Tel. 474, 11/15/1951, RG 84, Rangoon Embassy and Consulate, Confidential File 1945–52, Box 10, US National Archives.