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.