Foreign Relations of the United States, 1961–1963, Volume XXIII, Southeast Asia

302. Telegram From the Embassy in Indonesia to the Department of State⁰

Djakarta, March 1, 1963, 6 p.m.

1333. For Harriman. I have just had intensive review US position here with Country Team, and we agree on following assessment:

1. Next few weeks may be critical ones for Indonesia.

2. If Indonesia can survive short run, we should be able assure ourselves of a neutral, independent and non-Communist nation.

3. Present economic plight this country and need for concentrating attention on economic reforms have been repeatedly stressed by all principal government officials including President Sukarno since West Irian settlement

4. Need for external assistance to implement any economic stabilization plan unchallenged. In face strong PKI hopes divert GOI from cooperation with US on stabilization and development, real issue is whether external assistance is to come from free world (USA) or from Communist bloc (USSR).

Sukarno is one of our biggest problems in Indonesia but we must approach Indonesia’s needs and role we play here in terms importance US places upon Indonesia and not on basis that Sukarno is eternal. Apart from Sukarno and his inner circle, capable American and Western trained young men hold responsible positions at secondary and tertiary levels in military services, civil service, professions, universities and even private business. It is this strength and friends US has here which gives us all confidence in long run.

Understandably our purchase of time is expensive. Considering, however, vast riches this archipelago, its sea lanes and harbors, its natural resources, and well proved ability its people to survive under hardships of both war and peace, importance of keeping these resources from international Communist domination is, I am certain, vital to West and free Asia alike.

Principal current considerations for US policy are:

1. Soviets gambled $1 billion in modern military hardware that they could by pushing Indonesians into conflict with West over WNG bring Indonesia into Communist camp. US foiled this scheme by acting as go-between to encourage peaceful settlement and transfer area to Indonesia.

2. As result NG settlement Indonesians temporarily drew back from Soviets and attempted halt flow massive military assistance as Soviet military technicians left in droves. Indonesians turned toward US hoping for massive economic assistance, and for renewal military shipments. In response US approaches, Indonesians have been making real effort to initiate economic stabilization program as base for development aid from US and other Western countries. Indonesia’s military is now inaugurating civic action program with US help.

3. Soviets suffered what may be but temporary setback, however. Seemingly more by accident than by anyone’s design, Brunei rebellion has given Soviets new opportunity pit Indonesians against West and set stage anew for Soviet victory in Indonesia. Indonesians have characteristically reacted to what to them is a colonial issue. Flow of Soviet military aid continues. At this crucial time Indonesians are being diverted from their concentration on correction their economic ills, to face what they see as new conspiracy aimed at undermining only recently established Indonesian unity.

4. A small group of Indonesian leaders led by First Minister Djuanda continues emphasize economic stabilization program. His representatives are in US now discussing this program with IMF and USG. Should they fail receive US support for this program which they prepared and how discuss with Sukarno’s approval, their defeat would be an incalculable loss not only to them personally, but more important to US and its operations here. These men represent those who believe in US sincerity toward Indonesia and who would re-emphasize cooperation with US. Djuanda’s record has been consistent in this regard. His long service in Cabinet positions of trust is perhaps best token that Sukarno, despite resentment he undoubtedly harbors for outside support (Taiwan and the Philippines, which to many Indonesians means US) for 1958 rebellion, is still willing give Indonesian-American cooperation another chance.

5. Indonesians have been led expect steps will be taken soon meet economic ills. As in past Sukarno and Djuanda have turned first to US. If program developed by Indonesians with IMF and US advice does not move forward in way which makes it possible for Sukarno and Djuanda government retain confidence in US and show results political situation here could take sharp turn to left.

6. All issues in Indonesia are enormously complicated by struggle going on behind scenes (though occasionally in full view) for Sukarno’s favor and number one position in Cabinet. Vying for First Minister Djuanda’s position (like jackals they are expecting his early political, if not physical, demise) are principally Chaerul Saleh and Subandrio, although Ruslan Abdulgani not out of running, and even Ali Sastroamidjojo has hopes lightning will strike. All are playing for PKI favor and support to further their own ambitions.

7. Communist Party in Indonesia is not yet in government, but is in position exert enormous pressure on government. It is aided in this by economic situation which has pushed endurance of Indonesian people almost to what even for this most enduring people may be limit. PKI cannot yet exert military pressure in Indonesia, but if Soviet military assistance continues grow and ours continues trickle, PKI may achieve that ability.

8. Fact that MAP programs for last three years are being held in abeyance is undermining Indonesian Army’s confidence in US as supplier and weakening military’s influence. If Indonesian Army, greatest organized domestic force opposed to Communism in Indonesia, has to turn to Soviets for its military supplies, it will undoubtedly undermine army’s anti-Communist position.

9. US still holds good hand. It would be tragic for US at this point not to play its hand for all its worth. To hold its position and improve it, US needs to do three things:

A. Act to prevent clash between Indonesians and Malayans and British over Malaysia (development in which US would almost surely be drawn into a head-on conflict with Indonesia);

B. Be responsive to Indonesia’s attempts implement stabilization program and to Indonesia’s estimated need for approximately $600 million foreign exchange or its equivalent over next three years;

C. Resume flow of military supplies to army

A Presidential letter to Sukarno giving him hope that President Kennedy will visit Indonesia during his term of office would be helpful at this critical point. When I presented President Kennedy’s much appreciated Idul Fitril message to Sukarno,¹ his eyes lit up when I said I had a message from President Kennedy and he said, expectantly, “good news?” before I could explain what it was. He was obviously pleased but just as obviously had hoped for more.

Jones

0. Source: Department of State, Central Files, E 1–1 INDON. Secret; Priority; Limited Distribution.
1. Reference is to a February 22 Presidential message to Sukarno expressing greetings for the Moslem holiday. (Kennedy Library, National Security Files, Countries Series, Indonesia, Vol. III, 1/63–2/63)