Foreign Relations of the United States, 1964–1968, Volume XXVI, Indonesia; Malaysia-Singapore; Philippines

253. Airgram From the Embassy in Indonesia to the Department of State¹

A–423

Djakarta, February 21, 1968.

SUBJECT

• U.S. Policy Assessment

REF

• CA–6014.
• CA–5400.²

Country Team Message.

I. Indonesian Setting

In March 1967 Sukarno was totally removed from power, and a “New Order” under the leadership of Acting President Suharto assumed full responsibility for governing the nation. The transition from Sukarno to Suharto, which took a year and a half of patient and effective effort by the latter, did not produce the internal upheaval many had felt was inevitable. The ease with which the transition was accompanied was, in fact, a reflection of Suharto’s excellent sense of timing and his understanding of at least the dominant Javanese segment of Indonesian society.

At the same time, removal of Sukarno took away a convenient scapegoat with the result that since March 1967 all of Indonesia’s pent up expectations have centered on the new government. With the departure of Sukarno, the “New Order” also lost the unifying force of a common enemy, and social, cultural and religious frictions have increased markedly during the past nine months.

These problems will continue to press in on the Suharto government during the coming year, as will the desperate shortage of trained personnel, Indonesia’s critical economic situation, the increasing expectations of the people, revival of serious political in-fighting, and others.

Despite the problems and shortcomings which were accentuated during 1967, we believe Indonesia has embarked on the long road toward modernization. It is following sound economic policies and moderate foreign policies, although progress in creating a domestic political base for the present government is far slower than it could or should be. The present year will be crucial to the success of these efforts, for during 1968 trends will be set in motion which will determine the course of this important nation for many years to come. (These problems are spelled out in detail in a companion report—Djakarta A–358.)³

II. Our Dilemma

Following the removal of Sukarno, our bilateral relations with Indonesia improved markedly. During 1967, American owned businesses, previously taken over under the Sukarno regime, were returned to their original owners, and several American firms, taking advantage of the present government’s liberal economic policies, concluded agreements for new investments in Indonesia. The bilateral air agreement between Indonesia and the United States in late 1967 was one of the most favorable we have concluded in recent years. The United States has become the pace setter for aid to Indonesia within the Inter-Governmental Group (IGG), and an increasing number of US officials visited Indonesia during 1967, highlighted, of course, by the visit in November of Vice President Humphrey, who established a new benchmark in our bilateral relations.

As a result of these and other factors, the US has become closely identified with the goals and efforts of the Suharto government. Such an identification is in fact inevitable since we have a heavy stake in the success of the “New Order” not only for obvious reasons related to Indonesia’s size, strategic importance, resources and potential strength but also because it is the latest test case of whether liberal economic policies combined with free world assistance offer a more solid path to modernization than communism or other totalitarian solutions.

In seeking to advance our national interests in and regarding Indonesia, the United States Government faces two fundamental problems, one deeply rooted in Indonesian cultural norms and the other in our own tendency as a government to become too deeply involved in the affairs of other nations. Our dilemma, simply put, is this: we cannot and must not let the “New Order” fail, but we also must not become so active that we conflict with Indonesia’s cultural heritage or substitute our initiative for theirs. We have faced the problem ever since October 1965 of treading this narrow line, but the increasing importance of the US to Indonesia’s hopes for recovery means that the margin for error and for misjudgment has become even more critical.

While our stake in the “New Order” is large, our ability to assist it is circumscribed. The experience of the United States Government in Indonesia over the past 15 years clearly shows that the injection of our assistance into the Indonesian economy does not provide a directly corresponding stimulus to growth but will often be rejected, deflected or transformed by basic features in the Indonesian social structure. Economic development through the infusion of foreign skills and assistance apparently requires parallel development in other sectors of the society. For this reason, it is perhaps best to regard our ultimate aim in Indonesia not as economic development alone but as modernization.

Needless to say, we would run grave risks if we attempted directly to initiate or even counsel reform in the social structure, where are moored the individual Indonesian’s sense of security and identity. (Sukarno mobilized the nation behind his policies by pointing to a Western threat to the “Indonesian way of life” and the anti-communist campaign after the October 1, 1965 events was powered with similar fuel.) Our problem, therefore, is to choose from among the priority needs, programs which are compatible with the Indonesian social structure and yet active stimulants for change. The overall process must in the Indonesians’ eyes appear as “modernization,” not “Westernization” and least of all “Americanization.” If the process appears as “Americanization”, we will not only waste our funds and incur blame for failures but, more importantly, will trigger long acting rejection devices within the Indonesian society to what is falsely identified as foreign intrusion rather than internal development.

III. Criteria for American Programs

To date we believe U.S. policy has avoided the worst dangers of this dilemma and has successfully advanced U.S. interests. Our timely economic assistance has strengthened the hands of Indonesia’s “modernizers” and the U.S. has also been successful to date in supporting Indonesia’s efforts to obtain substantial aid from other donors. Our small but important MAP has made a major contribution to encouraging the Indonesian military to move into Civic Action projects which not only contribute to economic stabilization but also help to enhance the local image of the Armed Forces. Our informational and cultural programs have expanded modestly during the past year, with particular emphasis being placed on distribution of one-half million American books to Indonesian educational and other institutions. We have also had continued success in our efforts to quietly influence Indonesia’s top leadership. Indonesians not only seek our aid but privately they also seek our advice and this has enhanced our ability to influence some, but by no means all, developments. Finally, we have succeeded substantially in convincing Indonesia to do business “through channels” and to cease sending visitors to Washington armed with open-ended “hunting licenses” seeking aid and special favors.

These past experiences and our estimate of the problems we will soon face in the mounting urgency of the stabilization efforts and in the implementation of the development plan lead us to suggest the following broad criteria for American policy in Indonesia.

A. Regionalism

We must continue to encourage Indonesia to join in Southeast Asian cooperation. In addition to the material and political benefits, closer regional ties will encourage Indonesia to see itself as a partner and participant in a world-wide process of modernization rather than a sick patient in the hands of Western doctors. Indonesia’s neighbors, however, must be responsive. While suspicion on the part of some of Indonesia’s neighbors is historically understandable, we should encourage these nations to realize that a “New Order” has taken over in Indonesia and that, even if they fail to accept this fact, the best and most pragmatic way to guard against the possibility of future Indonesian adventurism is to embrace Indonesia’s new government and interweave it inextricably in responsible regional activities.

Our own expressions of support for regional organizations such as ASEAN should be decidedly low-key. The Soviets, from whom the Indonesians hope to receive additional aid, are already charging that ASEAN is a “Western puppet” and the Indonesians fear that too close an embrace by us would not only complicate their relations with Moscow but also add substance to these allegations and perhaps make it more difficult for ASEAN to enlist the support of additional non-aligned nations.

B. Multilateral Approach

We remain convinced of the necessity of setting our programs into a multilateral framework, with the IMF, IBRD and IGG nations assuming together a position well in advance of any individual foreign government. This is both a more forceful method of persuading Indonesia to make the tough decisions that will be required and a better guarantee against Indonesia sluffing off responsibility to others’ shoulders. The multilateral approach may, however, prove too slow or inflexible to meet certain problems of exceptional urgency and we must recognize the need for flexibility in applying this criterion.

C. Adaptations to the Indonesian Social Structure

There are three broad attributes of the Indonesian culture which will constitute impediments to much-needed technical and project assistance and which we should take into account in developing our programs: (1) a predominantly traditional (as contrasted to rational) mode of thought which resists change, stresses human adaptation to rather than manipulation of environment and recommends avoidance rather than resolution of conflict; (2) particularistic (or personalized) rather than universalistic values, emphasizing loyalty to kin or, more particular to Indonesia, to a protector (Bapak) rather than to institutions or abstract codes of behavior; and (3) a decentralized and compartmentalized organization of the society with relatively little coordination exerted laterally and relatively little authority exerted vertically.

Perhaps the best single way of ensuring that an American program will be adjusted to the Indonesian environment is to work through the so-called “third culture,” that is Indonesians who have gained a broad knowledge of our culture and yet retain accredited membership in their own. This type of person, most prominently represented by General Suharto’s team of economic advisors, can serve as invaluable mediators between the two cultures. Every assistance request should consequently by evaluated on the basis of whether the Indonesians controlling or staffing the offices connected with the program include a sufficient number of “third culture” persons.

A second prerequisite for evaluating the prospects for an assistance program is to identify the “Bapak” or “Bapaks” into whose spheres the project falls. If these are corruptionists, solely political operators or pure traditionalists, the project will probably be deflected from its economic as well as political aims. In this respect, we should continue to promote the modernizer-staffed Bappenas as the agency most directly responsible for economic development.

It is much more difficult to propose criteria to meet the problem of compartmentalization and decentralization. For the immediate future, however, we should probably concentrate our attention within particular compartments and resist the temptation to place technicians in coordinating roles between compartments where they are more likely to replace than develop Indonesian initiative in central coordination and supervision. (What we diagnose as lack of “managerial skill” is often inability to move beyond the society’s structure, a deficiency which cannot be rectified with instruction in American management methods.) It may prove more fruitful to work outward from individual compartments than to attempt to build up prior or simultaneous coordination and supervision between them.

The criteria in the immediately preceding paragraphs should not be regarded as binding prerequisites but as safety precautions. They can and undoubtedly must be set aside in certain instances. When it is deemed necessary to provide technical assistance which will involve coordination and supervision of separate Indonesian compartments, we should first seek to have the IMF, the IBRD or other multilateral bodies take on this task. Where the U.S. must assume this role, the program should be designed with exceptional care and flexibility. Advisors who run a clear risk of being drawn into coordinative or supervisory roles must be carefully selected on the basis of personality and understanding of the local culture. They might in many instances also be placed on TDY status so as to appear as temporary trouble shooters rather than semi-permanent replacements for roles the Indonesians are unwilling or unable to fill.

D. Restricting the American Presence

The criteria listed above all argue for continued restrictions on the American presence in Indonesia. Although some growth in the size of the mission must occur as we move into development projects, we would rule out for the foreseeable future personnel from any U.S. Government agency serving in sensitive fields such as community development, manpower planning, much of public administration and some phases of local agricultural development. Cultural programs should be concentrated in binational centers in Djakarta and, if possible, Surabaya. (Savings in personnel in this sector would pay high dividends if invested in magazine subscriptions and more books for donation to key institutions and individuals.) Finally, those personnel who are assigned to Indonesia to work closely with Indonesians must be carefully selected. (We have already had several minor problems of adjustment.)

E. Working from the American Social Structure

Moving Indonesians to an outside vantage point is undoubtedly the best way to show them the deficiencies in their own social structure and stimulate a desire for this change. For this reason, the participant training program is perhaps the single most valuable component of a modernization program and must be expanded.

In order to ensure that this program results in the transfer of modernizing attitudes as well as technical skills, we should consider: (1) emphasizing training programs of at least two years in length for adults; (2) concentrating on youth, whose attitudes are more flexible—we should welcome the revival of the AFS program if the GOI officially asks for it, although we cannot prompt the GOI on this issue; and (3) “team training” in which five or six Indonesians are trained in related fields at the same time and at the same institution. Upon return to Indonesia these teams should be so grouped in their occupational fields as to provide mutual reinforcement against the social forces which lead to a reversion to a traditionalist framework of thinking. (Suharto’s economic team of advisors is testimony to the success of this method.)

F. Building Indonesian Confidence

Perhaps the foremost requirement of any American assistance program is that it serve to build Indonesian confidence in the modernization process. This criterion is now most pertinent to the stabilization program. Aside from causing important segments of the population to lose faith in and withhold cooperation from the Suharto government, failure of the stabilization program would also perhaps cause Suharto to lose confidence in pragmatic policies and those who have recommended them (the IMF, Western governments and his own team of economic advisors). It may, in fact, be useless to talk of economic development if Suharto is unable to surmount the inflation hurdle within the next eighteen months.

We are now clearly faced with the probability that IGG nations at their March meeting will not pledge the full $325 million of assistance requested of them by the Indonesian Government and the IMF. Such a result will risk losing the confidence which both the Indonesian public and leadership have placed in the IMF and the multilateral approach, and this confidence is perhaps a more important determinant to the success of the stabilization effort than the sums left unsubscribed. If the United States moves to make up this deficit, on the other hand, we risk setting an undesirable precedent for a larger American role in and responsibility for the stabilization program and perhaps the development program which will follow. For the Embassy the last risk is clearly the lesser. In the final analysis, of course, the extent and nature of our aid must be measured against Indonesia’s own performance. Our long-term interests in this important country require that we not substitute our initiative for theirs or be so responsive to Indonesia’s requests that pressures for self-help measures are weakened.

IV. Conclusion

U.S. policy towards Indonesia must address two broad problems, the relatively short-term task of economic stabilization and the long-term task of modernization. The approaches we have outlined above apply to both problems but with different intensity.

Our role in economic stabilization is a relatively simple one because it involves minimal contact with the Indonesian social structure: multilateral agencies provide advice and supervision, an outstanding group of “third culture” persons serve as capable intermediaries, and a large American presence is not required. Our decisions in this sector are nevertheless difficult ones as they are couched in urgency and must weigh American resources against possible Indonesian loss of confidence in pragmatic measures.

In defining our role in Indonesia’s modernization, there is perhaps less need for speed than caution. We are fortunate to be starting off with virtually a clean slate as regards technical and project assistance and information programs. Unlike Vietnam, Laos and Thailand, the urgency of the Indonesian problem is not such as to preclude us from setting up careful test procedures. With a cooperative government, a classically traditionalist society and a good measure of material resources, Indonesia constitutes a good test subject.

The Embassy consequently recommends that we treat our role in Indonesia as a controlled experiment in modernization. We should begin to apply the criteria we have set out above and develop new criteria as experience is gained. The development of our assistance programs must from the outset be geared to Indonesian performance. In this respect, we will want to keep a careful watch not only on economic measurements but also on the incidence of corruption, on the abuse of authority and on the tendency towards militarism, all of which are relatively good gauges of the progress towards modernization in the social structure.

MG

1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 1 INDON. Secret. Masters and Philip F. Gardner, political officer at the Embassy, were the “coordinating drafters” of this airgram which was approved by Green.
2. Neither found.
3. For the summary, see Document 251.