501.BC Indonesia/5–748: Telegram
The Secretary of State to the Consulate General at Batavia
188. Usgoc 97. Neth Emb Wash has informally provided Dept with following paraphrase secret tel Palar, NY to Hatta: “(1). Good bargaining position now possible for Repub because of world situation. (2) Neth position presently unfavorable since Neth cannot secure loan from US unless and until Neth has settled dispute with Repub. (3) Because US desires raw material originating Indonesia it will not permit Dutch to resume hostile action Indonesia. (4) US Army determined to circumvent Neth blockade Repub trade because of its special military interests and consequences this will be evident near future. (5) Repub position may be strengthened by successful conclusion discussions with oil group in US now in progress.”
Foregoing tel substantiates Dept’s belief (Deptels 161, Apr 21 and 184, May 51) that Repub’s reluctance discuss terms entry into interim govt, together with general intransigence respect negotiations, is due in large measure to prospect profitable commercial connections here with US Govt approval. Degree to which Repub is relying on supposition US financial assistance to Neth entirely dependent on Repub action appears far greater in light foregoing than heretofore supposed.
Reference to world conditions, point one foregoing, Dept supposes means Repub belief that continued deterioration US–USSR relations, presupposing hostilities in Europe and Asia would provide Repub opportunity to remain outside conflict, since Neth would presumably be obliged to withdraw NEI, and therefore to continue present dilatory tactics in respect of final settlement in anticipation of that contingency. Reference to position of US military is product of Palar’s imagination only since Dept has not been pressed by military to secure commodities from NEI.
Dept takes most serious view of predicates Repub position as indicated foregoing and believes Repub leadership must be disabused such notions quickly and firmly. Accordingly, please find appropriate and effective opportunity approach Hatta, Roem, and if necessary Soekarno to make following points abundantly clear without reference of course to Palar-Hatta exchange described foregoing.
(1) US Govt hopes Repub not constrained to delay or endanger present negotiations objectives of which are achievement peace, prosperity and democracy in Indonesia in favor of prospect of war in Europe or Asia. Objective US policy toward Indonesia is peace and creation those conditions in which peace can be permanent. US would [Page 164] regret to see Repub govt assume that there can be advantage to it in disturbed world situation. (2) From nature of case conditions under which US Govt will grant loan to Neth Govt cannot be materially affected by transparent delaying tactics on part Repub. In considering loan to Neth US will obviously take into account question as to whether Neth and Repub have reached final political agreement. However, you should point out to Repub that should US become convinced that Repub is attempting to use this as lever against Dutch in such way as to make agreement impossible or even seriously to delay it, Dept would, of course, in making its recommendations to EXIMBank be compelled reconsider its entire position with respect to loan, including the desirability of extending it to Neth with or without Repub participation. Dept leaves your discretion how you should make clear once and for all to responsible leaders of Repub that no negotiating advantage can accrue to them from fact that US is considering extension of loan. You may also choose to relate this statement to chronological limitations on negotiations imposed by target date program, Gocus 247, Apr 26. (3) Policy US Govt vis-à-vis Indonesia not dictated as Repub apparently supposes by economic compulsions such as US requirements for raw materials. It might be useful here to point out that there are any number of positions the US might have taken if this had been its principal concern; in this connection, pls recapitulate Dept’s position in respect Fox contract and all transactions contemplated thereunder, set forth Deptel 161, Apr. 21, disposing of this Govt’s attitude toward negotiations with oil group (Point 5) in this manner. Military has not requested Dept to secure commodities from Indonesia for reasons of US military interests; on contrary Dept is in receipt letter from Munitions Board expressly stating there no urgency respect NEI commodities for stockpiling.
Since you cannot refer to tel intercepted by Neth and since in any case US would not act on basis evidence this nature, suggest you predicate your approach on impressions Dept officers have gathered as consequence of several conversations with Indonesians in US, Fox and his associates, as well as broadcasts from Repub controlled radio and press.2
Sent Batavia as 188; rptd The Hague as 174.