501.BC Indonesia/6–1349: Telegram
The Consul General at Batavia (Livengood) to the Secretary of State 1
532. Gocus 725. For State and ECA. Reference Usgoc 379.2 Question resumption ECA aid Indonesia appears to resolve itself into purely political and psychological matter in view relative unimportance unexpended balance 1949 ECA allotment Indonesia in relation 72 million dollars originally earmarked, most of which has been or is being utilized under procurement authorizations issued prior December suspension. Remaining sum negligible in relation to long-term needs and even from point of view immediate assistance could hardly make deep impression in either Netherlands or Republican circles on strictly economic grounds. Indonesian exports have been showing large improvement over 1948 and total Indonesian export salaries [sic] first 4 months 1949 amounted to guilders 436 million equivalent $167 million. This figure not cited in order minimize Indonesian payments balance difficulties but to stress proportionate unimportance residual ECA allotment 7 if these could be channeled immediately into Indonesian economy, which appears impossible due to necessity procurement, shipment and distribution delay.
[Page 428]Political effect release this small fund would, however, be very great here and presumably in Netherlands. Favorable political impression in Hague and Netherlands circles here would undoubtedly have its counterpart in very adverse Republican reaction which would almost certainly regard move as reversal US policy prior to implementation agreement re Jogja and convening Hague Conference. Whatever manner of announcement, world press would tend take same view, particularly since actual initial recipients would be Dutch.
Aid could not be extended direct to Republic and effect would be to place Dutch in position deciding when and to what extent sub-allocations should be made for use Republican territory or by Republican authorities. Republicans could not claim credit in their area for supplies channeled this manner.
These comments intended to apply any proposal resumption ECA aid to Indonesia prior satisfactory conclusion Hague Conference. This does not imply that in meantime studies should not go forward in Washington re possible means noh-ECA financing Indonesian recovery. Seeding of economic mission to Indonesia, however, or even discussion thereof at present would result in probable serious misinterpretation US motives here, particularly in view status US as one of participant governments in UNCI, and already strong suspicion that US economic interests Indonesia are largely responsible our present policy.
After Hague Conference and delay in securing alternative financing could be bridged by ECA allocations up to date transfer sovereignty to USI. Re 4.1 million off-shore purchase copra Indonesia by Bizone authorized third quarter 1948 Netherlands might be pressed transfer proceeds to Government of Indonesia. Such transfer should not incur objections referred to above any more than does present shipment goods procured under pre-December procurement authorizations.
In summary, therefore, not believed that adverse political reaction to early resumption ECA aid Indonesia would in any way be counterbalanced by limited economic benefits to be derived Indonesia as whole and still more limited benefits Republican territory, latter channeled through Netherlands authorities. Believe action would undermine Hatta influence and be viewed both here and abroad as weakening US support of SC position. Signed Cochran.