501.BC Indonesia/6–1549: Telegram
The Ambassador in the Netherlands (Baruch) to the Secretary of State 1
508. For Secretary of State and ECA from Baruch and Valentine: This is joint statement Embassy and ECA mission in full agreement in response to Department/ECA 499, June 10, sent Batavia as 320.
Cogent reasoning in Department’s 499 appeals strongly to us. We believe plan entirely feasible and timing should be now.
Answers to questions your penultimate paragraph should properly [Page 432] come from Cochran, not us, but we offer following comments and suggestions.
On basis our information, amount of aid proposed entirely inadequate but realize your present problems and limitations. Therefore suggest emphasis be not upon amount but upon renewal of aid to all Indonesia as vital to development democratic government there through provision of basic economic needs.
While distribution of proposed aid presumably must at present be made through Dutch channels, we believe you can find way to arrange that Hatta, with Dutch cooperation and agreement, can play effective public role in helping determine recipients of aid and in working out relative requirements on geographical basis of different areas of Indonesia. If plan succeeds, Hatta government would then claim and probably receive credit for having brought about conditions which achieved aid for all Indonesia on equal basis. This should strengthen Hatta government against extremists, and also strengthen US position with Indonesians as a whole by supporting their desire to govern their own affairs.
Consequently it is further highly desirable if possible to include in planning and approval other Indonesian native elements, not Dutch or Republican, if this can be done without undue delay in providing aid, but we repeat need is urgent and its early fulfillment should take precedence over ideal arrangement which might be sort of all-Indonesian economic organization along general lines of OEEC.
If Hatta government and BFO also judged capable of assisting in distribution of aid, so much the better, but if Dutch [apparent omission] has any validity it seems doubtful that existing personnel experience and conditions would make for reliable distribution in Indonesia except through Dutch at present.
If above plan followed, we believe it removes possibility of being construed as effort to aid Dutch in Indonesia.
We believe Netherlands Government now has sincere desire to achieve objectives stated in Department’s 499 and would cooperate in above plan. Our opinion fortified by discreet inquiries of key Netherlands Government officials here and following is summary for your information of their informal person first opinions.
- a.
- Political effects early resumption of aid need [would] be favorable to all Indonesian parties except extremist groups.
- b.
- If initial aid greatly limited, economic gains would be secondary but even limited aid if assured soon would among other advantages permit Dutch to expedite replacement of stocks their consumption supplies which they plan to use to support re-establishment of Republican goods and services.
- c.
- Formula should stress distribution on geographic basis and Dutch recognize this would require special Dutch attention to emergency areas, especially within Republic.
- d.
- Ideal psychological moment to announce renewal of aid would be coincident with assumption of government responsibilities in residency by Sultan of Jogjakarta, effective restoration of whose authority Dutch regard as essential to peaceful return and continued leadership of Soekarno–Hatta government.
We urge that when announcement of renewed aid is made it be accompanied simultaneously by announcement of intention to dispatch to Indonesia soonest possible a special mission to study need and possibilities of further aid, such mission to be headed by American of recognized distinction. In this connection see Valentine to Hoffman, to ECA 398 of June 6.2 Such mission should have capacity to handle technical and general economic questions, also standing with Indonesian politicos, and recognition its immediate economic concern must be with consumer not production goods.
We repeat we endorse Department’s thinking in your 499 and believe suggested procedure above would help meet Department’s desire to impart maximum strength to Hatta without jeopardizing success of distribution scheme or impairing delicate balance political position.
Sent Department 508, repeated Paris 43, OSR for Harriman.