501.BC Indonesia/7–1149: Telegram
The Secretary of State to the Consulate General at Batavia 1
371. Usgoc 403. For your info, fol is sequel to Usgoc 394 (Deptel to Hague 580) July 1 concerning ECA Indo.
Philipse2 and Schiff called again to discuss Indo aid program with Dept officers. Dept position reaffirmed as reported previous tels. Dutch seemed fully to understand our reasoning re necessity avoid premature decision and announcement thereof, but emphasized fol points: (a) Indo dollar reserve dangerously depleted, import schedules very low with consequent hardship native population, further reduction imports in offing as result failure obtain CCC credit, serious danger that within four months economic situation so deteriorated as to render ineffective limited assistance which might then be available through ECA; (b) something in nature of deadline confronting Neth Govt, in view of OEEC meeting probably Aug–Sept to recommend division ECA funds now up for appropriation by Congress; (c) fluid situation in Dutch domestic politics re present policy vis-à-vis Indo. In this connection point was made that tangible encouragement to Neth Govt from US is factor as important as avoidance under-cutting Hatta, if real and enduring solution to be reached at Hague conference.
Dept officials replied that above points have been, and certainly wld be, factors considered in any decision; that matter was one in which timing seemed to be of great importance in order achieve political objectives both in Indonesia and in Holland, and that we desired keep these discussions on very frank basis in order avoid in so far as possible any misunderstanding of motive. No commitment was made either in principle or as to timing.
It appears desirable to Dept that ECA aid Indo be resumed at earliest possible time, but only, of course, when such resumption wld be compatible with attainment objective of strengthening Hatta Govt vis-à-vis extremists and otherwise effective in furthering final solution. In view above and in view fact discussions re resumption with Neth officials have taken place, Dept wld appreciate your taking matter up with Hatta or other Repub leader at your discretion and your forwarding his reaction and your comments thereon.