856D.10/1–2650: Telegram

The Ambassador-Designate in Indonesia (Cochran) to the Secretary of State

secret
priority

153. Believe Djuanda should be advised and constructively assisted to obtain signed credit agreement with Export Import Bank while in US. Can understand from our insistence to him and Sumitro1 on presenting definite capital projects that Djuanda may now have gone all out in setting forth four-year plan and ideas for Point Four Program.

I fear from Deptel 892 however Djuanda has either been misunderstood or has not been kept informed by his government of developments Indonesia since his departure. Lest I on other hand may be misinterpreting Deptel 89, particularly after receiving encouraging Deptel’s 79 and 84,3 beg submit following with view clarification.

[Page 974]

I do not agree that “earmarking” or “giving assurances” of help is adequate. Credit contract above suggested would involve opening credit against which there would be no drawings until sums due account approved projects. Djuanda should convince Export Import Bank eventual total credits which his over-all plans warrant. Get Export Import approval while Djuanda in US of some sufficiently specific projects and needs to permit him arrange for early initial purchases and delivery of such essentials as agricultural implements, trucks, cement-making and roadbuilding machinery, fishery equipment, cables and other mining replacements.

I do not agree that Indonesia is not in position to request or expect firm contracts during next few weeks. On contrary I insist present is propitious time to consummate contracts of at least firmness of those hereinabove suggested. We should thereby give RUSI fullest possible support in manner which should dispel any impression here or elsewhere that US is fair weather friend afraid to risk concrete support when clouds arise. In addition to rehabilitating economic plant and increasing output and export also necessary inspire national confidence and relieve unemployment including ex-and potential soldiers.

I believe financing capital projects most helpful and safest investment we can now make Indonesia. Netherlands would like make this type loan and French and Swiss concerns appear similarly interested. I would favor leaving Netherlands and other possible lenders job of helping with credits for consumption goods to follow ECA rice and textiles perhaps in April. Also give our banks and business concerns chance at this.

Talked last night with Hatta who said he had left to Djuanda decision as to amount of credit to be requested but considered 500 rather than reported 100 million dollars as more realistic amount needed if plan for economic rehabilitation Indonesia involved. He agrees on urgency definite loan agreement soonest. My preference would be to announce before Djuanda departs that:

(1)
Indonesians think plans will require 500 million (or whatever sum is decided);
(2)
Contract for say 200 million has been signed and;
(3)
Door left open for considering additional credits as rehabilitation progresses and actual opportunities for further constructive undertakings are disclosed.

Nine-man group arriving today from SCAP 4 presumably to seek market for Japanese products. ECA party of ten moving in shortly to police end-use ECA funds already lent and spent and to program use counterpart. Numerous American salesmen here. Such invasions with accommodations lacking industries poorly organized, and functioning [Page 975]feebly in first few weeks of existence of harassed government will be of little avail and hurt rather than help if we do not give government financial support necessary for getting its economic machine in better operation.

To inspire confidence in our intentions is especially urgent now that Soviets seeking early penetration with immunity through establishing diplomatic relations. This will probably soon be followed by Chinese Communist approach with even greater implications. Sjharir sent to me last night important Chinese who had been member Republican delegation to RTC to give me picture of danger to Indonesia of permitting establishment of any Communist mission; Indonesia with its 2 million Chinese.

Java Bank manager told me Friday RUSI Government had already drawn 300 million guilders on his bank. Am confident Netherlands interests will insist on utilizing counterpart funds for reducing RUSI indebtedness to them unless we quickly show advantage tying use such funds in with productive projects for which we providing dollars required for imported elements thereof. Hence, another reason for speed toward definite and early working loan.5

Cochran
  1. Dr. Sumitro Djojohadikusumo, Indonesian Minister in the United States.
  2. Not printed. In it Cochran was informed that in preliminary discussions Djuanda had “clearly stated intention and objective for period his present visit not gaining definite Ex-Im Bank credit, but rather getting Ex-Im Bank assurances.” (858D.10/1–2650)
  3. Neither printed. The former told Cochran that the Department of State would “do everything possible assist Djuanda in his discussions with Bank,” while the latter transmitted the schedule of Djuanda’s appointments with various financial and trade representatives in Washington. (856D.10/1–2650)
  4. Supreme Commander Allied Powers.
  5. In a subsequent exchange of telegrams the Department of State confirmed that Djuanda desired assurances rather than a definite credit and stated that he “had not wished take Washington trip, but came because ‘Ambassador Cochran insisted’.” Djuanda further proposed that he return to Djakarta for more specific information to justify specific loan outlays. In reply Ambassador Cochran reaffirmed his statements and stressed particularly the need for a contract before Djuanda departed. Telegrams 101, January 28, to Djarkata and 165, January 31, from Djakarta (856D.10/l–2850 and 3150).