856D.00–TA/2–1451: Telegram

The Secretary of State to the Embassy in Indonesia


855. Fol recommendations approved by UN Secy for FE action:

Inform ECA Dept will not support before Budget Bureau Indo program for this FY beyond projects already substantially agreed with and committed to Indos. Judge this will cut ECA FY ’51 proposal from $12,767,000 to about $9 million.
ECA and Budget Bureau be also informed (1) above represents initiation of windup grant aid operation; that during remainder of FY opportunity will be found or made explain to Indos that:
believe econ conditions do not warrant initiation fiscal ’52 ECA grant program in Indo; but that
all our resources will be exploited to fullest assist Indo finding such Amer technicians they believe they need and willing pay for themselves;
in line with policy favoring multilateral UN action we will take special interest assisting through UN orgs further implementation of already elaborate plans for UN tech assistance activities in Indo;
will continue be sympathetic and receptive in future as proved in past to Indo applications under Ex-Im credit;
will have special concern, within limitations of statutory and administrative possibilities, and security needs ourselves and allies, see that Indo gets her fair share scarce or allocated commodities from US, both for her gen needs and particularly in actual carrying out Ex-Im Bank loan contracts.

Gist of paras 1 and 2(a) being notified to ECA by ltr today as Dept position, including specific request that full two year term White contract be financially covered under FY ’51 program.1 ECA being requested withhold any comment to Indos until final Wash action on this Dept position. At that time, you will be notified, and Dept has complete confidence you will be able notify Indos of action in manner that will not give them any reason believe cessation grants was conceived as punitive measure.

This tel not being distributed outside Dept.

  1. According to a typescript note on the Department of State’s file copy of a letter dated February 20, from Assistant Secretary of State Rusk to Mr. Robert Allen Griffin, the Director of the Far East Program Division of the Economic Cooperation Administration, a letter embodying these proposals was sent to ECA several days earlier. With the exception of the last three sentences, the text of the letter was the same as that of the letter of February 20, which is printed on p. 605.