Memorandum by the Director, Office of Philippine and Southeast Asian Affairs ( Lacy ) to the Assistant Secretary of State for Economic Affairs ( Thorp )


Subject: Indonesia’s Political Position

1. I enclose as requested a selection of telegrams (and one despatch) from our Embassy at Djakarta bearing on Indonesia’s political position in relation to the United States and to Communism, with particular [Page 598] reference to the resultant Indonesia attitude on US economic aid.1 Since some of these enclosures are lengthy, an effort has been made to outline in ink the most important sections.

2. In the approximate fourteen months of Indonesia’s independent existence the dominant characteristic of its foreign policy has been “neutrality” in the East-West conflict. As pointed out in Djakarta’s despatch 560, Indonesian labor, youth and the Indonesian press has shown a marked drift toward the left. The Army, called upon to take action equally against Communist and fanatic Moslem groups, is avoiding committing itself on general issues. Government officials and intellectuals are split. Speaking generally, many Indonesians appear to believe that Indonesia has less to fear from Communism than from American efforts to combat Communism.

This attitude has shown itself specifically in Indonesia’s lack of readiness to accept American technicians and economic aid, as mentioned in the attached telegrams. Parliament approved the Exim Bank loan on November 2 by a vote of 90 to 17 (with 50% of the members abstaining), but has so far failed to take any action on ratifying the US–Indo economic bilateral agreement.2

In the face of this attitude, and cognizant of the very real internal difficulties faced by the Indonesian Government, we have attempted to pursue a policy of patience and perseverance. This continues to be our policy, although at the moment we consider it necessary to apply more pressure in order to make the Indonesians realize that friendship between nations must be a two-way relationship.

  1. The eight telegrams and one despatch attached to this memorandum are not here printed. The telegrams from Djakarta were as follows: No. 545, October 20, 1950; No. 594, October 31, 1950; No. 604, November 3, 1950; No. 896, January 8, 1951; No. 1002, January 26, 1951; No. 1032, February 3, 1951; No. 1061, February 10, 1951; and No. 1083, February 14, 1951. The despatch was No. 560, January 19, 1951.
  2. The reference is to the ECA agreement signed at Djakarta on October 16, 1950. See footnote 2, p. 594.