856D.00/3–2051
Memorandum of Conversation, by the Deputy Director, Office of Financial and Development Policy (Corbett) to the Director, Office of Financial, and Development Policy (Stinebower) and to the Assistant Secretary of State for Economic Affairs (Thorp)
Subject: Economic Aid Program for Indonesia.
The following attended a meeting in Mr. Rusk’s office today to discuss an economic aid program for Indonesia for 1952:
| ECA | —Mr. Allen Griffin |
| Mr. Harlan Cleveland1 | |
| State | —FE—Mr. Rusk |
| PSA—Mr. William Lacy | |
| PSA—Mr. Charles Shohan2 | |
| PSA—Mr. James O’Sullivan | |
| OFD—Mr. Jack C. Corbett |
The ECA representatives raised objections to the attitude taken by Ambassador Cochran regarding the program of technical assistance and economic aid recommended by Mr. Harris, the recent appointee as STEM Chief. They felt that the Ambassador had personal reasons for objecting to this program and had therefore not given the matter fair consideration. They recognized that it was within the competence of the Ambassador and the Department to object to the ECA program but they felt that such a negative approach was not the most effective means of fighting communism in Indonesia and bringing the Indonesians to our side. They pointed out that Ambassadors in other countries had accepted and concurred in the programs recommended by ECA and it struck them as odd that only one had found grounds for objection. Neither Mr. Griffin nor Mr. Cleveland believed that the program recommended by Ambassador Cochran—$2½ million for technical assistance plus $7½ million in reserve as a loan—was in fact a program. They did not believe that technical assistance would be effective unless accompanied by the necessary capital goods and equipment and they did not believe it desirable to ask Indonesia to borrow money for this purpose.
Mr. Rusk and Mr. Lacy outlined at some length the history of our relations with Indonesia and the record of Ambassador Cochran in that country. They saw no reason to question his judgment in this matter and, in particular, praised his wisdom in recommending that the Indonesians be left to handle migration problems from Java to other parts of Indonesia. It was pointed out that this was politically a most difficult operation and the U.S. would be well-advised to stay on the sidelines. Mr. Lacy did not question the fact that Mr. Harris could have gotten the impression that the Indonesians were very desirous of the technical assistance program but he pointed out that the Indonesian officials have widely varying views on the acceptability of U.S. aid at this time. Mr. Rusk asked the ECA representatives if they felt there was a vital difference between the programs recommended by Ambassador Cochran and Mr. Harris. The ECA representatives responded that their program was marginal at best; they did not feel the program of the Ambassador would even operate effectively in the margin available to us.
Mr. Harris is returning from Indonesia this week. It was agreed that no attempt would be made to resolve this problem pending his [Page 625] arrival. All agreed that it would be impossible to go to the Budget Bureau with a 1952 program for Indonesia at this time. There was no disagreement on the 1951 program for Indonesia.