Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 2

756D.5 MSP/6–1952: Telegram

No. 205
The Acting Secretary of State to the Embassy in Indonesia

secret
priority

Washington, June 24, 1952—1:38 p.m.

1354. For Embassy and STEM.

1. Dept appreciates Ambs views re desirability clarification Amer econ aid situation Indo (Embtels 1809 and 1825).¹ As first step toward goal clarification, Dept concurs ur opinion that a note shld be presented to Indos. This note shld (a) explain legislative and administrative basis US tech and econ aid program to Indo; (b) arrange for mtg Amb and TCA Administrator to discuss subj with Indo officials; (c) on basis (a) and (b) elicit Indo views such aid. Nature further steps will be determined by Indo reactions to above.

2. In light of para 1 and for fol reasons, draft note submitted Embtel 1829² not considered suitable:

a. MSA act does not explicitly provide for transfer Indo AID program to TCA. Transfer is required by lapse of authority of ECA Act of 1948³ for programs other than in support of mil effort. Legislative history, especially House Report, makes clear Congressional intent is transfer program TCA.

b. Indo Govt (as distinct Indo press) has not to Dept’s knowledge questioned econ and tech aid program. Approach made by Ali re sec 511 was in terms possible request for Burma formula 511 (b) which wld cover econ and tech aid.

c. No new program is inherent in MSA–TCA transfer and Indo Govt aware of this. Holdup of TCA aid wld probably be considered as penalty for Indo difficulties under sec 511 and not as routine requirement US law.

d. Relationship shld be understood between over-all Mutual Security Program and specific programs under Act for Internatl Development (AID).⁴ Latter is basic legis under which TCA operates. Mutual Security Acts 1951 and 1952 in part modified AID and authorize appropriations for AID but do not supersede it. Mutual Security Acts are omnibus fon aid legis including mil and econ aid and even US contribution to UN technical assistance. Of course, assurances under sec 511 (b) of MSA required for extension aid by TCA. Assurances under 511 (a) needed if mil grant aid also extended. (For urinfo it shld also be noted, for sake completeness rather than because of any proposed application to Indo, that new law provides that up to $20 million to individual country and not exceeding $100 million globally may be extended by US without regard to conditions of eligibility Mutual Security and underlying Acts, e.g. need for obtaining sec 511 assurances, shld the Pres determine that such is important to security of US.)

e. Objective of AID as stated secs 402 and 403 is to promote “econ and social progress”. To this purpose Mutual Security Act 1951 (sec 2) adds objective “to maintain security and to promote fon policy of US”. MSA objective shld of course not be disguised, but it shld not be overemphasized at risk of obscuring AID objective in Indo.

f. Dept does not wish at this stage express to Indos any Amer attitude re AID program other than factual exposition legislative and administrative basis thereof. Neither does Dept wish at this stage use tactics suggesting deadline.

3. Emb shld present note FonOff along fol lines:

“MSA Act of 1952 was signed by Pres June 20 and became effective that date. Under this legis auth contained in Econ Coop Act of 1948, as amended, under which Mutual Security Agency has been operating in Indo and Burma terminates as of Jun 30, 1952. (This decision in accordance sec 503 Mutual Security Act approved Oct 10, 1951.) Thereafter Mutual Security Agency can administer only programs of econ assistance which are designed to sustain and increase mil effort in countries receiving US grant mil assistance or which are necessary to carry out mutual defense programs. However, Govt of US is prepared to continue making available to Indo technical aid for econ development under Act for Internatl Development which is administered by the Technical Coop Admin (TCA). Accordingly TCA has been authorized to administer the program of technical and econ coop with Indo. TCA is the agency which carries out so-called US Point Four Program throughout world and is already administering technical coop assistance programs throughout Near Eastern Asia, Africa, Latin Amer and Southern Asia, including such countries as India and Pakistan. No basic changes anticipated in nature Indo program.

“In opinion of US Govt the Econ and Technical Bilateral Agreement of Oct 16, 1950 with Govt of Indo wld be adequate to cover the extension of technical aid by TCA. No new bilateral agreement wld be necessary.

“The Hon Stanley Andrews, Administrator of TCA, is expected to arrive in Djakarta shortly after Jul 1. At that time Amb of the US wld request opportunity, together with Administrator, of reviewing with Indo Govt US econ and technical grant aid to Indo and of discussing the views of the govt of Indo re nature and scope of the program of TCA from July 1, 1952 to June 30, 1953. The Amb and Andrews will at same time be pleased to answer any questions which may assist in clarifying for Govt of Indo the administrative and legal factors affecting a program of econ and technical assistance administered by TCA, as well as any question re the nature of such a program.

“Govt of the US will appreciate a reply giving the views of Govt of Indo regarding the arrangements proposed above re Mr. Andrews visit.

“US Govt hopes this note together with conversations between Govt of Indo and Amb and Andrews will clarify for the Govt of Indo the administrative and legal changes in US administering auth, and will look forward to a reply by Govt of Indo expressing its views re a program of econ and technical assistance coop with Indo as administered by TCA.”

Specific objectives above approach (paras 1 and 3) to Indos at this stage are: (1) to clarify for Indo Govt legislative and administrative status econ and technical aid program; (2) to clarify for US Govt Indo Govt’s attitude toward this program, as step toward assessing program’s value to US policy vis-à-vis Indo; (3) to gain this mutual clarification in manner calculated not to embarrass non-Commie Indo Govt, and to give both Govts dignified opportunity to consider whole question Amer aid; (4) we wish avoid any connection in minds of Indos between formal transfer of program from MSA to TCA and any showdown on Indo attitude toward aid from US.⁵

Bruce

1. Telegram 1809 is printed supra. Telegram 1825, June 19, again urged the Department of State to approve sending to the Indonesian Government a note along the lines suggested in telegram 1809. (756D.5 MSP/6–1952)

   In a memorandum of June 20 to Allison, Samuel T. Parelman, Special Assistant to Allison for Far Eastern Regional Programs, made the following comment regarding telegram 1809:

   “It is my humble view that the transmittal of a note to the Indonesian Government along the lines contained in the suggested note from Djakarta could result only in achieving the crystal clear objective of the Ambassador, ‘the natural death of the program’.

   “I do not see why the Ambassador finds objectionable a United States decision to keep the program going. I think that the Ambassador is confusing the antagonisms which have arisen between himself and portions of the government with a view that this represents basic antagonisms between the Indonesian Government and the United States Government on the issue of the continuation of an economic assistance program.” (756D.21/6–1652)

2. Not printed. The draft note follows the outline of telegram 1809. (756D.5 MSP/6–2052)
3. 62 Stat. 137.
4. Approved June 5, 1950; 64 Stat. 204.

5. On June 30, Ambassador Cochran informed the Department of State that he personally handed to Foreign Minister Mukarto on that day a note based on telegram 1354. (Telegram 1866; 756D.5 MSP/6–3052)

   On July 3, Acting Secretary Bruce sent the following letter to Ambassador Cochran:

   “As you know from a recent telegram from the Department, Stanley Andrews plans to be in Djakarta early in July. You are also aware, I am sure, that the Department succeeded in retaining responsibility for the Point 4 program in the face of considerable opposition in Washington. In his capacity as Director of TCA Mr. Andrews has the full authority of the Secretary on matters relating to Point 4 and will wish to discuss the Indonesian program with you. I know that you will give him your wholehearted cooperation and the benefit of your judgment.

   “Since this program is one of technical assistance, the Department has assumed full responsibility as of July 1. We in the Department are aware of the fact that you had certain reservations about the aid program as previously carried out by the Mutual Security Agency. I know that you and Mr. Andrews will be able to resolve any remaining reservations which you may have, so that there may be a complete meeting of minds and basic agreement with regard to this future program. The Secretary and I count upon you to assist in every possible way.

   “I had hoped that this letter would reach you before Mr. Andrews arrives, but I find that the pouch schedule is such that this is impossible. I have, therefore, asked Mr. Andrews to hand it to you, in order that you may receive it when he is in Djakarta.” (856D.00 TA/7–352)