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

493.56D9/7–554: Telegram

No. 277
The Secretary of State to the Embassy in Indonesia

secret

Washington, July 9, 1954—8:31 p.m.

39. Department troubled by Ali statement your 27¹ he would find difficult believe we would not exercise discretion he thought permitted by Battle Act. If statement not directly denied, Indonesians may assume silence is agreement and proceed shipment untroubled by possible U.S. reaction. If we were grant Indonesians exception after first bringing great pressure avoid shipment, Indonesians will regard U.S. as having been bluffing with consequent great damage U.S. prestige and adverse effect on future U.S. representations other subjects:

Question application Battle Act this instance is without clear precedent since this would be first violation UN embargo. U.S. has not terminated aid any country because Battle Act violation. Previous exceptions granted pursuant Section 103(b) involved trade European Communist countries.

Consideration further complicated by facts:

(1) Rubber not explicitly included UN resolution (and is only Title II Battle Act Commodity) and Indonesia could technically avoid violation by withdrawing its certification to UN of rubber as commodity falling under embargo. At time certification Indonesians reserved right revise list of items; and

(2) Difficulty convincing Asians that maintenance CHINCOM controls fully justified despite probable relaxation COCOM controls.

To considerable extent however U.S. decision on present case would involve question U.S. objectives Indonesia. Accordingly in order assist evaluating action U.S. should take in event rubber shipment made Communist People’s Republic, Department would appreciate your views and your estimate of:

(1) Likely extent further deterioration Indonesian economy reported your 31² and political implications thereof;

(2) Possibility internal pressures caused by such deterioration would bring in even less friendly government;

(3) Possibility additional U.S. aid might help forestall this contingency; and

(4) Effect invocation Battle Act might have increasing likelihood unfavorable developments under (2) above by increasing pro-communist influence while same time preventing U.S. from ability resort possibility (3).

Also desire political estimate whether invocation Battle Act would strengthen Ali in Parliament and increase Communist influence or cause fall cabinet with (a) Sukarno naming Executive Cabinet or succession by (b) less-friendly parliamentary cabinet or (c) more friendly parliamentary cabinet.

If in your opinion Indonesia irrevocably committed Pulaski shipment to Communist China do you believe possibility they would be prepared give commitment that no shipments beyond that of Pulaski would be made.

In response Indonesia’s suggestions that U.S. might exercise discretionary authority under Battle Act you may wish make clear it is mandatory under the law take such action as is necessary carry out the intent of Congress.

Dulles

1. Supra.

2. Dated July 6; it concludes as follows:

   “Unless country can further pare budget expenditures, organize move effectively against corruption and smuggling, cease special import and export permits, worsened exchange position could effect such reduction foreign trade as to threaten internal financial stability and major segments of country’s economy.” (856D.10/7654)