Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

116. Telegram From the Department of State to the Embassy in Indonesia¹

Washington, September 23, 1955—6:15 p.m.

511. Joint State/ICA message. Your 623.²

1. You authorized reply Indonesian Government that U.S. willing sympathetically explore on informal basis Indonesia’s requirements for economic needs. Agree no formal notes desirable at this time. Exploratory talks should examine interests and objectives mutually held by U.S. and Indonesia to which any U.S. assistance would be related.³

2. Foregoing based on assumption general order magnitude Indonesian needs approximately that set forth your 512⁴ and that total requirements U.S. aid for remainder this fiscal year will not exceed $30 million of which greater part could be provided through negotiation of surplus agricultural commodity agreements as recommended your 512. As stated Department’s 456,⁵ U.S. prepared open negotiation shortly with Indonesia on PL 480 agreement. We assume this would meet great part immediate Indonesian needs. FYI we also prepared consider PL 480 program of greater magnitude than outlined Indonesian note July 12⁶ if larger program can be worked out satisfactorily.

FYI some modest amount of appropriated funds might also be found to be available as a supplement to round out this fiscal year program. In view of general fund shortages however it would be essential that this amount be kept to an absolute minimum consistent with our objectives Indonesia. Any large scale program involving as much as $50 to $60 million within a single fiscal year would have to await submission to and approval by Congress. Accordingly, U.S. consideration provide supplemental assistance to Indonesia this fiscal year would necessarily have to be without commitment regarding magnitude of aid in future years.

3. View above Indonesia should understand that although U.S. is willing enter discussions with serious interest Indonesia’s needs, sympathetic review situation by U.S. cannot imply commitment particularly re congressional authorization. First step would be determine reasons and need for any aid request, fundamental problems toward which proposed aid would be directed, related Indonesian measures to assure effectiveness U.S. assistance and estimated magnitude and types projects involved.

4. You may commence such informal discussions with Foreign Ministry at your discretion.

5. FYIPL 480 assistance would not involve renewed signing assurances of type required January 1952.⁷ Neither would such assurances be required for assistance given under MSP authority other than Title I Mutual Security Act, e.g. Title II.⁸ However if Title I assistance contemplated in future, assurances would be required unless waived by President. Assume Embassy continuing review outlook Indonesian Red China trade and evaluating prospects any future Battle Act⁹ complications.

Dulles

1. Source: Department of State, Central Files, 756D.5–MSP/9–1355. Secret. Drafted in PSA and ICA; approved in FE; cleared with E,ITR, L, PSA, ICA, and the Department of Agriculture.
2. Telegram 633 from Djakarta (received through an error in transmission as telegram 623), September 13, reported that Anak Agung had told Cumming that Indonesia was prepared in principle to request U.S. economic assistance. (Ibid.)
3. Telegram 787 to Djakarta, September 30, reported that Cumming had conveyed the contents of paragraphs 1 and 3 of this telegram to Utoyo Ramelan, Chief of the Economic Division of the Indonesian Foreign Office. (Ibid., 756D.5–MSP/9–3055)
4. Telegram 512 from Djakarta, August 26, recommended the initiation of a program of economic assistance to Indonesia, with an estimated annual cost of $60 million. (Ibid., 756D.5–MSP/8–2655)
5. Dated September 16, not printed. (Ibid., 411.56D41/9–1655)
6. See footnote 4, supra. The note stated that the Indonesian Government envisioned purchasing commodities up to a value of $48 million over a 2-year period. Telegram 561 from Djakarta, September 2, reported that the Indonesian Government was considering increasing its request to as much as $200 million. (Department of State, Central Files, 856D.2317/9–255)
7. Reference is to an agreement effected by an exchange of notes signed at Djakarta, January 4 and 5, 1952, in which the Indonesian Government gave certain assurances required under the Mutual Security Act of 1951 of countries receiving U.S. military assistance. It was terminated by an exchange of notes signed at Washington and Djakarta on January 5 and 12, 1953. For texts of both agreements, see 4 UST 18.
8. Title I, “Military Assistance,” and Title II, “Development Assistance,” of the Mutual Security Act of 1954, as amended.
9. The Battle Act, or the Mutual Defense Assistance Control Act of 1951, approved October 26, 1951, forbade U.S. assistance to countries shipping strategic goods to Soviet-dominated areas; 65 Stat. 644.