Office of the Historian

141. Telegram From the Department of State to the Embassy in India1

Washington, March 9, 1956—7:20 p.m.

Tosec 50. Netherlands Ambassador who called today on several matters expressed misgivings designation Ali Sastroamidjojo as new Indonesian Prime Minister2 and discussed Indonesian unilateral abrogation of Roundtable economic accords.

Regarding Ali, Ambassador feels that new Government will feel compelled to be even more nationalistic than last and that it will eventually accept PKI support. Hence anticipated orientation of Indonesian Government is cause for grave concern not only to Netherlands but to all Western Powers.

Unilateral abrogation of Roundtable agreements leaves no protection for foreign investments since there is no adequate domestic legislation concerning it. Netherlands Ambassador suggested it would be appropriate for us to inquire, in light of abrogation of Roundtable accords, what protection in legislative field now exists or is contemplated for American investments. Finally Van Roijen expressed hope that Secretary while in Djakarta3 would neither by commission nor omission give Indonesians impression, on which they might subsequently trade, that US approves of unilateral abrogation of international treaties.

Regarding alleged privileged position of Netherlands Government in Indonesia Netherlands Ambassador said that this derived from two provisions in Roundtable settlements: 1) Indonesian Republic assumed some of debt obligations in Indonesia to Netherlands and 2) that Netherlands Government be consulted before there any change in rate of exchange of Rupiah. Beyond this Dutch investors have had no privileged position. Van Roijen referred to Indonesian note to UN February 284 which indicates in paragraph 12 Dutch investment will receive same treatment as other foreign investment. Netherlands Government van Roijen said would be satisfied to continue receiving most-favored-nation treatment for its investments and expressed hope US would take formal notice either in UN or in [Page 238] discussions with Indonesians of these assurances in Indonesian note to UN.

Hoover
  1. Source: Department of State, Central Files, 756D.00/3–956. Confidential. Repeated to Djakarta and The Hague. Drafted in WE, cleared with PSA and FE, and approved in EUR. Secretary Dulles was in New Delhi after attending the SEATO Council meeting in Karachi.↩
  2. The Harahap Cabinet resigned on March 3; on March 8, President Sukarno asked Ali to form a new Cabinet.↩
  3. secretary Dulles was scheduled to arrive in Djakarta on March 12.↩
  4. Not further identified.↩