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

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

Washington, March 10, 1956—3:48 p.m.

1589. Your 1312.² As reviewed during your consultation, Secretary requested Defense explore legal and practical possibilities supply Indonesian Regimental Combat Team on credit basis.³ Department noted following possibilities credit: (a) establishment of eligibility by certain minimum assurances under Section 106 MSA as amended via (1) sales based on credit up to three years in amounts available from military services or (2) on transfer under Section 103c MSA through loans up to 10 years to extent Defense could reallocate appropriated funds; or (b) without legal necessity any specific assurances, subject Presidential determination, up to $20 million any approved terms under Section 401. Departmental view was no attempt ought to be made utilize Section 401 until attempt made obtain Indonesian assurances for other eligibility.

Defense now prepared sell desired equipment to Indonesia “for cash” under Section 106 if Indonesia becomes eligible by giving necessary assurances or by Presidential determination exempting Indonesia such assurances. Unable indicate what amounts could be handled on credit terms lacking list specific equipment required, but would consider further upon submission. Also indicates “furnishing equipment to Government Indonesia for Regimental Combat Team is not considered project sufficient military priority warrant use limited MDAP appropriations finance long term credit under Sections 102 and 103c even if Indonesia became eligible.”⁴

Department will not take matter up with Ambassador or Military Attaché Washington, despite their optimistic interest months ago, until you advise whether feasible now encourage Indonesia submit assurances in form unilateral declaration or otherwise. Request your views soonest whether (a) any hope getting formal program through with assurances or (b) you believe consideration should be given seek Presidential determination for funds under Section 401.

Hoover

1. Source: Department of State, Central Files, 756D.5/12–255. Secret; Limit Distribution. Drafted in PSA, approved in FE, and cleared with U/MSA.
2. See footnote 5, Document 130.
3. See footnote 6, ibid.
4. The Department of Defense reply was conveyed in a letter of March 2 from Gordon Gray to Secretary Dulles, not printed. (Department of State, Central Files, 756D.5–MSP/3–256)