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

151. Telegram From the Embassy in Indonesia to the Department of State¹

Djakarta, April 18, 1956—4 p.m.

2541. Reference: Deptel 1860.² Last September Foreign Minister previous Government told me officially Indonesia was prepared in principle request United States economic assistance and asked what steps government should take (Embtel 633, September 13³). Department s reply (Deptel 511) was given government through Dr. Utoyo Ramelan on September 30 (Embtel 787⁴). Since then signature PL 480 agreement is in fact partial fulfillment Indonesian economic aid requirements. No further approaches have been made by Indonesian Government, however, on additional economic aid nor have discussions along lines paragraph 3 Deptel 511 taken place, apparently because Indonesians not clear amount aid they desire. Postponement discussions may have resulted also from desire former government await outcome national elections, establishment new government based on elected parliament, and from delay adoption 5-year plan.

Recent developments however would seem indicate that subject may be raised by present government. Prime Minister Ali in April 9 policy statement to Parliament referred specifically to United States aid and welcomed economic assistance from whatever source (Embtel 2451⁵). Planning Minister Djuanda has also recently intimated in conversations with USOM director⁶ government’s intention request aid from United States in implementation 5-year plan which is expected to be considered by Parliament shortly. Indo press has discussed probability approach by Djuanda during Sukarno’s trip to United States to Ex-Im and World Banks on funding Indonesian 5-year plan. As a result of recent Soviet offer (Embtel 2450⁷) press has also been carrying on active discussions re need economic aid and sources from such aid may be expected.

In view above I believe it likely Indo Government may soon approach US again on economic aid. There have also been reports that President Sukarno may raise question during his forthcoming trip to United States. Although in my opinion we should not allow ourselves be placed in position of creating impression that because of Soviet offer we now ready extend economic aid Indonesia or that we prepared outbid Soviets I believe it would be wise if we were fully prepared for prompt action if approached. We should assume that general request has been tabled and replied to affirmatively and that matters for discussion are those listed [third?] paragraph Deptel 511. Should Djuanda or others in Sukarno group during latter’s forthcoming visit be prepared speak in specific terms on kind and magnitude aid desired, we should give consideration to jointly announcing decisions reached during or at end Sukarno visit. (This would give him some bacon to bring home compensating for inability obtain United States support Irian question.)

I am seeing Prime Minister Friday⁸ morning for first official call since he assumed office. It is possible he may raise subject economic aid with me. On other hand should he not, it may be desirable for me, referring to our discussions with previous government and current public discussions of subject, to leave with him impression that whenever Indonesian Government wishes we are prepared proceed to explore informally Indo economic requirements in line with Deptel 511, and our statements to Utoyo Ramelan last September (Embtel 787). Would appreciate Department’s instructions what line I should take with Prime Minister when I see him.⁹

Cumming

1. Source: Department of State, Central Files, 856D.00/4–1856. Secret; Priority.
2. Telegram 1860 to Djakarta, April 12, stated that it was U.S. policy to help Indonesia solve its economic problems and counter attempted Communist economic penetration by being prepared to provide economic assistance, when requested, for programs that would serve those purposes and when conditions were favorable. The telegram requested the Embassy’s estimate of present conditions. (Ibid., 856D.00/4–1056)
3. See footnote 2, Document 116.
4. See ibid. and footnote 3 thereto.
5. Telegram 2451 from Djakarta, April 10, reported Ali’s statement. (Department of State, Central Files, 656.56D13/4–1056)
6. James C. Baird, Jr.
7. Telegram 2450 from Djakarta, April 10, reported that the Soviet Ambassador to Indonesia announced that day that he had submitted a proposal for Soviet economic aid to the Indonesian Government. (Department of State, Central Files, 856D.00/4– 1056)
8. April 20.
9. Telegram 1921 to Djakarta, April 19, instructed Cumming to tell Ali, if the latter raised the question of economic aid, that the United States was willing to explore Indonesian aid requirements informally and sympathetically and recommended that Cumming should not take the initiative in raising the issue, since Ali appeared to be aware of the U.S. position. It stated further that U.S. policy was to keep state visits disassociated from any extension of economic aid and therefore no announcement of aid could be made during or as a result of the Sukarno visit, but U.S. representatives would be willing to discuss the Indonesian economic situation informally at that time with Djuanda or other Indonesian representatives. (Department of State, Central Files, 856D.00/4–1956) Telegram 2580 from Djakarta, April 21, reported that Ali told Cumming that morning that he would like to discuss the general subject of economic aid at a future date and that Cumming had replied that he would be glad to explore the subject with him informally and sympathetically. (Ibid., 856D.00/4–2156)