162. Telegram From the Embassy in Indonesia to the Department of State1
3325. Subject: Economic Aid. Since return Djakarta I have felt uncomfortable about situation which seems be developing here with regard economic aid with possibility that we may be maneuvered into awkward position: On one hand, local press and conversations with individual Indonesians are replete with news or rumors Soviet bloc economic aid offers. Czech credit agreement, Soviet, East German and Rumanian credit offers and proposed July visit Soviet trade mission all receiving heavy publicity and subject considerable comment, much of which considers such offers welcome and acceptable in principle.
On other hand, although piecemeal approaches have been made to Baird on individual projects and we know Indonesians planning explore near future possibility increased Export Import Bank credits (my telegram 28362), there is general unawareness here that I told Prime Minister as long ago as April 21 (my telegram 25803) we stand ready informally explore general subject economic aid any time Indonesians ready. For example, during conversation with Foreign Minister at Salt Lake City June 3 when he raised question of economic aid he was not aware until I told him that with approval of my Government I had already made Ali offer to discuss.
Although I have in mind and generally agree with Department’s desire preserve tactical advantage by not taking any initiative in raising [Page 281] issue of economic aid (second paragraph Deptel 19214) and am of course aware Washington legislative situation, I am concerned lest inactivity our side as well as Indonesian side in face Soviet aggressiveness jockey us into very position which I believe we should try avoid, namely, that of competing with Soviet bloc offers. Accordingly, during my call on Prime Minister June 26 I raised question indirectly by relating to him my conversation with Foreign Minister at Salt Lake City of which I knew through Subandrio he already aware. I was struck by his complete silence on this subject as well as to my efforts draw some comment from him on rumors of Soviet aid offers. Yesterday during conversation with Vice President he mentioned his “fear” that Soviets “were about to make” extensive aid offers which Indonesians would find tempting. He mentioned especially fields of communications including road construction. I took opportunity tell him of above-mentioned conversation with Ali. Hatta did not give me any further information regarding Soviet offer but attached considerable importance to Ali’s failure follow up my offer of April 21 and said he would look into this next week after Sukarno returns.
While I wish avoid indicating to Indonesian Government officials undue interest in or concern regarding Soviet bloc activities in direction economic aid lest I arouse their blackmailing instincts, I thought it wise suggest to Baird that he seek early interview with Djuanda and if Djuanda gives him opening perhaps through further piecemeal approaches on individual projects, he mention my previous offer to Ali discuss aid informally in effort to obtain some insight into reasons for publicly expressed official interest in Soviet offers coupled with lack of response privately to our offers. While of course there have been some rumors of American aid offers (my telegram 32775), these rumors do not approach in volume stories of Soviet bloc offers.
- Source: Department of State, Central Files, 856D.00/6–295. Secret.↩
- Document 155.↩
- See footnote 9, Document 151.↩
- See ibid.↩
- Telegram 3277 from Djakarta, June 26, quoted a press report from Washington that U.S. economic aid to Indonesia would total $35 million during the coming fiscal year. (Department of State, Central Files, 756D.5–MSP/6–2656)↩