Office of the Historian

166. Memorandum From the Assistant Secretary of State for Far Eastern Affairs (Robertson) to the Acting Secretary of State1

Washington, July 27, 1956.

SUBJECT

  • Indonesia’s Request for U.S. Economic Aid

A. Problem:

What action should the U.S. take to meet the Indonesian request for additional U.S. economic assistance?

B. Discussion:

The purpose of this memorandum is to obtain your approval in principle for a larger economic aid program in Indonesia and to initiate action to ensure funds for such a program. (See Tab A for NSC Action.)2

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Although the Communists were successful in obtaining 16 percent of the vote in the Indonesian election this spring, the picture in Indonesia is more favorable in terms of U.S.-Indonesian relations than it has been for some time. The Indonesian Government, following President Sukarno’s visit to the United States, is finally turning to the United States for developmental assistance. The Foreign Minister raised the question of additional U.S. aid with our Ambassador at the end of President Sukarno’s visit to the United States, and the Prime Minister followed up this exploratory conversation after Ambassador Cumming’s return to Djakarta. (Embtel 41—Tab C.3) Our Ambassador has been instructed to delay the negotiations pending Congressional action and determination regarding additional funds for Indonesia. (Deptel 26—Tab D.4) President Sukarno will visit the Soviet Union and Communist China in August and we believe it important for the United States to be responsive to Indonesia’s request for assistance prior to these visits.

C. Recommendations:

It is recommended that you

1.
Approve in principle developmental assistance loans of $25 million for Indonesia during FY 1957 in addition to the present program ($8 million for technical assistance and $4 million for the police and malaria control program) making a total program of $34 million for Indonesia.
2.
Sign the attached memorandum to Mr. Hollister (Tab B).5
3.
Authorize our Mission to commence negotiations with Indonesia as soon as fund availability has been established.6

  1. Source: Department of State, Central Files, 756D.5–MSP/7–2756. Secret.↩
  2. The tabs were not attached to the source text. Tab A presumably quoted paragraphs 17–a and b from NSC 5518 (see Document 95), as did tabs attached to draft memoranda of May 10 and June 13 from Robertson to the Secretary. The draft memoranda recommended providing to Indonesia $30 million in development assistance loans and $5 million in development assistance grants, in addition to $8 million for technical assistance, in fiscal year 1957. Both failed to receive clearance from all the interested bureaus, primarily on the grounds that Congress had not yet appropriated the money to finance such assistance. (Department of State, Central Files, 811.0056D/5–1056 and 811.0056D/6–1356)↩
  3. Telegram 41 from Djakarta, July 5, reported that Ali had expressed interest in discussing with Cumming, at a convenient time, the possibility of U.S. economic aid. (Ibid., 611.56D/7–556)↩
  4. Telegram 26 to Djakarta, July 5, informed Cumming to continue to express U.S. interest in Indonesian economic aspirations and needs and, for his information only, that every effort was being made to “ensure fund availability and obtain clear-cut decision soonest.” (Ibid., 856D.00/7–556)↩
  5. This memorandum, August 2, from Hoover to Hollister requested the latter’s views on the program recommended by Robertson from the economic standpoint and on the possibilities of financing such a program from fiscal year 1957 funds. (Ibid., 756D.5–MSP/8–256)↩
  6. There is no indication on the source text of Hoover’s approval.↩