239. Telegram From the Embassy in Indonesia to the Department of State1
139. Following are principal points of general interest covered in hour-long talk yesterday evening with Prime Minister Djuanda.
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National Council:
While Djuanda admitted differences with President Sukarno over council he said President had adopted a give-and-take attitude. Most important was admission by President that establishment of [Page 398] National Council was “an experiment” and that it was not of necessity permanent. Whether or not National Council would survive depended upon (1) how it governed its relations with the Cabinet and (2) decision of Constituent Assembly on whether it should be continued or replaced by a Senate. Djuanda apparently favors the creation of a Senate. Prime Minister was again most definite that council only had advisory powers. According to Time correspondent from Hong Kong who interviewed Djuanda earlier in day, Prime Minister had been most outspoken in his determination to keep council in its place.
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Constituent Assembly:
In response to question as to progress being made by Constituent Assembly, Djuanda said it did not have enough sense of urgency and was being too casual. However, it has reached one most important decision and while this has not yet been publicly formalized, Djuanda says it has been definitely agreed upon, namely, that Indonesia shall be a secular state.
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Provincial Problems:
Prime Minister confirmed Subandrio’s statement to me last week (Embtel 962) that situation in Sumatra showed glimmering of hope. He referred to fact that Sukarno intends shortly to visit Central and South Sumatra and he revealed that Nasution would shortly go to North Sumatra to negotiate for removal of both Gintings and Macmour whom he characterized as “weak man”. Removal of Macmour would, if achieved, be great blow to Communists in North Sumatra. Djuanda said Atjeh was quiet for first time in years and greatest problem was now the finding of jobs for the former guerrillas.
With respect to Sulawesi, Djuanda made clear that government does not intend at this time to take any drastic action against Sumual but will continue attempt by persuasion to reach solution. Prime Minister said that when government took step of removing Sumual from office and dividing Sulawesi into four commands it realized risk it was taking and was not surprised at subsequent action of Sumual. Alternatives were to do nothing or to attempt by force to settle matter and either of these courses would have produced worse results than one followed. Djuanda said Sumual is an honest man but is too young and naive politically and economically to cope with the people who are profiting from present situation and who are using Sumual. Djuanda said government was sending mission to North Sulawesi (announced in this morning’s press) which includes Justice Minister, Industrial Affairs Minister, Ambassador to Canada Palar and former Ambassador to Peking Mononutu, all of whom come from North Sulawesi. In addition Djuanda revealed that Christian [Page 399] Church circles in Sulawesi were also being called upon to see [use] their good offices. Djuanda hinted strongly that if these efforts failed economic sanctions would be used to bring Sumual into line. Use of military force is not contemplated as of now.
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Economic Matters:
Djuanda expressed considerable satisfaction at results being achieved by new exchange regulations. He said that report yesterday morning by Monetary Board showed that exports were averaging rupiahs 30 million a day whereas prior to institution of regulations they had sunk to rupiahs 5–6 million. While admitting that import prices had risen he claimed that if new regulations had not been instituted it would have been necessary to limit imports so severely that prices would have gone up anyway for such imported goods as were available. Overall result from point of view of Indonesian Government is therefore good.
Djuanda confirmed that Soviet loan is entirely for economic projects. He said it was almost exactly like line of credit US Export-Import Bank had granted and that money would be used only as projects approved. Credits granted will only be for foreign currency components of approved projects and Indonesian Government will have to provide rupiah expenses. This will limit use of the loan and Djuanda apparently does not anticipate great influx of either Soviet money or technicians.
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Conclusion:
While Embassy has had several reports that Djuanda is discouraged and ready to quit, nevertheless throughout conversation he appeared to have no doubts about ability of his Cabinet to remain in office at least for next few months. He did not ignore the great difficulties facing the government but appeared confident that with patience and good will they could be met. He is not working for quick or dramatic solutions but is hoping that by concrete practical measures the provinces can be convinced that their best interests will be served by cooperating with central government. He reaffirmed specifically that his goal was to bring Sukarno and Hatta together again but admitted this would not be realized in near future. He admitted dissatisfaction at results of his attempts to bring the army under effective discipline but said he was not giving up on this. In this connection he hopes to be able within two or three months to make a start, first in Kalimantan then in East and Central Java, at abolishing state of war and Siege. He wants to do this soon as possible so that military attention can be confined to military matters and taken away from political and economic affairs for which they have little training or ability.
Djuanda is most impressive and I hope he will be given time and opportunity to implement his ideas. Only question still is, will Sukarno [Page 400] give him that chance, or if not, will Djuanda have strength to oppose President? It is not at all certain that he will.