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

1518. Manila for MLG, also pass 13th AF. Department pass CINCPAC for POLAD. Prime Minister Djuanda saw me this morning in company with Foreign Minister Subandrio for about one hour. Following are points made with specific relation to present anti-Dutch activities. During this discussion I mainly played role of listener.

There will be no immediate mass expulsion of Dutch from Indonesia. Djuanda and Subandrio recognize necessity of keeping economy of country going and necessity of retaining many Dutch experts. However it is firm government policy to speed up replacement of Dutch by Indonesians and to break stranglehold of Dutch on Indonesian [Page 540] economy. Djuanda pointed out that previous agreement with BPM, for example, called for two-thirds staff to be Dutch and one-third other nationalities including Indonesian. This would be reversed with Indonesians having two-thirds staff.
Take over of KPM banks and Dutch estates (this just announced this morning) by government is for purpose of conserving them, keeping communications open and containing [continuing?] production. There has been no confiscation or nationalization. Earnings have been frozen but this is question open to negotiation at proper time.
Strict orders have been given and will be enforced, that human and property rights of individual Dutchmen, as well as all foreigners, must be respected. Djuanda said there had been agitation for closing of all Dutch schools but he had ruled against it, as he said Dutch children had nothing to do with dispute between the two governments and as long as they were in Indonesia they should have right to go to school. He admitted with regret that excesses had been committed but expressed belief that worst was over and that matters are now under control. (This remains to be seen.)
Press stories of Dutch warships in Indonesian waters most disturbing. This only added fuel to fire, did no good, and makes it increasingly difficult for moderates in government to exercise influence.
Public statements by Dutch Ambassador van Roijen in Washington personally attacking President Sukarno most unhelpful and in Indonesian opinion, with which I agree, comes close to violating diplomatic hospitality.
Still not too late for overall negotiations to take place which could reverse present trend. However, time was running out and if something not done soon, extremists would carry the day. Indonesia could not be expected to take initiative as she had already done so too many times. Forcible outside intervention would do more harm than good. Appeal by friendly power to both Netherlands and Indonesians to come together and talk might be effective. Djuanda referred to his known record for moderation but said he was convinced his government could not do otherwise than it was. He recognized that if negotiations did not take place and Indonesians went ahead with their present program considerable suffering would ensue. He recalled in this connection that in 1945 and in subsequent Dutch police actions, Indonesians, relatively speaking, were armed with spears against cannon and yet had won out. If necessary, in the economic field, they were prepared to go through a similar phase and in the long run he was confident of success.

Comment: These were two worried but determined men. They hope to keep things under control but have no intention of reversing [Page 541] the trend unless some indication that Dutch will talk. They definitely would welcome US intervention, addressed to both sides, but if this not forthcoming they are prepared keep ahead and, if need be, go down with the ship.

  1. Source: Department of State, Central Files, 656.56D/12–1057. Confidential. Repeated to Canberra, The Hague, and Manila.