Foreign Relations of the United States, 1958–1960, Indonesia, Volume XVII

138. Memorandum From the Assistant Secretary for Far Eastern Affairs (Robertson) to Secretary of State Dulles⁰

Washington, July 30, 1958.

SUBJECT

• Indonesia—U.S. Policy

A meeting is to be held in your office on Thursday, July 31, with representatives of Defense, JCS and CIA also present, to review our policy toward Indonesia and determine what our next move should be. The following comments and recommendations are submitted as a basis for the discussions at that time:

1. Tension between the United States and Indonesia has abated significantly since the decision on May 20 to encourage the anti-communist and pro-U.S. elements in the Army and Government.

2. During this period the Government of Indonesia has given evidence, both in word and in action, of a desire to improve relations with the U.S. and of its determination to take action against the communists. (Tab C)

3. The momentum has, however, slackened. Considerable impatience is developing due to the alleged lack of U.S. responsiveness. At the present moment we appear to be in a period of drift.

4. During this period it has again been demonstrated that (a) Sukarno is the key to the situation, (b) Sukarno believes the pendulum has swung too far to the PKI, and (c) the communists are the most serious threat to his position.

5. Also, during this period the anti-communist orientation of the Army has become more evident, and the PNI has moved as a party into active opposition to the communists.

6. There has been nothing to demonstrate that the dissident movement can exert any leverage on Djakarta. On the contrary, their continued activities result in greater economic and fiscal chaos, which serves the purposes of the communists, who take advantage of such conditions to increase their political power. The Government has been able to learn in great detail the source and scope of outside assistance to the rebels, on the basis of which it has made its charge of “foreign intervention”. Any encouragement to the dissidents from outside Indonesia would, in view of developments in the Middle East, be considered as “indirect aggression” and could lead only to further deterioration of the U.S. position.

Conclusion:

In light of the foregoing circumstances Ambassador Jones is convinced the time has come for the United States to strengthen the hand of the Indonesian Army. Admiral Stump has recommended we initiate shipment at once of a phased delivery of the $7 million arms package which has been held in readiness. He has also recommended that an officer be sent to Indonesia to coordinate this program with the Indonesians. Additional courses of action for which we recommend approval and progressive implementation are at Tab A. If the U.S. does not embark on a positive policy, our potential for influencing the situation will decline.

A more extended analysis of the Indonesian situation appears at Tab B.¹

Recommendation:

That you approve the courses of action at Tab A.²

Tab A³

POSSIBLE ACTIONS U.S. CAN TAKE⁴

1. Military.

a) Furnish token military aid—particularly to the Army—totaling about $7 million. CINCPAC strongly recommends this be done. CINCPAC also recommends that a senior officer be sent to Indonesia to coordinate such a program with the Indonesian Army.

b) Provide additional slots for Indonesian officers in U.S. military schools.

c) Agree to the use of counterpart funds for the construction of barracks for the Indonesian Army.

2. Aviation. Authorize the Embassy to resume negotiations with the Indonesian Government on a Civil Aviation Agreement. The Indonesians have recently indicated a desire to do so. This would also permit American carriers to discuss with Garuda possible assistance in the personnel and maintenance fields.

3. Shipping.

a) Explore ways in which the U.S. might be able to assist Indonesia in meeting the inter-insular shipping problem.

b) Furnish instructors, books and other training aids to the Indonesian Merchant Marine Academy in Djakarta.

c) Offer training to Indonesians in the State merchant marine academies in the U.S.

4. Licenses. Issue on a continuing basis licenses covering equipment, small arms and ammunition similar in type and quantity to those previously authorized.

5. EXIM Bank.

a) Withdraw our objections on political grounds to an Ex-Im Bank loan ($12 million) for three Commercial Lockheed Electra Turbo-prop Jets for Garuda, to be delivered in 1960.

b) Support an Indonesian application for financing the design and construction of a Urea Fertilizer Plant in South Sumatra ($36 million).

c) Consider with Ex-Im Bank the possible financing of power plants to be built by Westinghouse (which otherwise are expected to be financed and built by the Czechs).

6. Impact Projects.

a) Assistance to the IBU Sukarno Children’s TB Hospital, Djakarta, for the purchase of equipment ($1.65 million).

b) Consider the possibility of using IMG (Information Media Guarantee Agreement) counterpart funds for the construction of schools in Indonesia.

0. Source: Department of State, Central Files, 611.56D/7–3058. Secret. Drafted by Parsons and Mein.
1. See the Supplement for Tab B, entitled “Factors Affecting U.S. Policy,” and Tab C, “Attitudes Towards the U.S. and the West and Anti-Communist Actions and Statements.”

2. In a July 31 memorandum to Dulles, Herter stated that he had read the material provided by FE and INR and was “struck by the wide divergence in the interpretion of some of the factual material.” In view of this divergence Herter suggested that the Intelligence Community be asked to prepare a paper on the situation that Dulles should have prior to making the decisions recommended by FE. Herter also recommended that the July 31 meeting be postponed until after Dulles’ return from Brazil and the estimate by the Intelligence Community is received. (Eisenhower Library, Herter Papers, Miscellaneous Memoranda) Cumming’s intelligence summary, July 30, is attached to a memorandum from Cumming to Irwin, August 1. (Washington National Records Center, RG 330, OASD/ISA Files: FRC 64 A 2170, 092 Indonesia) See Supplement.

   On July 31 Robertson telephoned Dulles and mentioned that Herter wanted to put off the scheduled meeting on Indonesia until the following week. (Eisenhower Library, Dulles Papers, General Telephone Conversations) See Supplement.

3. Secret.
4. Dulles approved these courses of action at the August 1 scheduled meeting; see Document 139. At the end of the first sentence Dulles added a phrase so that it read: “a) Furnish token military aid—particularly to the Army—totaling about $7 million on phased basis and on military level so far as practicable.”