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

163. Telegram From the Department of State to the Embassy in Indonesia⁰

Washington, November 7, 1958, 8:59 p.m.

873. FYI only. Secretary November 5 approved following US actions re Indonesia:

1) Military Programs

a) Prompt completion entire August 1 military assistance program, i.e. delivery 3 L–20 aircraft for army and 3 helicopters for air force.

b) $7.8 million augmentation program as follows: for army $2.4 million for 12 bridges; for navy $2.9 million for one LST, two minesweepers and equipment for one marine rifle company and one 60 mm mortar section; for air force $2.5 million for pilot training and command and general staff school training. To be financed under MSP subject to Presidential determination.

c) Continuing limited program of military assistance contingent upon future internal developments.

2) Removal of restrictions on issuance export licenses for all types civil aircraft, surplus propeller-driven military aircraft, small arms and ammunition, surplus landing craft for police and civil use. In general our program for the sale of military equipment to Indonesia will be on a government to government basis. We cannot, however, make a commitment to permit no commercial sales, although such sales will remain subject to export licensing procedures and thus to control by the government.

3) Program of increased economic assistance utilizing several available types economic aid. Among projects currently under consideration are a) $2.7 million DLF loan for railway rehabilitation South Sumatra and b) negotiation new PL–480 agreement for rice and other commodities.

4) Informing Ex-Im Bank that for political reasons we wish them to proceed with consideration of projects in Indonesia meeting their criteria. Projects under consideration include a) fertilizer plant ($30 million); b) thermal power project Surabaya ($9.4 million); c) dredges for land development Borneo and Sumatra ($6.9 million); d) Lockheed Electras for Garuda ($12 million).

Indonesians, Dutch and Australians not yet informed above decision and we presently working out arrangements for notification.

No action should be taken by any addressee pending further instructions. End FYI.

Dulles

0. Source: Department of State, Central Files, 756D.5–MSP/11–758. Secret; Limit Distribution; Priority. Drafted by Wenzel, cleared in draft with Jandrey, and approved by Parsons. Also sent to Canberra, The Hague, and CINCPAC.