195. Telegram From the Embassy in the Philippines to the Department of State 0

5. From Dillon. Djuanda asked Jones to arrange opportunity for private talk with me which we had after dinner at Embassy. Djuanda gave long exposé of reasons for return to 1945 constitution as apparently Indonesians are very sensitive that we may think they are abandoning democracy in making this shift. After I had reassured him on this point he asked if I had any questions. I told him my primary interest was economic development and I understood one of the main Indonesian problems was the expense of combatting the rebellion. I asked him how long he expected this to continue. Djuanda replied the most pessimistic estimates were that it would take 3 more years to complete the suppression of the rebellion, but he said he hoped and expected that there would be a political solution earlier. He alluded to the government’s recent success in negotiating a political solution with Atjehnese and indicated he hoped for something similar in other rebel held territory. He then quickly said the time was not yet ripe for such negotiations and that if it proved necessary to carry matters to ultimate military conclusion then 3 years would be required.

Djuanda then launched into what apparently was main reason he had wished to talk with me. This was his conviction that the many bureaucratic details in implementing US aid projects were largely destroying their psychological usefulness. He emphasized that he was not thinking of any increase in dollar volume of aid but that both the negotiation of projects and implementation once they were negotiated left much to be desired. He pointed out this was particularly so in view of invidious comparison with Soviet aid practices and stated that the majority of Soviet aid programs were being promptly and rapidly implemented. He then asked my view regarding Soviet aid.

I told him US had no objection to the acceptance of Soviet aid as such because a cement plant for instance would serve development purposes equally well no matter who had constructed it. I said we were concerned lest countries unwittingly get into position where they were dependent on Soviet aid. Soviets had shown in the case of Yugoslavia that they were fully prepared to terminate their aid programs at moment’s notice for political reasons. Djuanda said he was glad to hear my views and assured me Indonesian Govt was well aware of danger of their dependence on Soviet aid. He then repeated plea that some action be taken to expedite our procedures. I told him we were well aware of [Page 373] problem which was not confined to Indonesia and that we were in process of taking steps to improve situation. I promised to look into particular cases of excessive delays in Indonesian projects on my return. I had impression Djuanda was sincere and felt our implementation procedures were working against best interests of US-Indonesian relations.

This impression strengthened when I checked ICA record of implementation which is not good.

I then took opportunity to speak to Djuanda about DLF application for purchase of KPM ships from Dutch which described in separate telegram.1

  1. Source: Department of State, Central Files, 756D.00/4–1459. Confidential. Repeated to Djakarta.
  2. Reference is to telegram 4 from Baguio, April 14, in which Dillon reported on his discussion of the prospective DLF loan to finance the purchase of ships from the Netherlands with Ambassador Jones and his staff. (Ibid., 756D.5–MSP/4–1459) See Supplement.