229. Memorandum of Conversation0

SUBJECT

  • Indonesia

PARTICIPANTS

  • Mr. Booker, Minister, Australian Embassy
  • Mr. Mein, Director, Office of Southwest Pacific Affairs

Mr. Mein gave Mr. Booker a copy of the attached paper commenting on the Australian paper on “Negotiations with Dissidents” which Minister Casey had handed to the Secretary on November 4, 1959.1 Mr. Booker expressed his appreciation for receiving the Department’s comments.

[Page 445]

Attachment2

COMMENTS ON AUSTRALIAN PAPER ON “NEGOTIATIONS WITH DISSIDENTS”

Handed to the Secretary by Minister Casey on November 4, 1959

1. United States Position

It is the policy of the United States Government to encourage a reconciliation between the rebels and the Central Government. We feel that such reconciliation, however, should take place only on the basis of mutually acceptable terms. We would hope that such terms would not mean complete surrender by the dissidents as demanded at this time by the Government. The dissidents still represent an anti-Communist force which cannot be ignored by the Central Government in determining its policies and which could be used as a rallying point should the Communists take over in Java. We would hope, therefore, that any negotiations for settlement of the rebellion would result in attainment of some of the original objectives of the dissidents and in strengthening the anti-Communist forces in Indonesia. The following are some of the reasons for this policy:

a)
Continued P.R.R.I. activity is of primary interest to the Communists since they thrive on chaos. They have been taking full advantage of the political differences resulting from the rebellion as well as of the deteriorating economic situation in the country.
b)
Continuation of the rebellion will serve only to weaken further the economy. The expense of the rebellion is reported to be about one-half of the total budget, which is a considerable drain of funds. This cost is being met primarily through the issue of new bank notes, resulting in growing inflation. This trend will negate any beneficial effects which might have resulted from the August 24 monetary measures. On the other hand, re-establishment of the Government’s authority in North and Central Sumatra and North Celebes, which areas are important foreign exchange earners, would assist the Government in improving its foreign exchange position.
c)
Further deterioration in the economy will only increase the amount of foreign aid which eventually might be necessary to put Indonesia back on its feet, and since we presumably would be one of the major sources of such aid, it would be in our interest that the economic situation not deteriorate further.
d)
A settlement of the rebellion would permit the Government to devote all of its resources, manpower and energy to other serious problems now facing Indonesia which must be resolved before the country can move forward.
e)
A reconciliation with the rebels would facilitate the return to active participation in the political scene of men like Hatta and would serve to remove one of the irritants among the non-Communist political parties. A settlement would create a climate for non-Communist and anti-Communist elements to join forces against the PKI.
f)
Continuation of the rebellion would tend to increase Indonesia’s suspicions of foreign assistance to the rebels. The rebels are in very serious trouble and their continuing ability to carry on for any length of time would only be interpreted by the Government as an indication that they were being assisted from outside. This suspicion would be directed primarily at us, the Republic of China and the Philippines, making our relations with Indonesia more difficult.
g)

Settlement of the rebellion would not weaken the position of Nasution and the Army but on the contrary would permit him to concentrate his efforts on the PKI. Inability on his part to settle the rebellion might in fact weaken his position in the long run. It does not necessarily follow that the state of emergency would be rescinded following a settlement of the rebellion but even if this were to be the case, we would not perceive any diminishing of effective Army control over the country, particularly in the outlying regions. The Army’s influence in the formulation of Government policy—e.g., the postponement of national elections—would also continue.

The settlement of the rebellion would have to have at least the tacit approval of Sukarno. However, given the evidences of the Army’s ability to influence Sukarno in the past (e.g., the formation of the new Government last July, the Attorney General affair),3 we do not believe that it is beyond the realm of possibility that Sukarno would acquiesce to some sort of settlement. The Australian view that Sukarno would feel that a settlement would precipitate a major breach between himself and the PKI is, we believe, invalid. It might be pointed out that Sukarno has approved the current Army-inspired drive against the Chinese retailers in Indonesia, which action has caused considerable unrest in the PKI. [Page 447]Sukarno’s antipathy toward the rebel movement is predicated, on the contrary, on his feeling that the rebels have betrayed the revolution.

h)
A settlement would diminish the military strength of the P.R.R.I. although the rebel movement would likely retain some psychological influence. However, as the Australians have pointed out, the P.R.R.I. position is likely to diminish in any event over the next two or three years. On the other hand, a settlement would eliminate or at least substantially reduce the conflict between the two leading anti-Communist forces in Indonesia.
i)
We do not believe that a settlement of the rebellion would substantially increase the danger of an Indonesian attack against West New Guinea. By far the most significant deterrent to such action has been statements by the United States and the UK to the Indonesian Government setting forth our strong opposition to any use of force against this territory. This political deterrent would remain effective even if the rebellion were settled.

Summary of United States Position

To sum up the foregoing comments briefly, a major United States policy guidance is to encourage reconciliation between the rebels and the Indonesian Government. The emergence of the Indonesian Army in the past 18 months as the major anti-Communist force in that country and a number of Army inspired and directed actions during this period have been successful in curtailing and in obstructing Communist political activities in Indonesia. While the growth of the Communist machine has certainly been slowed and possibly halted in some areas, in all likelihood none of its essential parts has been damaged. It appears probable that the Army can continue to contain the PKI at least in the short run. However, given the serious continuing political and economic problems created in large part by the rebellion, it does not appear possible for the Army and the Government to take any major steps against the PKI until these problems are resolved or at least diminished. Thus, in the long run the prospects of achieving United States objectives in Indonesia do not appear to be bright unless and until greater political and economic stability is brought about in that country. In other words, there can be little hope for a permanent reduction of the power of the Communist party unless the chaotic internal situation on which Communism thrives is eliminated. The most significant step which could be taken in this direction at the present time would be a reconciliation of opposing non- or anti-Communist elements, specifically the Army and the P.R.R.I. What we would lose in the diminishing of the power position of one anti-Communist element (the P.R.R.I.) would certainly be more than an equivalent gain in the consolidation and strengthening of anti-Communist forces to meet the PKI threat.

[Page 448]

2. Australian Intercession

Whether they should accede to Nasution’s request is a matter for the Australians themselves to decide. While negotiations between the Indonesian Government and the P.R.R.I. would seem to us to be a matter for the Indonesians themselves, it might be pointed out that such negotiations have taken place off and on over the past several months with no apparent success. The latest attempt to achieve a reconciliation is evidenced by Lt. Col. Sukendro’s trip to Singapore and Europe to discuss possible terms with rebel representatives. Although the results cannot be predicted, intercession by a third party could possibly pave the way to a settlement. We would perceive no objection to the Australians exploring this matter further if they should so decide. We agree, however, that if the matter is pursued the dissidents should not be pressed to accept the terms at present offered by the Central Government, since this would amount to a surrender and would only undermine the confidence of the P.R.R.I. leaders and other potential rebels in Western support. One problem which might be faced if the Australians should determine to intercede is that the rebel group outside Indonesia which the Australians would approach might not necessarily represent all the rebels still in Indonesia and consequently any terms worked out would not necessarily be accepted by all elements within the P.R.R.I.

(Discussed with Mr. Krebs and the Agency and cleared in draft by Mr. Parsons.)

  1. Source: Department of State, Central Files, 756D.00/11–1759. Top Secret. Drafted by Mein.
  2. See Document 228.
  3. Top Secret. Drafted by Mein and Wenzel.
  4. Reference is to Attorney General Gatot Tarunimihardja’s proposed investigation of illegal barter transactions by the Indonesian Army. As a result of Army pressure, Gatot was dismissed from his post in November 1959. The Embassy reported this affair to the Department in despatch 44 from Djakarta, November 30. (Department of State, Central Files, 756D.00/11–3059) See Supplement.