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

293. National Security Council Report⁰

NSC 6023

Washington, December 19, 1960.

DRAFT STATEMENT OF U.S. POLICY ON INDONESIA

General Considerations

1. The chief danger confronting U.S. policy with respect to Indonesia is that a combination of domestic instability, burgeoning Sino-Soviet Bloc economic and military aid, and substantial local Communist strength may lead to a Communist takeover or to a policy increasingly friendly toward the Sino-Soviet Bloc on the part of whatever regime is in power. The size and importance of Indonesia, together with its strategic position in relation to Australia and Free Asia, and the serious consequences of its loss to Communist control, dictate a vigorous U.S. effort to prevent these contingencies.

2. Basically, any non-Communist Indonesian regime likely to come to power will desire to follow a “neutralist” policy, seeking aid on its own terms from both the Free World and the Bloc and balancing each off against the other. It is unlikely that any foreseeable non-Communist regime will depart from this basic policy, even though there is growing concern among Indonesians, including the Army, over the magnitude of Communist strength and the extent of aid accepted from the Bloc. Many Indonesian leaders remain suspicious of Western motives. These leaders, preoccupied with colonialism, focus their criticism on the Western European attitude toward nationalist movements in Africa and Asia, and especially toward the West New Guinea issue. Formal political commitments to either the Free World or the Soviet Bloc would constitute in their minds unacceptable abridgement of their international freedom of action; and regional military security pacts are opposed on the grounds that they increase rather than reduce international tension.

3. Indonesia has certain advantages and points of strength. It shares no common boundary with a Communist state. Although the Indonesians have an extremely low per capita cash income, a salubrious climate and fertile soil make the crushing poverty and starvation characteristic of some Asian nations rare in Indonesia. A predominantly subsistence economy cushions most Indonesians from adverse commercial and financial developments. While there is severe over-population on Java and much “shared poverty,” absentee landlordism and glaring inequalities in land distribution are almost unknown. Western concepts of individual freedom and democratic government find some parallel in the democratic structure of the Indonesian village and the Indonesian tradition of compromise and collective decision-making.

4. On the other hand, Indonesia was ill-prepared to face the problems and assume the responsibilities of independence. The educational policy of the colonial regime prevented the development of an indigenous civil service and a corps of trained professional men. Dutch economic policy militated against the growth of an Indonesian entrepreneurial class. The Dutch policy of regarding all political activity as subversive prevented the acquisition of a healthy political experience and a knowledge and understanding of political techniques; rather, a pattern of negativism, opportunism and irresponsible obstructionism has emerged. Finally, Dutch administrative policies tended to preserve and accentuate regional and ethnic differences.

5. The Indonesian Community Party (PKI)¹ is relatively well-organized, well-financed, and well-led. It is unique among Indonesian political parties in its discipline, unity of purpose, and command of the techniques of political action. It also dominates the Indonesian labor movement through its labor federation, SOBSI, and its electoral strength is particularly concentrated in central and east Java. The PKI, which has capitalized on internecine quarrels, venality, and incompetence in the non-Communist parties, demonstrated in 1957 and 1958 local elections its steadily increasing popular support. If the election scheduled originally for 1959 had been held, the PKI would probably have emerged as the largest party in Indonesia and would have been in a strong position to use this as a base to demand cabinet representation. However, it now appears that elections may be postponed until 1962. The party has established itself in a strong psychological position by refraining from overt extra-legal activities and strongly supporting Sukarno’s policies and political concepts, most effectively with respect to the issues of the rebellion of 1958 and the sovereignty of West New Guinea. Recently, in an effort to discredit the present non-Communist government while sustaining superficially undiminished support for Sukarno, the PKI has directed stinging criticism at the effectiveness of government methods of achieving policy goals. At the same time, it is free of any responsibility for government failures and inadequacies since it has not been formally represented in any cabinet. Since the return to the executive-president type 1945 Constitution in mid-1959, PKI representation has been appointed to the Supreme Advisory Council, the National Planning Council, the “re-tooled” Parliament and the People’s Consultative Congress, thus reflecting President Sukarno’s conviction that all major elements of Indonesian society should have a voice in policy formation. Of the nation’s highest level executive and deliberative organs, only the cabinet has thus far remained free of Communist membership. In the circumstances now prevailing, in which Sukarno is vigorously urging cooperation between nationalist, religious and Communist elements, the possibility that the PKI may be able to secure one or more cabinet posts must be recognized. Open measures of repression against the PKI, although frequently undertaken by the Army, are difficult to justify on internal political grounds, and expose their perpetrators to charges of truckling to Western pressure. At present the PKI probably lacks the resources to seize power by overt force, and postponement of the elections may delay a bid for power via the polls. However, there is a serious and continuing danger that Indonesia may fall to Communism through Government inadequacy, Communist subversion, legal political means, or, as a last resort, by violence.

6. PKI efforts have been complemented in the external field by the Sino-Soviet Bloc, which since September 1956 has offered to Indonesia approximately one billion dollars in military and economic credits. Arms and military equipment not available from Free World sources, which have pursued a policy of limited assistance to Indonesia in the military sphere, have been obtained by use of these Soviet Bloc credits. Additionally, the PKI has benefited from consistent and vigorous Soviet Bloc support of Indonesia’s claim to West New Guinea and from the support, diplomatic and propaganda, offered by the Bloc during the 1958 rebellion.

7. The anti-Communist political groups in Indonesia have clearly lost ground in the recent past. However, in the past year many non-Communist leaders and political parties have demonstrated a greater realization of the Communist danger facing their country and appear more willing than before to cooperate among themselves and with the Army to give Indonesia a more effective government and check the growth of Communist strength and influence. The most recent example of this encouraging development was the establishment in mid-1960 of the Democratic League, a loose political coalition comprising Christian, Moslem, Nationalist and Socialist elements. Formation of the League was made possible by the presence of discreet Army support and, although the successes of the League were limited, the basis for future further cooperation was established. Despite this more recent tendency to cooperate among the anti- and non-Communist parties, they remain severely divided by factional strife and ideological considerations and hampered by indecisiveness and poor organization. As a result of recent Presidential action, both the Masjumi and Socialist parties have been disbanded and, although their members continue to exert influence in anti-Communist circles as individuals, the magnitude of formal opposition to the PKI nonetheless has been significantly reduced as a result of these parties’ demise. These non-Communist elements, however, continue to comprise a significant element of Indonesian society which is seeking to steer a course designed to avoid authoritarian rule in Indonesia by Sukarno, the military or the Communists. They exercise a stabilizing influence on political developments in Indonesia and, to a somewhat lesser extent, on Indonesian foreign policy expressions. In present-day Indonesia, however, a basic necessity for development of this anti-Communist potential to more effective proportions is strong military backing.

8. The Indonesian political stage continues to be dominated by the President, the Army and the PKI. In the past two years the Army, under the leadership of General Nasution, has sharpened its awareness of Communist policy and has sought to curb wherever possible the more flagrant of the PKI acts to undermine the effectiveness of the government. In these developments, the Army has had the cooperation of First Minister Djuanda and the prominent anti-Communist elements mentioned above. The most striking development in Indonesia in the past one and a half years has been the rapid consolidation of the organs of political expression into the hands of President Sukarno. Since promulgation by decree of the present constitution of July 5, 1959, and the formation of a new cabinet in which Sukarno assumed for himself the post of Prime Minister, other top level government policy-forming organs, such as the Parliament, the Supreme Advisory Council, the National Planning Council and the People’s Consultative Congress, have been either re-vamped or established on the President’s terms, including appointments made personally by the President. Sukarno thus is now in a position to impose his policies on the nation through a legalistic facade of his own making. All of the government organs mentioned above, with the exception of the cabinet, contain Communist representation and thus are consonant with Sukarno’s concept of “Gotong Rojong— mutual cooperation” as a means of developing his unique theory of guided democracy. Sukarno remains Indonesia’s most prominent political element. He retains his position due to a number of factors. The first of these is the role that he played in the Indonesian revolution and the symbol that his person constitutes as an embodiment of the Indonesian state. He retains the respect of the Javanese masses and to a lesser extent that of common Indonesians in the outer islands. Another reason for Sukarno’s position is his extraordinary, almost mystic, ability as a political practitioner. In a nation with many contending internal forces, Sukarno alone continues to be a meeting point for the conflicting ideologies and through his balancing, maneuvering, encouraging and rejecting he has made himself politically indispensable. Still another reason for Sukarno’s prominence, a reason related to his personal popularity, is that all of the diverse political elements in the nation hope to exploit his personal stature to achieve their own ends, and one of his political techniques is that the door is never quite closed to the possibility that this or that group might be able to achieve this aim. Despite Sukarno’s position, he keenly feels the lack of a strong organized mass political base loyal to him personally. Unlike other national leaders in Asia, Sukarno is neither the titular nor actual head of a political party machine. Several previous attempts to establish such a political organization, such as through the medium of the National Front for the Liberation of West Irian, have not been successful. A current campaign to develop such a political base for Sukarno may be found in the plans now being formulated for the establishment of a national political front, in which will be represented the various political and power forces of the nation. It appears that technical formation of the front may be delegated to the Army, and it may be anticipated that this will sharpen to a degree the struggle for power between Sukarno and the anti-Communist Army leadership. Although a substantial segment of the educated elite of Indonesia questions Sukarno’s ability to provide constructive leadership for Indonesia, his ability as a balancer of forces, his position vis-à-vis the masses, and the lack of attainable alternatives combine to further his indispensability. He is a living national monument, a political fact of life which must be lived with.

9. The Indonesian Army is the largest element of the Indonesian armed forces. The Army and the predominantly non-Communist orientation of its officer corps represent the principal obstacles to the continued growth of Communist strength in Indonesia. This situation derives to a considerable degree from the favorable impressions made on the several hundred Indonesian officers trained in U.S. service schools, many of whom now hold responsible positions. These officers have accepted U.S. organization, equipment, and training methods and, upon return to their homeland, have exerted a strong influence in orienting the Army toward the West and toward the United States in particular.

10. Under the leadership of the anti-Communist General Nasution, the Army has assumed an increasingly powerful position in the political arena including a growing policy-making role. The Army is likely to continue to exercise considerable authority in civil affairs barring an open break between Sukarno and Nasution. The Army’s increased power has in part resulted from two factors: the considerable authority it is permitted under the present “state of emergency,” and the prestige accruing from its success in suppressing the regional revolt. The Army’s objective is to steer a middle-of-the-road course designed to implement both in domestic and international terms Indonesia’s neutralist position in the cold war, a fundamental concept widely approved even among those Indonesians most apprehensive over the advances of the PKI. In these terms, the Army will continue to suppress and frustrate PKI aims, recognizing them as inimical to the welfare of the nation. At the same time, the Army will not accede to the demands of the extreme Moslem right which favors a theocratic state and a large measure of local autonomy. Although Navy and Air Force leaders have in the past had relatively minor influence in national affairs, their role in this respect now is increasing and they may be expected in the future to demand a more prominent part in policy decisions. Unlike the Army, which has preferred to obtain matériel support mostly from Free World sources, the Air Force in the past and more recently the Navy have turned to the Soviet Bloc for large scale assistance in procuring military hardware. There is strong evidence, however, that the decisions to obtain Soviet Bloc equipment have in part been made with some misgivings and have resulted in the recent past from an inability to obtain such items in desired quantities from the Free World.

11. Until recent years the Indonesian armed forces were equipped with weapons, aircraft and ships of varied origin and type, including Dutch, British, United States and Japanese, primarily of World War II vintage or earlier. Spurred on by the impending rebellion and the fear of a would-be Dutch attack in late 1957, the Indonesian Government began to make major purchases of military equipment abroad. Because the United States and other Free World countries were generally unwilling to sell military equipment to Indonesia at that time, approaches were made to the Soviet Bloc and an Indonesian military procurement mission was dispatched to Bloc countries. Since that time Indonesia has procured over $200 million of Bloc military equipment on long term credit terms, primarily for the Air Force (jet fighters and bombers, transports and trainers) and the Navy (patrol craft, destroyers and submarines). Army purchases of Bloc equipment (mostly standard hardware) have been relatively modest. The Indonesian Navy is currently negotiating an additional credit purchase agreement with the Soviet Union which would cover a number of heavy warships, submarines, patrol and service vessels and training reportedly totaling approximately $300 million. In view of Indonesia’s “active and independent” policy and the generous Bloc offers, continuing Indonesian purchases of military equipment from the Bloc can be expected.

12. In view of the emerging importance of the military as a stabilizing and anti-Communist force in Indonesia, the United States since mid-1958 has been furnishing modest quantities of military equipment to Indonesia in response to long-standing Indonesian requests. Since Indonesia is unwilling because of its policy of non-alignment to conclude a standard military assistance agreement with the United States, this assistance has been provided under a sales agreement concluded on August 13, 1958, whereby military equipment has been delivered to Indonesia for its internal security and self-defense in return for token payment in local currency. The necessary Presidential Determinations under the appropriate section of the Mutual Security Act of 1954, as amended, have been obtained to provide military programs for Indonesia not to exceed $22 million in FY 1959, $20 million in FY 1960 and $21 million in FY 1961. The large part of the U.S. equipment furnished has gone to the Indonesian Army since we regard this service as the best vehicle for maintaining a measure of stability and anti-Communist alertness in Indonesia. Smaller amounts of equipment have been furnished to the Navy and the Air Force to minimize inter-service jealousies and to avoid spotlighting the Army as an instrument of U.S. policy. U.S. assistance is believed to have contributed in part to the growing anti-Communist posture of the Army, and assistance to the Navy has helped in some measures to enhance U.S. ties with that service. U.S. relations with the leftist Air Force leadership continue to leave much to be desired although recent Air Force inquiries about U.S. equipment may possibly indicate a greater receptivity toward the procurement of U.S. military items. Taking into account the uncertainties of the Indonesian situation, U.S. military assistance to Indonesia is limited and selective and subject to continuing review in light of developments in that country. The United States also takes into account the concerns expressed by the Netherlands and Australia about a military build-up in Indonesia and the possibility of Indonesian armed action against West New Guinea; In this connection, Indonesia has now furnished the United States with written assurances that U.S.-furnished equipment will not be used against West New Guinea. In addition to the United States, other Free World countries including the United Kingdom, France, West Germany and Japan have sold substantial quantities of military equipment to Indonesia since 1958.

13. U.S. policy has for a number of years called for the provision of both technical assistance and economic aid to Indonesia. Since 1950 U.S. assistance to Indonesia in the economic sphere has totaled approximately $372 million and may be divided into three categories:

a. The grant-aid U.S. technical cooperation program has concentrated on the important problem of developing technical, professional, and managerial skills, with major emphasis on education. In addition to technical assistance furnished in a number of fields in Indonesia such as agricultural, public health, etc., over 2,000 Indonesians have been brought to the United States under the auspices of the International Cooperation Administration for various types of technical training;

b. U.S. lending agencies (Export-Import Bank, Development Loan Fund, International Cooperation Administration) have since 1950 extended a number of long-term loans to Indonesia for various economic development projects;

c. Since 1956 the United States has concluded three Public Law 480 agreements with Indonesia under which surplus agricultural commodities have been sold to Indonesia for local currency. The major part of the sales proceeds are being loaned or granted to Indonesia for economic development projects.

In the past few years Indonesia has become increasingly receptive to U.S. economic assistance and is now actively seeking such assistance. While generally quite satisfied with the substance of U.S. assistance, Indonesia has occasionally expressed dissatisfaction with the lengthy and complicated negotiations involved in U.S. aid transactions. Indonesia also receives various types of technical and economic assistance from Free World nations through the Colombo Plan. In addition, Indonesia is receiving war reparations from Japan through an agreement concluded in 1958. Since 1956, the Soviet Bloc has offered Indonesia almost a half billion dollars in economic assistance. Bloc offers have taken the form of announcements of willingness to make available large sums in the form of long-term, low interest rate credits without any indication of the specific uses of the funds. These announcements are exploited vigorously for their propaganda value, although the subsequent negotiations over the use of the funds have sometimes been considerably protracted. The initial Soviet offer in 1956 was not accepted by the Indonesians until 1958. Actual expenditures under the Bloc economic credits have to date totalled only about $80 million. Bloc equipment furnished under the programs has not always been satisfactory, although deliveries have been prompt once country decisions were made as to the nature of the goods to be imported. Considerable numbers of Bloc technicians are employed in Indonesia on these projects.

14. The Indonesian Government fiscal and financial situation, although recovered slightly from the depths suffered approximately one year ago, remains a matter of major concern. In the past three years, additional heavy burdens have been imposed on the already unstable economy by a series of developments: the outer island rebellion of 1958 which, although no longer a military threat to the central government, continues in the form of acts of economic attrition such as large-scale smuggling of rubber and copra and inciting of turmoil in the countryside which prevents the development of productive agriculture; the anti-Dutch campaign during which Dutch-owned assets were seized by the Government and thousands of Dutch nationals, many of them technicians, departed from Indonesia; and the decree effective January 1, 1960, forbidding aliens, most of whom were Chinese, to transact retail business in rural areas. Added to the above is the demonstrated inability of the Indonesian Government to develop and pursue a realistic attainable economic or fiscal plan. Such planning as has been accomplished has failed to meet economic needs. The Indonesian masses, especially those outside metropolitan areas, live on a subsistence economy and are relatively unaffected by this situation, but the absence of economic development and the inability of the Indonesian Government to provide needed public services, such as schools, hospitals, roads and inter-island communications, have contributed to dissatisfaction and political unrest. These conditions have been exploited by the Communist Party, particularly on the overcrowded island of Java, to win popular support. Ultimately, actions to defeat Communism in Indonesia must, if they are to have any hope of success, be supplementary to long-range effective programs to improve the living standards of the masses and to demonstrate capacity for progress in solving Indonesia’s serious economic and social problems.

15. The shortage of trained professional men, administrators, and technicians is an underlying obstacle to progress in the solution of Indonesia’s manifold political, economic and social problems. The Indonesian Government is making strenuous efforts to remedy this deficiency, and this is one field in which U.S. assistance can pay great long-range dividends.

16. In the 1958 rebellion, the regional leaders and their rebel forces in the outer islands were no match for the government forces in regular military operations. However, the rebels are proving to be effective guerrilla fighters and are seriously harassing the government forces and hampering there-establishment of effective civil authority in North and Central Sumatra and North Celebes. Although the rebels lack the military capability and the political following to re-establish their control of major populated areas, they have some local support and can continue guerrilla warfare for a prolonged period, creating serious economic and political problems for the central government. Although most responsible Indonesian elements will agree privately that the final solution to the 1958 rebellion lies not in military action but in political and economic concessions and reform, an unyielding attitude of President Sukarno makes it politically impossible for this realization to be stated publicly. There are recently indications, however, that secret negotiations between the Army and the rebels have taken place and that some measure of settlement ultimately may be achieved. Since Sumatra, Borneo and Celebes produce a major portion of Indonesian export earnings, they are of great significance to the Indonesian economy. Regional distrust of the central government, however, is likely to continue.

17. The unresolved dispute between Indonesia and the Netherlands over West New Guinea has become in Indonesia a major liability not only to the United States and its European allies, but also to moderate elements in Indonesia favoring a rapprochement with the Netherlands and closer ties with the Free World. It has poisoned Dutch-Indonesian relations, and undermined Indonesia’s otherwise excellent relations with Australia. Internationally the Soviet Bloc, by strongly supporting Indonesia’s position in the dispute, has on frequent occasions successfully exploited Indonesia’s basic policy on neutralism in the cold war by defining issues so as to practically force Indonesia’s support as a matter of principle. Domestically, the PKI has used its strong support of the Indonesian position as a major implement of policy. Sukarno is again agitating the New Guinea issue, and the new Indonesian military purchases plus other evidence suggest that the Indonesians will adopt a more activist and threatening posture toward New Guinea, though overt military intervention still seems unlikely.

18. The United States cannot expect to reap the full benefits of aid to Indonesia while at the same time appearing to oppose Indonesian aspirations on the one international issue which has aroused great nationalist emotion in Indonesia and is a personal idée fixe with Sukarno. Not to support Indonesia on this issue is to leave this key gambit to the Communist Bloc. On the other hand, a reversal of U.S. policy would create grave complications with the Netherlands and Australia, with unforeseeable results. However, it should be recognized that U.S. support of Indonesia on the West New Guinea issue probably would not deflect Indonesia from pursuing a basically neutralist course.

19. Our present policy has been followed because of the serious adverse consequences which would ensue if the United States supported either the Dutch or the Indonesian position. The former would drastically reduce if not eliminate U.S. influence in Indonesia, deal a serious blow to pro-U.S. elements and be exploited by the Soviet Bloc and the PKI as proof of U.S. hostility to the aspirations of the peoples of Asia and Africa. To support Indonesia, on the other hand, would have an equally serious damaging effect both on our bilateral relations with the Netherlands and Australia and in our working relationships with the former in NATO and the latter in ANZUS. At the same time, this unresolved issue is a major deterrent to successful pursuit of U.S. objectives in Indonesia, and an armed clash between the disputants, which remains a possibility, could seriously undermine the achievement of these objectives. Accordingly, we believe it desirable to explore possible arrangements, utilizing the United Nations, of achieving a cooling-off period or of otherwise isolating the issue from cold war exploitation.

20. U.S. ability to influence Indonesian policy and government actions is limited by Indonesian:

a. Resistance to guidance and direction from any foreign source.

b. Reluctance to undertake ties and associations which would appear to bind Indonesia politically and militarily to the West.

c. Continuing suspicion that the United States may be motivated more by a desire to combat Communism in Indonesia than to assist in the establishment of a strong Indonesian state.

d. Preoccupation with colonialism, both as it relates to its own West New Guinea issue and to other current issues between Western European nations and dependent or newly independent states in Asia and Africa and the position which the United States has taken on these issues.

e. Resentment over alleged U.S moral and material assistance to the rebels.

f. Irritation, frustration, and doubt of U.S. intentions occasioned by the length of time required by the United States in the provision of military and economic assistance.

21. U.S. ability to influence Indonesian policy and actions is strengthened by the following factors:

a. The predominantly Western cultural orientation of the Indonesian governing elite and the moral and intellectual commitment of this elite to the principles of democratic, representative, government.

b. A strong desire for economic assistance, military supplies and equipment, and higher education and professional training from the United States and other Free World countries.

c. The fact that approximately 90 percent of Indonesia’s trade is with the Free World.

d. The teaching of English as the first foreign language in Indonesian schools.

e. Western orientation of the Army, which results in part from training accorded Indonesian officers in U.S. service schools.

f. Difficulties, sometimes causing severe strain in relations between Indonesia and Communist China, which arise from differing policies toward Indonesia’s Chinese population.

Objectives

Short-range

22. Prevention of Communist control of Indonesia, or vital parts thereof, by overt armed attack, subversion, economic domination, or other means.

Long-range

23. The establishment of a politically stable, economically viable nation, friendly to the Free World, with the will and ability to resist Communism from within and without, and the denial of its human and natural resources and strategic positions to the Sino-Soviet Bloc.

Major Policy Guidance

24. Employ all feasible means, including, in accordance with constitutional processes, the use of U.S. armed force if necessary and appropriate to prevent Indonesia or vital parts thereof from falling under Communist control by overt armed attacked, subversion, economic domination, or other means; concerting action with other nations as appropriate.

25. While seeking an ultimate pro-Free World orientation, accept Indonesia’s neutralist policy, as necessary, even though the present regime maintains diplomatic, trade and cultural relations with the Sino-Soviet Bloc and is receiving Bloc military equipment and economic assistance; but endeavor to ensure that these relations are reasonably balanced by relations with the Free World.

26. Seek by official and personal relations, as well as through the general character of U.S. relations with Indonesia, to encourage Sukarno to regard the United States as a friend of Indonesia, to direct this influence into constructive channels, and to restrict and contain the harmful aspects of his influence on Indonesian political and economic development.

27. Encourage reconciliation between the rebels and the central government, and cooperation among non-Communist political and military leaders, as well as between political parties, in order to stimulate the development of a more effective non-Communist political force.

28. Maintain and strengthen existing U.S. ties with the Indonesian police and military establishment; and increase their capability to maintain internal security and combat Communist activity in Indonesia by providing appropriate arms, equipment, and training, on a limited but continuing basis. To the maximum extent practicable, U.S. training of personnel of the Indonesian armed forces should be expanded and efforts made to curtail Sino-Soviet Bloc training programs.

29. Demonstrate interest in and concern for economic development in Indonesia while avoiding actions which might be interpreted as an attempt to control or take responsibility for Indonesian economic development. To this end:

a. Encourage Indonesia to take steps such as the following to further its economic development:

(1) Improve its basic economic and fiscal policies, including the budgeting of government expenditures and a tax structure and administration which will increase government revenues.

(2) Control inflation and gradually eliminate inflationary pressures.

(3) Create a favorable climate for private investment.

(4) Reduce corruption.

(5) Expand technical, administrative, and entrepreneurial skills among Indonesian nationals.

(6) Foster diversification of the economy without neglecting stable exports.

(7) Maintain and increase close friendly commercial relations with the United States and other Free World nations.

b. Support loans to Indonesia by international organizations where consistent with relevant U.S. loan policies.

c. Encourage other Free World nations to continue measures designed to contribute to Indonesia’s economic development.

d. Continue to provide appropriate economic and technical assistance to Indonesia.

e. Continue to provide U.S. loans for economic development which are consistent with relevant U.S. loan policies.

30. Encourage Indonesia to improve administration and planning by modernizing laws and administrative procedures.

31. Seek to broaden Indonesian understanding of the United States and the Free World and to convince Indonesia that closer cooperation with the Free World is desirable, by:

a. Encouraging and assisting Indonesians to travel and study in the United States and other Free World countries.

b. Strengthened programs for training of Indonesians.

c. Making full use of U.S. private organizations to assist educational, cultural, medical, and scientific activities in Indonesia.

d. Identifying the United States with willingness to assist peoples struggling with problems of independence, and emphasizing the U.S. tradition of anti-colonialism.

32. Encourage the development of closer relations between Indonesia and other nations of Free Asia, particularly Australia, Japan, the Philippines and the Federation of Malaya, and seek opportunities for improvement in relations between Indonesia and the Netherlands.

33. Give priority treatment to requests for assistance in programs and projects which offer opportunities to isolate the PKI, drive it into positions to open opposition to the Indonesian Government, thereby creating grounds for repressive measures politically justifiable in terms of Indonesian national self-interest.

34. Encourage government officials and other national leaders to oppose Communist activities, to understand the relations of these activities to international Communism, to realize the danger of Communist China, and to foster such understanding and opposition throughout the Indonesian populace.

35. Encourage the development of non-and anti-Communist labor, peasant, business and similar organizations.

36. While for the present maintaining neutrality in the West New Guinea dispute in our relations with other governments, explore within the U.S. Government and with other interested governments solutions to this problem compatible with over-all U.S. objectives, possibly through the UN.²

0. Source: Department of State, S/S–NSC Files: Lot 63 D 351, NSC 6023 Series. Secret. Transmitted to the NSC on January 21, 1961, under cover of a memorandum from the Executive Secretary of the NSC. Approved by the President on January 2.
1. There are no completely reliable figures on PKI membership, but it probably numbers at least 1,500,000. PKI claims that it is Indonesia’s largest party are probably correct. [Footnote in the source text.]
2. The NSC Planning Board prepared an 8-page financial appendix to NSC 6023, which was transmitted to the NSC and added to the policy paper on January 10, 1961. (Memorandum from Lay to the National Security Council, January 10, 1961; Department of State, S/S–NSC Files: Lot 62 D 1, NSC 6023 Series) See Supplement.