306. Memorandum From Michael V. Forrestal of the National Security Council Staff to President Kennedy0
The attached cable to Ambassador Jones in Djakarta will bring you up to date on the potentially serious position which is developing as a result of the deadlock on the Indonesian oil negotiations.1
The Indonesian Government has stupidly put a gun at its own head in an attempt to bulldoze the oil companies (Stanvac and Caltex) into [Page 668] concessions which they probably will not and possibly cannot make.2 We are most worried about the effect of a complete breakdown on Congress. There is already sentiment for barring all aid to Indonesia and news of this might pull down the house of cards. The oil companies have said they will work to calm any Congressional outbursts until June 15 at least.
The cable is somewhat over-written because experience has shown that it is difficult to convince Howard Jones that he must start using his goodwill in Indonesia to save this situation.
- Source: Kennedy Library, National Security Files, Countries Series, Indonesia, Vol. III, 5/63. Secret; Urgent. A note on the source text indicates that ithe memorandum was part of the President’s weekend reading of May 18.↩
- Reference is to telegram 1037 to Djakarta, May 18, in which Harriman informed Jones that he had met with Caltex and Stanvac company executives on May 17. The oil company officials indicated that by enforcing new oil laws Indonesia was in effect expropriating their oil operations in Indonesia after June 15. The executives were adamant that they would not export oil from Indonesia after that date. The Department asked Jones “to put all your assets of understanding and sympathy at stake now. We are dangerously at the end of the road,” Jones was to tell Sukarno that a break with the oil companies would have serious repercussions for U.S.-Indonesian relations. (Department of State, Central Files, PET 6 INDON)↩
- Regarding Law No. 44 of 1960, see Document 308.↩