307. Memorandum From Michael V. Forrestal of the National Security Council Staff to President Kennedy0
Indonesia
Further on the subject of the situation with respect to American oil companies in Indonesia (Deptel 1037 sent to you over the week end).1 It has how been decided by George Ball and Governor Harriman to send Wilson Wyatt as your personal emissary to talk to Sukarno in Tokyo. Wyatt will leave at the end of this week and will be accompanied by Walter Levy, an independent oil consultant who helped Averell during the negotiations in Iran at the end of President Truman’s Administration.
Wyatt advised by Levy will attempt to persuade Sukarno that he must give a political direction to his Minister, Chaerul Saleh, to reach an agreement with the oil companies on a 60/40 production-sharing basis before June 15th. Wyatt and Levy will then proceed to Djakarta in an attempt to work out with Saleh a device by which Saleh’s Ministry will [Page 669] receive a portion of hard currency revenues from Indonesia’s share to finance the domestic oil industry before the remainder is turned over to the Bank of Indonesia for general purposes. Our Ambassador believes that this arrangement, which is satisfactory to the oil companies, is what Saleh is really looking for. The oil companies’ representatives are not this optimistic.
After Wyatt and Levy have prepared the ground on principle, the oil companies have agreed to send top executives to negotiate the final details before June 15th.
The oil companies have informally agreed to keep this matter in strict confidence, at least until we have gone through the above exercise. I would suggest, therefore, that in order to avoid any political repercussions here, we announce that Wyatt is traveling to Tokyo and Djakarta to discuss generally Indonesia’s economic problems and the proposed IMF stabilization plan. If the negotiations go badly, of course, the fat would be in the fire, and we must assume that some of this will then become public.
Up to the present, cooperation between the oil executives and the Department of State has been good; but I imagine that there will come a time when we will have to persuade the oil companies to accept something less than they are now demanding from Indonesia. This makes it very important, I think, to maintain the confidence of the companies in the early stages of the negotiations, so that they will be as reasonable as possible when the time comes for them to show flexibility.
If you agree with all this, a letter to Sukarno describing Wyatt and his mission will be prepared for your signature.2 Another letter will be prepared from you to Wyatt which can be made public at the time he leaves.
- Source: Kennedy Library, National Security Files, Countries Series, Indonesia, Vol. III, 5/63. Secret. A note on the source text indicates that the memorandum was part of the President’s weekend reading of May 18.↩
- See footnote 1, Document 306.↩
- Sent on May 25. (Kennedy Library, President’s Office Files, Indonesia Security, 1961–1963)↩