Foreign Relations of the United States, 1961–1963, Volume XXIII, Southeast Asia

309. Memorandum From Michael V. Forrestal of the National Security Council Staff to President Kennedy⁰

Washington, June 10, 1963.

Wyatt Mission to Indonesia

You will be receiving Governor Wilson W. Wyatt, Walter Levy and Abe Chayes on Tuesday at 4 o’clock to hear their brief report on a highly successful good offices mission to Tokyo in connection with the Indonesian oil negotiations.¹

Prior to the Wyatt mission, the two American companies, Stanvac (subsidiary of Mobil) and Caltex (joint subsidiary of California and Texaco) had been negotiating fruitlessly with the Indonesian Government for two and one half years. By May of this year they had gotten themselves into a position where they were hardly on speaking terms with the Indonesian negotiators headed by Chaerul Saleh. The Indonesian Government issued its Regulation 18, which the oil companies construed to constitute effective expropriation. As a result we were faced with an intensely dangerous situation in which the oil companies would claim that they had been nationalized without compensation and would be putting pressure on a sympathetic Congress to retaliate against Indonesia. Such an act would destroy whatever progress we have made in turning Sukarno and at least part of the Indonesian political community towards the West and probably would drive Indonesia into closer association with the Soviet Bloc.

The oil company executives, Gus Long of Texaco, and R. G. Follis of Standard of California, approached Averell with a request that the Department intervene in this situation, despite their policy not to engage the U.S. Government in their private negotiations. In face of the fact that the oil companies were already taking action to withdraw from Indonesia, Averell agreed, and suggested that a Presidential mission of good offices be sent to Sukarno.

Accordingly Wilson Wyatt, Walter Levy (a private oil consultant who had helped Harriman during the Iranian negotiations) and Abe Chayes departed for Tokyo on May 27th, after having examined the status of negotiations extensively with representatives of the oil companies. They returned to Washington on June 4th bringing home the bacon. A Heads of Agreement (a short form of preliminary contract) had been initialed in Tokyo which represented substantial concessions by both sides. The Indonesians had withdrawn their insistence that the oil companies finance the foreign currency requirements of domestic production and distribution over and above the 60–40 split. For their part, the oil companies agreed to a formula providing for the sale to the Government of their Indonesian distribution assets within five years and their refining assets within 15 years.

While it cannot be said that the Heads of Agreement does evenhanded justice to both sides, and that difficulties will not arise in the future, particularly with respect to Indonesian domestic needs for refined products, nevertheless considering the stage which the negotiations had reached, the team of Wyatt, Levy and Chayes did a remarkable job.

Wyatt was an ideal leader. He combined a lawyer’s ability to grasp the rather complicated facts quickly and the ability of a Kentucky politician to smooth tempers on both sides with just the right amount of toughness in negotiation. Walter Levy was indispensable to the team. His knowledge of oil company negotiations enabled him to bring to the attention of company executives most of the essential injustices and variations from normal business practice which were concealed in the draft agreements they had presented to the Indonesians. Having softened the companies in this manner, he described for the Indonesian side the areas where they could expect to get a better bargain and those areas where it would be senseless to push for more. Abe Chayes assisted Levy in the separate discussions with each side and was most useful in clarifying the obscurities which are inherent in any oil negotiation.

In conclusion, I expect that the Wyatt mission will prove to be one of the smoothest and most efficient bits of preventive diplomacy which the United States has undertaken in some time. The oil companies apparently feel so as well, and I attach letters to that effect from Messrs. Long and Follis to Harriman.

Assuming that the Indonesians do their part in economic stabilization, we still have to put together a reasonable multinational assistance program for them and sell our part of it to Congress. We should be able to call upon strong support from the oil companies for this purpose.

I must also remind you that President Sukarno is looking forward to a visit from you this fall and will now be more than mildly disappointed if you cannot make it. I attach his letter to you commenting on the mission.²

MVForrestal³

0. Source: Kennedy Library, National Security Files, Countries Series, Indonesia, Vol. IV. Secret.
1. A detailed record of a meeting among Jones, Wyatt, Levy, Chayes, and Sukarno and Indonesian leaders at the Imperial Hotel in Tokyo on May 29 is in airgram A–1711 from Tokyo, May 31. (Department of State, Central Files, PET 10 INDON)
2. None of the attachments is printed.
3. Printed from a copy that bears this typed signature.