183. Memorandum From the Director of the Far East Region (Blouin) to the Deputy Assistant Secretary of Defense for International Security Affairs (Friedman)1

I–28064/65

SUBJECT

  • Emergency rice assistance to Indonesia

Ambassador Green has reported an increasing number of approaches from high Indonesian civilian officials for USG assistance in financing emergency rice shipments “to help tide Indonesia over next few months and help Army avoid losing on economic front what it has gained on political”. He asked State’s views on the feasibility of arranging export credit guarantees for US and/or third country’s rice, whether covert financing is practicable, and what alternative methods there might be for assisting the Army if we need “to move rapidly and effectively” to support the Army’s position.2 Subsequently, Green reported that General Achmad, recently appointed by General Suharto to head the Economic Group of the KOTI Staff, said that he wanted to alert the USG to the Army’s desire to discuss US assistance in obtaining rice from Thailand or Burma on a covert basis.3

State has advised Green that it does not believe covert assistance to be practicable, that the political situation in Indonesia is still so fluid that such assistance could benefit Sukarno-Subandrio rather than the Army, and that emergency assistance for rice should not be separated [Page 384]from such broader political questions as Indonesian policy on Viet-Nam, confrontation and nationalization of US oil properties. Although State’s instruction does not close the door to further consideration of emergency aid to the Indonesian Army, it gives the clear impression that the USG should be in no hurry to give such aid and that when we do we should tie definite “strings” to it.4

In view of the probability that the USG will receive a firm request from the Nasution-Suharto leadership in the near future for aid in purchasing rice, DOD should formulate a position on this matter and relay it to State, (State’s outgoing instruction was not discussed with DOD). I am inclined to think that emergency assistance to help the Indonesian Army consolidate its position should be granted promptly when and if a bona fide request is made by the Army leadership. Such short-term aid should be considered separately from long-term economic assistance and should not be conditional upon a commitment to end confrontation and to suspend plans to negotiate the withdrawal of American oil firms. Although covert financing probably is too risky, it should be possible to get the Indonesian Army’s agreement on some method of handling this transaction that would not embarrass the leadership if it becomes known.

The real question, it seems to me, is whether the Army requires this rice to win its struggle for power with Sukarno, or whether it can cement its authority without our help. If our assistance is essential and is requested by the Army leadership, I think we should give it without strings. If the Army emerges on top politically, which now seems likely, we will get many requests for large scale assistance. That will be the time to talk about a change in Indonesian foreign policy and other conditions on our aid. In this connection see Djakarta telegrams 1712 dated 10 December5 and 1722 dated 11 December, which contain a firm Indo request for rice.

You might be interested to know that although Bill Bundy suggested in his letter of November 3 to Mr. McNaughton 6 that the working group on Indonesia should meet at regular intervals to discuss contingency planning, no meeting has been held in nearly a month. Frank Underhill has told Don Nuechterlein informally that he doesn’t believe the working group need be involved because this question involves only economic assistance.

[Page 385]

Recommendation

That in discussions with State Department, DOD’s position on rice aid to Indonesia be as set forth above.

F. J. Blouin 7

Rear Admiral, USN
  1. Source: Washington National Record Center, RG 330, OASD/ISA Files: FRC 70 A 3717, Indonesia, 400.73 (430 Indonesia). Secret. Drafted by Nuechterlein.
  2. As reported in telegram 1634 from Djakarta, December 3. (National Archives and Records Administration, RG 59, Central Files 1964–66, E 1 INDON)
  3. As reported in telegram 1722 from Djakarta, December 11. (Ibid., POL 23–9 IN DON)
  4. Telegram 741 to Djakarta, December 9. (Ibid., E 1 INDON)
  5. Not printed. (Ibid.)
  6. Washington National Records Center, RG 330, OASD/ISA Files: FRC 70 A 3717, Indonesia 320.2–400.3295 (381 Indonesia).
  7. Printed from a copy that indicates Blouin signed the original.