203. Telegram From the Department of State to the Embassy in Indonesia 1

1173. Ref: A. Djakarta’s 2628 (Notal); B. Djakarta’s 26332 (Notal).

1.
Following is our current assessment as to how Indo situation likely develop and summary our current thinking as to nature of US response to Indo requests for assistance, which seem to be inevitable and probably in near future.
2.
We do not expect either return of Sukarno/Subandrio to real power or rapid emergence strong, economy-minded regime in near future. Even if new moderate government emerges along lines para 5 ref B,3 it will likely represent compromise between various remaining elements of Indo power structure, collectively concerned about problem of establishing itself in effective control over country, and both unwilling and unable to take dramatic or surgical action on Indonesian economy. We assume Sukarno would preserve at least titular power, and that effective exercise of responsibility by new regime will be limited by a felt need to keep him reasonably happy through at least continued lip service to Sukarno’s official mythology for sake of maintaining continued national unity.
3.
Government of this sort is likely to be aware of and concerned about basic economic problems of Indonesia, but will feel that it must get through months ahead with palliative help from outside rather than by taking on basic problems. Expect it will, for example, not dare make significant reduction in size of civil service or army.
4.
This government likely make complicated series of bilateral appeals through the usual traveling teams and through foreign ambassadors in Djakarta for food and fibers and for debt rescheduling and new credits overtly from Japanese and Europe, and, at least initially, covertly from us.
5.
When approached by Indonesians we might react as follows:
A.
US interest in giving help depends on some showing that a constructive Indonesian government is establishing itself firmly in power desiring to pull country out of its present economic shambles. We are ready to help such a government out with rice and cotton on terms which Indos could advertise as commercial but which are in fact very concessional (along lines Ambassador Green’s discussions in Washington, using mechanisms like PL 480 and CCC guaranty).
B.
Concealment is impossible for us. We do not desire embarrass GOI or give erroneous impression that we are trying to move back into Indonesian scene, but fact of life is that any real role we can play in helping Indos will be public knowledge.
C.
With respect to debt rescheduling or other aid apart from above immediate food and fiber relief, following considerations apply:
i.
We feel that support for Indos other than limited emergency measures can only be effective or possible politically on multilateral basis.
ii.
Our thought is that one or more nations friendly to Indos—such as Japan—should be asked by Indos to take lead in arranging meetings of creditor and perhaps other interested countries to analyze debts and need for cash and credits during months while GOI is attempting to reverse present deterioration and to establish itself, and to decide how to proceed collectively in helping Indos out of predicament. We would be glad to participate.
iii.
Problem of Indo situation is international, and action taken must involve equality of treatment of creditors, for which reason we believe it important attempt secure participation USSR. We and other creditors could not, for example, accept an arrangement on credits and debt rescheduling which simply freed Indo assets to service Russian debt. We believe Russians should be asked to participate in aid meetings (ii. above) even though they may well refuse attend.
iv.
We are willing to help GOI but we cannot do so if GOI continues to hammer at us as its greatest enemy, is pursuing military confrontation or confiscates US oil properties. These are not onerous preconditions and we would not ask sharp changes in public policy of sort which might endanger GOI existence.
6.
We have it in mind that early if not first Indo request for support will be to Japanese in course visit frequently deferred Indo economic mission. When we and addressees have reached agreement as to US position we believe we should review it in some detail with Japanese, both to correct view reported para 4B ref A and to help Japanese prepare respond to Indo request for aid. Action addressees requested comment [Page 424]soonest on foregoing and on other aspects of problem they may wish raise.4
Rusk
  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) INDON. Secret; Priority; Limdis. Drafted by Cuthell; cleared in draft with Barnett, Vladimir Toumanoff, Officer-in-Charge of Multilateral Political Relations (EUR/SOV), and Poats; cleared by Mann and Richard W. Petree, Officer-in-Charge of Japanese Affairs; and approved by Bundy. Also sent to Tokyo and repeated to Moscow, Bonn, Paris, The Hague, Kuala Lumpur, and Hong Kong. In a note to Komer, March 18, Thomson reported that this cable went out without White House approval and was the “end product of a reluctant and hand wringing approach to contingency planning” strongly encouraged by the NSC staffers. Although “irked” by some preemptory judgments, Thomson “welcomed even this bit of glacial progress on the part of the Department.” Thomson concluded, “Clearly the Japanese are being set up as our front men, and I suppose that makes sense.” (Johnson Library, National Security File, Country File, Indonesia, Vol. VI)
  2. Both dated March 16. (National Archives and Records Administration, RG 59, Central Files 1964–66, FN 14 INDON and POL 23–9 INDON, respectively)
  3. In paragraph 5 of telegram 2633 from Djakarta March 16, Embassy suggested that, “there would almost certainly be an eventual rehabilitation of old pro-Western elements like Masjumi and PSI but probably under different names.” Leaders like Malik, Suharto, and Nasution would probably play a key role.
  4. In telegram 2682 from Djakarta, March 19, Green judged the Department’s analysis and proposed response to Indonesian requests for aid to be “excellent.” (National Archives and Records Administration, RG 59, Central Files 1964–66, AID 1 INDON)