213. Memorandum From Donald W. Ropa of the National Security Council Staff to the President’s Special Assistant (Rostow)1

SUBJECT

  • Limited Resumption of Aid to Indonesia—Presidential Determination

Marshall Green has now given his recommendations for short-term assistance to Indonesia (Djakarta Embtel 144, attached).2 He argues convincingly for specific, limited measures designed to meet urgent economic and political requirements over the next three to four months. He believes any recommendations for the longer haul are difficult, subject to continuous revision, and still depend on the outcome of debt rescheduling and further evidence of how effective Indonesia is moving to solve its own problems and handle its international relations (i.e. confrontation).

Green’s short-term proposals avoid involving us too deeply and prematurely while laying the groundwork for subsequent assistance. They are:

1.
Resumption of participant training (recommended earlier);
2.
Additional cotton sales up to 100,000 bales for third country processing, plus the supply of rice as available to help meet possible 500,000 ton shortfall;
3.
Food for work under Title II, PL–480;
4.
Modest amount of spares to rehabilitate previously supplied military equipment to support highly selected civic action activity;
5.
Equally modest spare parts to reactivate U.S. equipment in the general economy.

Green favors a Presidential Determination forthwith to activate student and participant training; he would await the formation of the new cabinet (two to three weeks hence) to begin implementing the other proposals.

State’s Position

Sympathetic, except for the military items which they believe should be deferred a while longer pending further clarification on confrontation. [Page 447]They are advising Green to this effect, stating that the Presidential Determination is under review.

Participant Training

Indonesia’s new education plans stress elimination of the influence of 10 years of PKI domination. Green sees this requiring a major effort, warranting our support, with its success representing perhaps our most important investment in Indonesia’s future. The limited stable of first rate economists, who are now assuming top level responsibility, were trained at Harvard, Stanford and the University of California before the program was halted in 1964. Indonesia’s ban on travel to the U.S. for study was lifted in June; there is a reservoir to draw on of 200 cases fully processed before the ban; new selection criteria and procedures pose no great difficulties.

The clear advantage of seeking the resumption of aid through a Presidential Determination that focuses primarily on the re-activation of participant training is the probable smooth sailing it would have with Congressional leaders. It would pave the way for other forms of aid later as feasible and desirable. State believes the favorable psychological reaction in Indonesia would be considerable.

Presidential Determination

The legislative language and history affecting the President’s authority on Indonesian aid (summary attached)3 make clear that the PD is necessary for any new bilateral assistance. Some lawyers at AID believe participant training could possibly be resumed without a PD, but we risk compromising our longer range aid posture with Congress by going this route; in any event the legislative intent can now be satisfied.

More immediately, before proceeding with the PD, the Hickenlooper restriction must be dealt with on the expropriation without compensation of six U.S. firms in Indonesia, plus arrears of $13 million in Indonesian debt to the U.S. private sector. The expression of Indonesia’s constructive intent may be adequate here, and State is advising Green what must be done.

Options on the PD

1.
We can process this separate from the forthcoming NSC discussion on Indonesia and possibly gain some time in responding to Green’s request for quick action, or
2.
We can include the PD in the NSC discussion and relate it to that broader review of the Indonesian situation and our future policies.

Do you have a preference for either of these alternatives?

Don Ropa
  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. VII, 5/66–6/67, [2 of 2]. Confidential. There is a check mark through Rostow’s name indicating that he read the memorandum. Attached to this memorandum was the following note: “Walt: Incidental intelligence re the attached—Bill Bundy says Fulbright could not have been more understanding—that there was no other course we could follow under the circumstances—and he understood and approved!! Bill [William Jorden]”
  2. Dated July 9, not attached. (National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) INDON)
  3. Dated June 14. (Johnson Library, National Security File, Country File, Indonesia, Vol. VII, 5/66–6/67, [2 of 2])