223. Memorandum of Conversation1

SUBJECT

  • Indonesian Economic Situation

PARTICIPANTS

  • Indonesian Foreign Minister Malik
  • Ambassador Palar
  • General M. Jusuf, Minister of Light Industry
  • Mr. A. Sani, Under Secretary for Political Affairs
  • Colonel Sudjono
  • Mr. E. Tobing
  • The Secretary
  • Assistant Secretary William P. Bundy
  • Ambassador Green
  • Mr. Francis T. Underhill, Indonesian Country Director

The discussion during Foreign Minister Malik’s call on the Secretary concentrated on Indonesia’s economic situation and Viet-Nam. Indonesia’s readmission to the UN, multilateral organizations, and Indonesia’s non-aligned foreign policy were touched on briefly.2

Economic Situation

1.
Foreign Minister Malik said that Indonesia’s principal short-range problem was providing adequate food for its population and sufficient clothing for the Muslim Lebaran holiday in December. He acknowledged the assistance which the United States has already provided to help meet these needs. He went on to say that it was not the size of foreign assistance that was important, but rather the right kind of assistance that would help Indonesia’s own productive capacity to improve. Indonesia, the Minister continued, is suffering from the legacy of the former regime and is saddled [with] economic chaos. There is also, he added, a continuing residual threat from Communist elements.
2.
The Secretary noted that Ambassador Green had been discussing with the Foreign Minister various kinds of emergency assistance which the United States was prepared to furnish, and said that there was understanding and sympathy for Indonesia’s problems within our government. The IMF and the creditor nations are organizing, he continued, for a cooperative effort to help Indonesia, and we are ready to do our part. The Secretary stressed that external resources could play only a marginal part in the development effort and that Indonesia itself must carry the main burden. He cited the Alliance for Progress in Latin America and United States assistance to India as examples. In connection with the Tokyo meetings, the Secretary said that in his talks with Soviet Foreign Minister Gromyko in New York [Page 474]he had expressed our views on the importance of Soviet cooperation in a multilateral solution of Indonesia’s debt problems and emphasized that the creditors meeting should in no sense be considered as an anti-Soviet conspiracy. Mr. Gromyko, continued the Secretary, received these views without polemics, but gave no indication of his government’s position. The Secretary noted the importance of non-discriminatory treatment of all of Indonesia’s creditors and said that any settlement that would imply payment of the Soviet debt at the expense of the United States and other western creditors would give us serious political problems. Mr. Malik said that he anticipated no difficulty in obtaining Soviet cooperation; they had in fact little choice but to accept the Tokyo principles.

  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) INDON). Secret. Drafted by Underhill and approved in S on November 26. The memorandum is Part I of III. On September 24 Bundy sent Rusk a briefing memorandum and talking points for this meeting, which Rusk saw. (Ibid., POL 7 INDON) The time of the meeting is from Rusk’s Appointment Book. After the meeting Rusk hosted a lunch for Malik and his party. (Johnson Library, Rusk Appointment Book)
  2. Malik met with William Bundy and Ball on September 23. (Memoranda of conversation, both September 23; National Archives and Records Administration, RG 59, Central Files 1964–66, POL INDON–US and POL 2 INDON) In describing the discussions with Ball and Bundy to the Embassy in Djakarta, the Department stated that the meetings “covered familiar ground with Malik laying stress on economic situation and importance of interim assistance.” (Telegram 53857 to Djakarta, September 24; ibid., POL 7 INDON) In a September 26 meeting between Malik and Thompson and Green, Malik stated that there was probably no substance to statements made in 1965 that Indonesia would explode an atomic device. Malik assumed it would have had to have been a Chinese device, but he doubted that China would have permitted it. Malik also discussed Indonesia’s relations with the Soviet Union and North Korea. (Ibid., POL INDON–US)