230. Memorandum From the President’s Special Assistant (Rostow) to President Johnson 1

SUBJECT

  • Aid to Indonesia

Agriculture (Secretary Freeman) and AID (Bill Gaud) have asked your approval to pledge up to $40 million of additional PL–480 and [Page 489]up to $20 million of additional Support Assistance for Indonesia in 1967.2 Their request has been endorsed by the Budget Bureau (Schultze) and Treasury (Joe Barr).3

This proposal is based on an estimate that Indonesia will require $210–$240 million in total aid this year if it is to carry out its stabilization program. Our portion of the total would be no more than one-third, up to a maximum of $85 million.

We have already committed $36 million in AID and PL–480 funds this year. The remaining $49 million would be a mix: $30–$40 million in PL–480 and $10–$20 million in support assistance. The amount, commodity composition and terms will be worked out in the interagency review.

AID funds will be limited to procurement in the United States to minimize any adverse effect on our balance of payments.

As you know, the new Indonesian leadership has been fighting an uphill battle to undo the damage of Sukarno’s years of misrule. They have worked closely with the IMF in laying out their plans for the future. Our specialists consider those plans to be realistic.

But they do need help, from us and from others.

The potential aid donors will be meeting in Amsterdam on February 23–24. This is a follow-up to the debt re-scheduling conference in Paris last December.

Our delegation wants authority from you to discuss this with the Indonesians and others on the basis of a pledge from us of up to one-third of the total requirement, i.e. no more than $85 million (of which $36 million has already been committed).

The Amsterdam meeting is not, strictly speaking, a pledging session. But our State and AID officials believe that this vital aid program will not move as it should if we can make no pledges or talk in terms of what we can be expected to provide. They consider it most important that they have the authority as outlined above.

I asked for a reading of sentiment on the Hill. Bill Bundy discussed the Indonesian problem on January 18 with the Foreign Affairs Committee. He reports that the members viewed with understanding our efforts to help Indonesia and to take part in lending support to the new leadership. Ambassador Green had a 90-minute session with the Foreign Relations Committee on January 30. He said the members welcomed the multilateral approach in meeting Indonesia’s needs and endorsed our participation in a program to afford Indonesia critically [Page 490]needed assistance. In separate sessions, Senator Mansfield, Congressman Morgan and Congressman Zablocki voiced full agreement to our giving timely assistance to Indonesia.

I believe the requested authority should be granted on the basis of the Agriculture-AID memorandum.

Walt

Proposals approved

Disapproved

See Me4

  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. VII, Memos, 5/66–6/67. Confidential.
  2. In a joint memorandum of February 16. (Ibid.)
  3. In a memorandum of February 18. (Ibid.)
  4. Johnson wrote the following note: “W[alt]—Check out House & Sen Leadership. Also For Rel Com & For Affairs. Top 3 on each side and report reactions. L.” In a memorandum to the President, February 23, Jorden reported that Katzenbach and Bundy spoke with Congressional leaders who were all in favor. The leaders were told that the United States was trying to convince Japan and the Europeans each to match the U.S. one-third offer. (Ibid.) Johnson wrote the following note on Jorden’s memorandum. “O.K. on assumption Japanese and Europeans go 2/3 to match our 1/3. We will go on that basis. L.”