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

216750. Subject: Suharto Call. Ref: Djakarta 6291, 6289.2

1.
Strongly endorse your view that main objective of your forthcoming conversation with Acting President should be to form basis for frequency and continuing exchanges of views. If Suharto at any point has doubts or questions about U.S. policy it is desirable that he resolve them directly with you rather than using complicated and unreliable mechanism of intermediaries whose personal interests may not always coincide with clear transmission either your or his thoughts. Following paragraphs suggest lines you may wish to use.
2.
U.S. Assistance: Presume Suharto will use discussion internal political situation as lead-in for plea for U.S. aid. One possible line of reply would make following points:
a.
Indonesia received resounding vote of confidence at Scheveningen meeting where intergovernmental group agreed to provide $200 million gap in Indonesia’s balance of payments as projected by IMF.3 Donor countries attentions will now be focused on 1968 debt relief and assistance needs, and IBRD will shortly have a team in country surveying priority development requirements. (Suharto might be reassured to know that Widjojo is now in Washington seeing Walt and [Page 504]Eugene Rostow, Bundy, Poats, Linder, and other senior officials, as well as members Senate and House.)4
b.
Indonesia’s primary asset in dealing with international community is support of International Monetary Fund. This support stems in turn from confidence this international organization has in economic team that developed and is now executing New Order economic policy. Performance Indonesian team at Scheveningen meeting continued very high standard established by this group at previous meetings, and continuing support of Suharto and Presidium to this highly competent group of economic advisers is best way, in our judgment, maintain and expand flow of foreign assistance to Indonesia. Donor countries will also be looking for progress during coming months along lines noted Scheveningen Chairman’s report (septel).5
c.
There has been circulating in Djakarta criticism that U.S. support of Indonesian stabilization effort has been slow and niggardly. This criticism difficult to understand in light of following facts. Since April 1966 U.S. has postponed payment of $51 million of debt falling due in 18 month period 1 July 1966 through 31 December 1967, and provided $77 million in new aid. Included in this figure is direct assistance to the Indonesian Armed Forces for its civic mission. The U.S. is further committed to provide an additional $32 million as part of its share in meeting its commitment at Amsterdam and Scheveningen. Total through December 1967 of assistance to New Order will be therefore roughly $160 million.
3.
Rice: We have for number of weeks been working on Indonesia’s anticipated rice requirements in the fall of 1967. At this stage the most we can do is to assure Suharto that we are keenly aware of Indonesia’s requirements, that Indonesia has a high priority, and that as early as possible in the new crop year (beginning in July) we will let him know whether we can help.
4.
Private Investment: If in discussion this topic opportunity pre- sents itself you might note confusion which we observe in American business community created by contracts concluded by various officials of Indonesian Government whose relationship to over-all economic development plans are not entirely clear. (Barre’s CEDO would be prime example.) To sustain U.S. interest in investment Indonesia, now at high level, GOI must (a) arrange to deal with businessmen in orderly, responsible way, and (b) continue to maintain the generally promising [Page 505]investment climate created by effective performance on stabilization goals, MPRS new investment law, and US–GOI investment guarantee program.
5.
You may inform Suharto of our affirmative response to Hartono’s request for fatigue uniforms and jungle shoes (State 211544).6 FYI. Widjojo quizzed Underhill on our judgment of Hartono’s perform- ance in dealing with DLG. Latter said that Embassy/DLG’s relations with Hartono excellent, and that we had high regard for his professional competence. Widjojo then explained that unspecified persons were circulating story that Hartono was ineffective in dealing with Americans and that others could extract more MAP from US. Persistence his questioning suggested that he also may be target of similar campaign. Boosts for Widjojo, Sadli and Company as well as Hartono therefore seem appropriate. End FYI.
6.
Suggested points on Viet-Nam and Middle East follow septel. Middle East situation changing rapidly, and we will send current message in time for your meeting. Please advise time of appointment.
Katzenbach
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL INDON–US. Secret; Priority. Drafted by Underhill, cleared with AID Assistant Administrator for East Asia, John C. Bullitt, in substance with Nuechterlein and the Associate Administrator of the Foreign Agricultural Service, C.R. Eskildsen, and in draft with Berger; and approved by Barnett.
  2. Telegrams 6291 and 6289, June 24 and 23, asked for the Department’s views on issues to be raised with Suharto and suggested that this meeting might be the start of a useful dialogue on issues of mutual concern. (Ibid.) In Indonesia: Crisis and Transformation 1965–1968, p. 103, Green recalled that during the first half of 1967 he was denied access to Suharto in part because the U.S. Government was unwilling to provide uniforms and shoes to the Indonesian armed forces as part of the civic action program. Green stated that he was privately informed that he was only welcome to meet with Suharto as the “bearer of good news” and suggested that this might have been the view of Suharto’s aide rather than Suharto himself. Green is apparently referring to a conversation with General Alamsjah as reported in telegram 5771 from Djakarta, May 26. (National Archives and Records Administration, RG 59, Central Files 1967–69, AID (US) INDON)
  3. The Scheveningen meeting of mid-June 1967 was the second gathering of the Inter-Governmental Group on Indonesia (14 Western donor countries and 5 international organizations—IMF, IBRD, UN Development Program, and Asian Development Bank) that met in mid-June. The first meeting was held in mid-February 1967 in Amsterdam.
  4. A record of the meeting between Professor Widjojo Nitisastro, Economic Adviser to Suharto, and Barnett and Berger and other Indonesian experts from State and AID on June 27 is in a June 27 memorandum of conversation. (National Archives and Records Administration, RG 59, Central Files 1967–69, E INDON)
  5. Not further identified.
  6. Dated June 15. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 19–8 US–INDON)