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

SUBJECT

  • Indonesia—The Vice President’s memorandum of July 14,2 and Bill Gaud’s comments thereon3

The Vice President’s memorandum argues that Indonesia should have a very high priority claim on our foreign assistance resources. Bill Gaud agrees, but points out that, for a variety of reasons, we face serious problems in meeting the commitments we have already made to Indonesia for this year. Moreover, there is every reason to think we will have even greater problems next year.

In other words, we are having trouble performing satisfactorily on what we have already agreed to do, and we are beginning to doubt if we have agreed to do enough.

[Page 514]

To meet the immediate problem of our commitments during Calendar Year 1967, we must get at least 100,000 tons of rice for Indonesia. That will leave almost $10 million of our current commitment unsatisfied. The solution that would best meet Indonesian needs is to use some of our FY 68 Indonesian money as a cash loan. That, however, is borrowing from Peter to pay Paul, for it leaves us more than ever short of the resources required to meet our commitments to Indonesia in CY 68. Basically, it looks as if we are going to have to find more resources.

Indonesian expectations of American aid vastly exceed anything we are going to be able to come up with. Whatever we do, they will be disappointed. It is essential, however, that the gap between what we give and what they expect not be so broad that their disappointment turns into despair and disillusionment.

There is a way out of this. We will keep digging until we find it.

Walt
  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. VIII, 6/67–8/68, [2 of 2]. Secret; Exdis. There is an indication on the memorandum that the President saw it.
  2. Document 237.
  3. In a memorandum from Gaud to the President, July 17. (Johnson Library, National Security File, Country File, Indonesia, Vol. VIII, 6/67–8/68, [2 of 2])