245. Memorandum From Marshall Wright of the National Security Council Staff to the President’s Special Assistant (Rostow)1


  • Indonesian Expectations of Aid in 1968

I have mentioned before the near certainty that 1968 would be the year in which we begin to have real problems with over-sized Indonesian aid expectations. The size of the problem is now becoming clear.

The Expectations

Suharto told Marshall Green last week that unless the U.S. could go above the one-third formula, Indonesia’s new order would be in serious trouble.

Suharto “hoped” that in 1968 we would contribute $100 million in addition to $50 million in PL 480 commodities.

Suharto’s Aide, Colonel Sutikno, separately mentioned to Ambassador Green the GOI hope for $150 million in 1968 aid.

The Indonesian budget for 1968 is based upon the receipt of $325 million in foreign aid. Even if we adhere to the one-third formula, our share would be $108 million.

Finance Minister Seda announced at the September 20 press conference that Indonesia would ask for $350 million from donors and hopes IGG countries will increase contributions proportionately to reach that figure. For U.S. that would mean $117 million.

Suharto is sending his Finance Minister to Washington to express Suharto’s personal thanks to President Johnson for the assistance the U.S. has provided and to bespeak his hopes for future aid.2

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The Availabilities

As of now, we have $20 million DL funds earmarked for Indonesia in the FY 68 AID budget. 150,000 bales of cotton and 100,000 tons of rice would make a PL 480 package of about $39 million. It might also be possible to put together a PL 480 sale of bulgur, edible oils, etc. of $5 million or so, and to use some of our FY 69 AID funds to meet CY 68 commitments. At best, however, it is hard to see how we could get a package much bigger than $80 million.

  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. VIII, 6/67–8/68. Secret. Also sent to Jorden.
  2. Indonesian Finance Minister Frans Seda visited Washington, October 2–3. The Department of State requested that the President receive him briefly, but suggested that an expected letter from Suharto to Johnson could be delivered to Rostow. (Memorandum from Read to Rostow, September 29; National Archives and Records Administration, RG 59, Central Files 1967–69, POL 7 INDON) There is no indication in the President’s Daily Diary that he saw Seda, but Vice President Humphrey met with him at 2 p.m. on October 3. A record of their meeting is in a memorandum of conversation, October 3. (Ibid.) A copy of Suharto’s September 18 letter to Johnson, which was delivered to Rostow, and Johnson’s reply of October 5 is ibid., E 1–1 INDON)