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

SUBJECT

  • Aid to Indonesia in 1968

In the attached, Messrs. Gaud, Schnittker,2 and Schultze recommend that you approve a U.S. pledge of one-third (up to $110 million) of the aid provided to Indonesia in 1968 by the nine-nation consortium.3 (This is the same percentage share we are providing this year, although it only amounts to $65 million in 1967.) The Vice President and Secretary Fowler have also reviewed and approved this recommendation.4

Schultze’s memorandum (Tab A) will give you a good summary of the proposed conditions and negotiating strategy. It boils down to this:

  • —If Suharto is to stay afloat, he must have about $325 million in aid next year. (This number will be blessed by the World Bank and the IMF.)
  • —We won’t get $325 million unless we propose now to continue carrying our 1/3 share—$110 million. Even then, it will be tough.
  • —We can do most of our share, perhaps more than $100 million, in PL 480 rice, cotton, cotton yarn, and wheat. Even if Indonesia can’t absorb as much of these commodities as we hope, Bill Gaud promises he can make up any shortfall in 1968 and 1969 AID money.
  • —Thus, when the consortium meets at Amsterdam on Tuesday,5 we would propose to start the 1968 ball rolling by stating our willingness to [Page 538]contribute 1/3 of the overall aid requirement the Bank and Fund certify. This will put maximum pressure on the other donors—and stimulate the Indonesians to keep the pressure on.
  • —If the other donors failed to raise their 2/3 the total, we would come back to you for guidance.

I recommend you approve.

Walt

Approve package6
Disapprove
See Me

  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. VIII, 6/67–6/68, [1 of 2]. Confidential.
  2. John A Schnittker, Under Secretary of Agriculture.
  3. Dated November 15. (Johnson Library, National Security File, Country File, Indonesia, Vol. VIII, 6/67–6/68, [1 of 2])
  4. Humphrey made a strong endorsement in a November 13 memorandum to the President. (Ibid.)
  5. November 21.
  6. The President checked this option and on November 21 sent Rostow the following note: “Walt: I want to do everything I can for Indonesia—as quickly as I can. Send me a program. LBJ.” (Johnson Library, National Security File, Country File, Indonesia, Vol. VIII, 6/67–6/68, [1 of 2])