263. Action Memorandum From the Assistant Secretary of State for Far Eastern Affairs (Bundy) to Secretary of State Rusk 1

SUBJECT

  • Substantive Aspects of the Visit of the Prime Minister of Malaysia

Discussion

The Prime Minister of Malaysia will seek to convince us that Indonesia intends to carry out its avowed policy of crushing Malaysia and driving the West from the area, thus complementing Communist strategy in Southeast Asia.2 He will seek to demonstrate the need for the United States to provide forthright, concrete support for Malaysia in the face of Indonesian confrontation. He will indicate, if not state, his opposition to the continuation of our aid to Indonesia in any form.

Our problem is to reaffirm our support for Malaysia and make some tangible gesture of encouragement without involving the United States in either the substance of the dispute or in substantial new commitments in Southeast Asia, and without needless aggravation of our relations with Indonesia.

There are several alternatives:

1)

Economic Assistance Program.

Such a program cannot be justified at this time since Malaysia has a relatively good economic situation, possibilities of additional revenues through taxation, substantial reserves and unexploited opportunities for borrowing from the IBRD, other friendly western governments and commercial sources.

2)

Other Types of U.S. Assistance.

There are 330 Peace Corps Volunteers in Malaysia at present and there is little possibility of expanding this program. We are informally assisting the Malaysians in locating sources of technical information, facilities for training in U.S. Government and private institutions, and intend to expand this so-called “non-AID aid” which does not require any special budgeting of U.S. funds. We have already informed the Government of Malaysia of this activity.

3)

Military Sales on Credit Basis.

We have told the Malaysians on several occasions that we would be willing to assist them in the purchase of military equipment in the U.S. and to explore all available U.S. Government and commercial sources of credit to secure the best possible terms once they had submitted firm requests for material. They recently requested price and availability data on certain heavy military equipment (armored personnel carriers and anti-aircraft guns). We propose to meet this and future requests for such information and to sell such equipment on the best credit terms available to the Department of Defense.

4)

Military Training.

The Prime Minister has informally expressed an interest in training Malaysian officers in the U.S. We believe a small military training program, involving not more than ten officers and costing approximately $100,000 a year, would offer important political advantages at low cost. It would demonstrate both to Malaysia and to Indonesia U.S. support for Malaysia in concrete terms. Indonesia could not logically take exception to such a program since Indonesian officers are already being trained in the U.S. Such a program would also give us contact with young Malaysian officers who may become national leaders in the future.

5)
Public Statement of U.S. Support for Malaysia.

I believe we should use the joint communiqué which will be issued after the Prime Minister’s meeting with the President to reaffirm our support for Malaysia, but that we should not agree to language criticizing or commenting on Indonesia’s policy of confrontation. To do the latter would neither add to Malaysian strength nor contribute to a relaxation of confrontation and might instead encourage greater Indonesian intransigence. We should be pro-Malaysia, not anti-Indonesia.

If response to criticism of our aid to Indonesia is indicated, I suggest we point out that unlike Malaysia, the structure of the Indonesian government rests entirely on one man; that we must look beyond Sukarno to the uncertainty perhaps chaos which is likely to follow his departure from the scene; that in our common interest we must maintain contact with elements in Indonesia that can prevent an outright Communist takeover; that our assistance to Indonesia is carefully [Page 579]screened to eliminate elements which would contribute to Indonesia’s ability to prosecute its military pressure on Malaysia.

Recommendation 3

1)
That we suggest to the Prime Minister that the Chief of the Armed Forces Staff of Malaysia be invited to the U.S. to visit U.S. military training establishments with a view to the possibility of setting up a small U.S. military training program for Malaysian officers.
2)
That we reaffirm to the Malaysians our willingness to assist them in securing the best credit terms available for the purchase of military equipment, and that we ask the Department of Defense to provide the Government of Malaysia with appropriate information on military equipment in which they express an interest.
3)
That we recommend to the President that a forthright statement of our support for Malaysia be included in the communiqué covering talks with the Tunku, but that we also recommend against the use of this communiqué as a vehicle for castigating Indonesia.

  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, POL 15–1 MALAYSIA. Confidential. Drafted by Moscotti; cleared in draft with G/PM, AID, and DOD; and sent through Harriman who initialed it.
  2. In a Special Report SC No. 00612/64B, March 27, prepared by the Office of Current Intelligence, the Central Intelligence Agency concluded that Indonesia’s policy of confrontation had diverted attention from Malaysia’s serious internal problems, primarily communal friction among the Chinese and Malays throughout Malaysia, Malays on Borneo and on the mainland, and between Chinese elements on the mainland and the rest of Malaysia. The CIA stated that the federal government “apparently is either not interested in pulling the four disparate parts of Malaysia together or is unable to do so. Malaya (the mainland), Singapore, Sabah, and Sarawak are scarcely more united now than they were when formally merged last September.” The CIA suggested that without the “cohesive effect of the Indonesia confrontation, the federation might already be disintegrating.” (Johnson Library, National Security File, Country File, Malaysia, Vol. I, Memos, 11/63–3/64)
  3. Rusk approved all three recommendations on July 15.