52. Memorandum From Secretary of State Rusk to President Johnson 1

SUBJECT

  • Status Report on Relations with Indonesia

Recommendation:

I recommend, with the concurrence of Secretary McNamara and AID Administrator Bell, that you approve continuation of carefully selected economic and military assistance to Indonesia, of the types now being provided, as originally approved in NSAM 278 of February 3, 1964.2

Discussion:

1.

The “Summit Meeting” of President Sukarno of Indonesia, Prime Minister Rahman of Malaysia, and President Macapagal of the Philippines took place in Tokyo recently. I believe the results represent limited progress and there is still a basis for further negotiation. The three heads of state agreed on a communique3 accepting in principle the designation of an “Afro-Asian Conciliation Commission” to assist the parties in resolving their differences. They also agreed to instruct their Foreign Ministers to continue to study the proposal for a conciliation commission with a view to a further meeting of the heads of Government.

Personal relations between Sukarno and the Tunku were poor at the conference and both returned home issuing angry statements. We are apprehensive that the guerrilla activity in Borneo may now increase again. Our efforts and those of President Macapagal continue to be directed to attempts to restrain violent speech and action. Our effort will be to keep the attention of Sukarno and the Tunku focused on the fact that there is an agreement which must be carried out, starting with a meeting of the Foreign Ministers.

2.
As you know, our limited programs of economic and MAP assistance with Indonesia have continued, in accordance with your decision recorded in NSAM 278 of February 3, 1964, pending the outcome of the “Summit Meeting.” In my judgment, concurred in by the Secretary of Defense and the Administrator of AID, it is essential to the national interest to continue carefully selected economic and military assistance to Indonesia of the types now being provided. We should not, however, make a formal public announcement of continued assistance for this might give unwarranted encouragement to President Sukarno. If you approve the above recommendation, we will routinely and confidentially notify the Congress of the current status of assistance to Indonesia, as required by Section 620 (j), without reference to a renewed Presidential decision.

Dean Rusk

Enclosure

Paper Prepared by the Bureau of Far Eastern Affairs

STATEMENT OF REASONS FOR CONTINUATION OF LIMITED ASSISTANCE TO INDONESIA

Indonesia, in terms of size, natural resources and strategic location, is a key country of Asia. In the midst of a convulsive transition from the colonial past, it has become a major target of the Communist powers and is itself a source of tension in Southeast Asia. For the past nine months it has been pursuing a policy of political, economic and military “confrontation” against Malaysia.

Our Indonesia policy requirements are two-fold: (1) to halt Indonesia’s “confrontation” against Malaysia and restore equilibrium to the area and (2) to influence the course of Indonesia’s long-range development in a direction consistent with our security needs.

Our aid programs have been an essential tool in this dual task. Over the years, they have helped us keep open the communications between our two Governments and build up a limited but real leverage with the Sukarno regime, which we are using to prevent a dangerous drift away from the West. Although “confrontation” has not yet been abandoned, our influence has probably helped prevent greater deterioration [Page 118]and encouraged the Indonesian Government to join with Malaysia and the Philippines in seeking a peaceful settlement of their differences.

Those forms of assistance which could help Indonesia maintain “confrontation” against Malaysia have been eliminated, and we do not intend to resume them so long as “confrontation” continues.

The present AID program is limited to technical assistance, including civil leadership training and advisory services, malaria eradication assistance, and police training and equipment. (Arms and ammunition have been and are being withheld.) The present Military Assistance Program is limited to training in those categories which do not contribute to Indonesia’s immediate offensive capability. The training is almost entirely confined to operations, logistics and administrative fields. However, no training is being provided in such fields as ranger, pathfinder, airborne, counter-insurgency, parachute packing, in-flight re- fueling, and landing force staff planning.

The reduced FY 1964 AID program totals approximately $10 million and the revised FY 1964 MAP is $1.9 million. All the FY 1964 MAP funds are for training; 90% of the FY 1964 AID funds are for training and malaria eradication. Similar programs at approximately the same level are planned for FY 1965. (See Tab B for details.)4

We are currently training 490 civilian technicians, administrators and managers, and 170 military personnel (including 50 officers under the civic action program) who will play an important part in Indonesia’s future leadership. In addition, U.S. university faculty teams in Indonesian institutions are reaching thousands of additional key Indonesians. Our training programs give us a unique opportunity to shape the thinking of Indonesia’s future civilian police and military leaders. Continuation of the malaria eradication program, benefiting approximately 70,000,000 people of the central islands, is protecting an existing investment of some $36 million and would demonstrate our continuing concern for the Indonesian people. If we stopped now, malaria—now virtually eradicated in Java and Bali—would almost inevitably recur. The program of assisting the national police has given us valuable influence in this key organization (the country’s first line of defense against internal subversion) and has greatly enhanced its effectiveness.

Continuation of these limited programs is essential to achievement of our policy objectives in Indonesia and to the national interest of the [Page 119]United States. Termination of the remaining programs would have little or no impact on Indonesia’s capacity to continue “confrontation.” The Indonesian Government would be likely to react to such termination by lashing out in anger, pushing “confrontation” harder, turning for help to the Communist powers, and further widening the gap between Indonesia and the West. In the process, substantial American oil and other private investment in Indonesia might well be expropriated.

All elements of these programs, including pipeline deliveries from previous years, as well as PL 480 programs (which are not controlled by Section 620 (j)), are being kept under continuing review.

  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. IX. Secret. The Department of State copy of this memorandum indicates it was drafted by Cuthell with clearances from Bell and Poats (AID), William Bundy, Harriman, Solbert (DOD/ISA), McNamara, and Arthur Wexler (H). (National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) INDON)
  2. Document 29. There is no indication of the President’s approval, but see Document 53.
  3. The text of the communique is printed in American Foreign Policy: Current Documents, 1964, pp. 898–899.
  4. Attached but not printed was a detailed description entitled “Current Assistance Programs in Indonesia,” which had four tabs attached. Tab A was the proposed MAP and AID FY 1964 Program obligation, Tab B was reductions in FY 1964 MAP and AID program, Tab C was a pipeline trend of estimated unexpended balances of all obligations, and Tab D was an outline of the Food for Peace program in Indonesia.