6. Memorandum Prepared by the President’s Special Assistant for National Security Affairs (Bundy)1

MEMORANDUM ON INDONESIA

We face two questions—one broad and one narrow:

A.
Broadly, it is agreed that we should have a cool and firm policy of increasing opposition to Sukarno, if he goes on lifting the level of force used against Malaysia. This policy has already led to a reduction of 80% in our planned assistance to Indonesia for FY 1964. Further reductions should be made in this assistance, in PL–480, and in Pipeline deliveries if Sukarno does not cool off. All this has been made very plain to Sukarno and is agreed throughout the Executive Branch.
B.
Narrowly, we have a question whether all assistance to Sukarno except goods in Pipeline and some PL–480 should now be cut off because of certain amendments to the Foreign Aid Act. Pros and cons are:

For the cut-off:

(1)
Nobody likes Sukarno, and with good reason.
(2)
Congress has expressed itself strongly.
(3)
A cut-off might show Sukarno consequences of “confrontation” with Malaysia.
(4)
Cut-off protects the President from having to determine that assistance to Indonesia is “essential to the interest of the United States.”
(5)
Adverse consequences in Indonesia could be mitigated by “wind-up” assistance, by continued PL–480, and by continuing parts of Pipeline deliveries (all outside the reach of the amendment).

Against the cut-off:

(1)
The programs we have planned are there now because we think them “essential to our national interest.” They are there not because we like Sukarno, but because we are contending for the long-range future of a country of 100 million with great resources in a strategic location. The odds may be long, but the stakes are high, and our investment is small. A cut-off now could end our hopes by our own act. “Wind-up” assistance, PL–480, and Pipeline deliveries would probably not reverse the political effects of the cut-off in Indonesia.
(2)
The right way to cut or increase these programs is by continuous Presidential judgment in a swiftly moving diplomatic situation. [Page 14]The President can control all the programs all the time. To let the amendment take effect now would be to cut out one part of the program at a quite arbitrary moment.
(3)
Such a cut-off today could trigger a violent reaction from Sukarno and block efforts to settle dispute by Filipinos and Thais. It could also cost us half a billion of private investment. It could hand Indonesia’s future to Communists. Aswan Dam case should remind us that neutrals are ready to seize on our acts to justify their outrages—and to some extent they get away with it.
(4)
The Presidential Determination can be reasonably explained to the American people. A draft statement is attached at Tab A.2 This draft aims to explain as much as possible to our own people without giving Sukarno excuses for wild actions.

McG. B. 3
  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. I, 11/63–4/64. Secret.
  2. Tab A was not attached. (Ibid., National Security Council Meetings, Vol. 1, Tab 2, 1/7/64, Assistance to Indonesia)
  3. Printed from a copy that bears these typed initials.