60. Memorandum From the Deputy Assistant Secretary of State for Far Eastern Affairs (Green) to Secretary of State Rusk 1

SUBJECT

  • Your Lunch with the President Today2—Current Indonesian Developments

On the assumption that Indonesia is likely to be discussed at your lunch with the President, I thought it might be useful for you to have a brief summary of our current view of the situation, and my preliminary estimate as to how we may have to react to it. I must emphasize that [Page 131]these conclusions about future developments are still very tentative, and have not been cleared or discussed in detail outside this Bureau. I thought, however, you might wish to have them for your conversation with the President.

Sukarno’s August 17 speech3 (full text not yet available) was a catalogue of specific points in Indonesian foreign policy in direct opposition to ours, and included lengthy sections on domestic affairs in which Sukarno set forth views identical with or very close to the PKI. During the period immediately preceding the speech various Indonesian groups with or without Government blessing seized our USIS Library in Djogjakarta, threatened take-overs or boycotts of several American private businesses, and increased the tempo of the current anti-American campaign. We assume that the stridency of the August 17 period will now give way to relative calm, but believe we are faced with an Indonesian Government which is increasingly moving away from the United States both internally and externally. That is also our Embassy’s judgment.

During the same recent period we have had a new amendment on Indonesian aid passed by the Senate.4 As we understand it, the present hope is that the final bill will contain the Tower amendment as written, further amended to give the President discretionary authority to continue such aid as he considers in the national interest. The practical effect of this would seem to be that shortly after the bill becomes law the President will be faced with the necessity of making a publicized formal determination on aid to Indonesia.

Bearing in mind both the difficulty of making a favorable determination in the light of Indonesia’s recent conduct and the undesirability of giving Sukarno a pat on the back by doing so at this point, I am considering areas in which the current Indonesian program could be contracted, both to get the lesson home to Sukarno and to reduce pressures in the United States. Specifically I believe that the time may have come when we should terminate aid to Indonesian military and paramilitary organizations, but that we should attempt to maintain over the next years as much of a program of educational exchange and support for Indonesian educational institutions as we can. If possible, it would seem desirable to continue the Peace Corps program and the program for malaria eradication.

If the United States should announce termination of aid to the Indonesian military as a unilateral action we would expect a strong and perhaps violent Indonesian reaction. We would expect abrogation [Page 132]of the agreement protecting our oil properties and loss of other American investments, and would anticipate violence against Government installations and perhaps people, a situation which would obviously create a new major problem to us in Southeast Asia in the months ahead.

If we decide to terminate military aid we believe there is a good chance that we could exit with minimum adverse reaction from the present situation by pointing out to the Indonesians that the Tower amendment and their own policies are leading toward the ending of such aid, and suggesting to them that, in the interests of removing irritants to our relations, we agree to immediate termination of our military assistance program, and that the Indonesian Government issue an announcement to this effect. On the basis of discussions which Ambassador Jones had with Sukarno and Subandrio last spring we believe that the Indonesians might find this an attractive and face-saving approach to the problem. (Subandrio at that time spoke of such Indonesian action as a useful way of removing programs which were becoming irritations in our relations rather than contributing to them.) From our point of view, encouraging Indonesia to take this course would stand a better chance of relieving us of increasingly embarrassing programs without creating the long-range obstacle to the resumption of good relations with any Indonesian Government which would undoubtedly result from unilateral American action.

For the foregoing plan to work, it would be necessary to discuss the subject quietly with Sukarno and Subandrio soon, as the Indonesians would have to act before the aid bill becomes law. I plan, therefore, to make a detailed recommendation to you on this subject as soon as the status of the Tower amendment becomes more clear, but thought you might wish to go over the subject in general terms with the President.

  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) INDON. Secret. Drafted by Green and Cuthell.
  2. President Johnson met with Rusk, Ball, Vance, and McGeorge Bundy at 1:33 p.m. in the White House. (Johnson Library, President’s Daily Diary) No other record of this meeting has been found.
  3. See footnote 2, Document 59.
  4. See footnote 4, Document 59.