67. Memorandum From the President’s Special Assistant for National
Security Affairs (Bundy) to President Johnson1
Washington, August 31, 1964.
SUBJECT
- Assistance Programs for Indonesia
Attached memo from Rusk (McNamara concurs) gives joint
State/AID/DOD recommendation that we suspend certain remaining aid to
Indonesia, chiefly military, but continue a few minor projects (most
civilian) in order to keep the door open. No new aid commitments are
involved, and no public determination is needed.
We are on a sharp downward curve in US/Indo relations, largely because of
the continued threat to “crush” Malaysia and our necessary opposition to
it. Sukarno has now adopted a
far more overtly anti-US line, which makes holding up further aid
essential.
At the same time, the very fact that we’re on a slippery slope makes it
all the more important not to burn all our bridges to Indonesia: (1)
with Vietnam and Laos already on our Southeast Asia plate, we can ill
afford a major crisis with Indonesia too just now; (2) we ought to keep
a few links, however tenuous, to the Indo military, still the chief hope
of blocking a Communist takeover; (3) there’s still a slim chance of
Sukarno drawing back from
a full-fledged push on Malaysia, and we want to keep dangling the
prospect of renewed aid; and (4) we do not want to be the ones who
trigger a major attack on U.S. investments there. So we urge you approve
Rusk’s proposals.2
[Page 145]
Attachment
Washington, August 30, 1964.
Memorandum From Secretary of State Rusk to President Johnson3
SUBJECT
- Assistance Programs for Indonesia
Action Recommendations4
- 1.
- That you approve certain moderate negative decisions,
specifically deferral of delivery of military assistance
major communications equipment and suspension of deliveries
of all military-type equipment for the Indonesian police and
internal security forces.
- 2.
- That, with respect to the military training program, our
Embassy explore whether the Indonesians are going to reduce
or eliminate this, and work toward a quiet mutual agreement
that will probably entail at least some reduction.
- 3.
- That you approve continuation of economic and technical
assistance, civic action programs, and nonmilitary training
and equipment for police and internal security forces,
unless and until Indonesia itself moves to alter
these.
Discussion
Sukarno’s recognition of
North Viet-Nam on August 10, his strongly anti-American anniversary
speech of August 17, and the Indonesian landing of August 17 north
of Singapore are adverse developments that should compel us to
withhold major actions we might otherwise have taken under paragraph
1 above. At the same time we wish to avoid any drastic or highly
publicized action that might lead Indonesia to cut off other
assistance programs that we believe to be useful, or that might
endanger important American private investments in Indonesia. The
attached memorandum describes the situation and the proposed action
in greater detail.
The Secretary of Defense concurs in these recommendations.
[Page 146]
Attachment
SUBJECT
- Assistance Programs for Indonesia
This memorandum provides the rationale for a number of decisions
tending to reduce our assistance programs for Indonesia but seeking
to retain the programs still regarded as useful. These decisions can
be carried out without any formal determination under the Foreign
Assistance Act, which we continue to believe should be avoided.
Facts Bearing on the Situation
- 1.
-
Sukarno
recognized North Viet-Nam on August 10. On August 17,
Indonesia stepped up confrontation of Malaysia with a small
(and apparently ineffectual) landing on the mainland north
of Singapore. Most basically, Sukarno’s August 17
anniversary speech was strongly and explicitly anti-American
and placed Indonesia on the side of the Asian Communists in
a series of issues. It represented the most systematic,
although not the most strident, expression of our growing
differences with Indonesia.
- 2.
- These Indonesian actions, as a matter of foreign policy
alone, would make it wise to adjust our aid policy. The
Indonesians have interpreted our statements of support for
Malaysia as expressions of hostility towards Indonesia, and
this has undoubtedly been one reason for their behavior.
However, its roots go deeper, and the fact is that we are,
at least for the time being, moving toward a different and
lower level of relationships with Indonesia.
- 3.
- From the domestic standpoint, the Tower Amendment cutting
off aid to Indonesia, with no Presidential discretion, will
probably be dropped if and when the foreign aid bill goes to
conference. We would not plan to disclose the present
decisions to Congressional leaders as it now looks, but it
might become useful to have the story available if it were
required.
- 4.
- At the same time, we should seek to avoid drastic or
highly publicized actions. These would tend to stimulate
possibly violent Indonesian reactions that would go much
further than we now wish to go in cutting off our aid
programs, and more specifically, that would seriously
endanger our major oil and rubber private investments in
Indonesia. Basically, our programs are now largely at the
point where they maintain valuable ties with key Indonesian
groups but do not bolster Sukarno or his Malaysian policy. Moreover,
despite his recent actions, Sukarno has not gone over to any sustained
military offensive against Malaysia and there is still a
possibility of a negotiated settlement probably through an
Afro-Asian commission. Thus, we believe we can continue to
sustain to Congressional leaders the argument that it is not
[Page 147] in our
interest to make a Presidential determination one way or the
other as to our aid programs as a whole.
Aid Actions Proposed
- 1.
- We can now take the following definitive negative actions:
- a.
- Decide not to ship any further major military
assistance equipment, at least for the present. Arms
and ammunition had already been eliminated last
fall, and the major pending item affected would be
about $8 million already funded to buy
communications equipment for a basic army network
connecting the major islands. This equipment would
have been supplied under a longstanding commitment
and would not have contributed to Indonesian
capabilities in Borneo. We would now tell the
Indonesians that delivery was being deferred,
and—which is true—that we may well have a valid US
operational requirement to ship it to Thailand
instead. The shutdown would then be complete in this
area except for about $100,000 per quarter of spare
parts for automotive and other equipment that we
believe is playing no significant part in Borneo or
other anti-Malaysian operations.
- b.
- Decide not to ship any further military-type
equipment and supplies to the National Police,
including the Mobile Brigade. We have since October
1963 cut off arms and ammunition to these units
also, but limited quantities of vehicles and
communications equipment had remained in the
program. These would now be completely
withheld.
- c.
- Decide not to furnish any further overhaul for the
Indonesian C–130’s purchased commercially under a
license granted in 1960. We are now overhauling one
C–130 in Georgia, and the effect of this decision
would be to stop the overhaul program with the
completion of this aircraft, with the result that
the C–130’s would become progressively useless. They
are clearly relevant to Indonesian military
capabilities against Malaysia, and the British have
been particularly sensitive to our actions in this
area.
- d.
- Consider no new PL 480 Title I and Title IV
commitments.
- 2.
- The military training program is a particularly sensitive
problem and was singled out for attack in the Senate debate
on the Tower Amendment. We have felt that it was an
important link to the Indonesian military, and this
long-term asset value is still considerable. On the other
hand, there are strong signs that Indonesia is slowing down,
if not stopping, the nomination of candidates for the coming
year. We would propose to find out what the Indonesian
reaction is to this problem and how they plan to handle it.
If they are in fact shutting down or eliminating it, we
would necessarily go along and let the program find its own
level through quiet mutual agreement. At the same time, we
would try to avoid any categorical “do you or don’t you”
approach to Sukarno himself or any senior civilian official
since [Page 148] to do so
might invite wider Indonesian action affecting programs
below that we wish to keep.
- 3.
- In addition to whatever military training would be
preserved under paragraph 2, we would be continuing, and
would wish to continue unless the Indonesians say otherwise,
the following programs.
- a.
- Non-military training and support for the
Indonesian armed forces under the civic action
program conducted by AID.
- b.
- Continuation of the malaria eradication program,
which is basically humanitarian and also affects the
health of neighboring areas.
- c.
- Continuation of technical assistance, non-military
training, and supply of non-sensitive equipment for
the National Police including the Mobile Brigade, to
preserve US influence in this important power
center.
- d.
- Provision of instrument landing equipment for
Djakarta’s airfield, provided that Indonesia permits
continued US flag use at the field. This is a valid
form of assistance to international civilian air
traffic. However, Indonesia would have to terminate
the current union boycott of Pan American.
- e.
- Civilian technical assistance and training
programs at roughly current (and fairly extensive)
levels.
- f.
- Completion of existing Eximbank loans for thermal
and fertilizer plants, and granting of a pending $5
million credit for cotton purchases.
- g.
- Continued availability of PL 480 Title I sales covered by the
general existing 3-year commitment, provided that
Indonesia can meet the criteria of normal market
purchases and an acceptable exchange rate. In
practice, there is no possibility of Indonesia
meeting these conditions except—and even this is
remote for the rest of the year—with respect to $8
million of cotton.
- h.
- Continue to negotiate terms of PL 480 local currency loan
agreements under previous sales agreements, but
delay signature pending further political appraisal;
and Title II and Title III PL 480 assistance where it provides for
humanitarian programs of disaster relief and
voluntary agency programs for children and the
needy.
- i.
- Continuation of present gradual phasing out of air
transport, maritime training, and navigational aid
programs through AID. These are small in scale.
- j.
- Continuation of Peace Corps activity.
