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

SUBJECT

  • Aid to Indonesia

Recommendation:

That you sign a determination that a carefully selected and reduced aid program in Indonesia, subject to review in light of developments, is essential to the national interest of the United States. We prefer the specific alternative statement of Presidential determination forwarded yesterday.2

[Page 15]

Reasons:

1.
For new aid obligations, Section 620(j) of the Foreign Assistance Act of 19633 provides: “No assistance under this Act shall be furnished to Indonesia unless the President determines that the furnishing of such assistance is essential to the national interest of the United States.”
2.
Sukarno regards Malaysia as neo-colonialist and a threat to his security. He advocates “crushing” Malaysia and supports guerrilla activity in North Borneo. At the same time he continues to explore with the Thais and the Filipinos possibilities for ending the Malaysia dispute. The situation, while dangerous, is not hopeless.
3.
We believe an aid cutoff would (1) risk a break of diplomatic relations by Sukarno and possible violent actions against U.S. personnel and interests; (2) endanger our foreign business investments there, including $500 million American oil properties; and (3) deprive the West of the crucial moderating influence which Ambassador Jones has been able to exercise on Sukarno.
4.
The Presidential determination we suggest would make possible a $15 million AID/MAP Program for Technical Assistance, Civic Action, malaria eradication, training, and engineering and communications equipment. In the pipeline, not affected by your determination, are $29.5 million MAP AID items. Details are in yesterday’s memorandum.
5.
I will advise you when aid should be stopped, under the terms of Section 620(i), because Indonesia is “engaged in or preparing for aggressive military efforts.”

Dean Rusk 4
  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, DEF 19 US–INDON. Secret. A handwritten note on the memorandum reads: “Hand carried to WH by Secy 1–7–64.”
  2. Apparent reference to Tab A, Document 4.
  3. See footnote 3, Document 4.
  4. Printed from a copy that bears this typed signature.