81. Memorandum of Conversation1

SUBJECT

  • Indonesia and Malaysia

PARTICIPANTS

  • US
  • The Secretary
  • William R. Tyler, Assistant Secretary for European Affairs
  • J. Harold Shullaw, Director, EUR/BNA
  • UK
  • Patrick Gordon Walker, Foreign Secretary
  • The Lord Harlech, British Ambassador
  • Sir Harold Caccia, Permanent Under-Secretary, Foreign Office
[Page 175]

In further amplification of the United States position with respect to the Indonesia-Malaysia problem, the Secretary said we did not want to be faced with residual military responsibilities for the consequences of escalation. The United States in this matter is a half pace behind those countries—the United Kingdom, Australia and New Zealand—with direct commitments. The American people are weary of the concept that the United States is to be regarded as the world’s gendarmes. We have pointed out to Australia and New Zealand the desirability of increasing their defense budgets. They have been relying too much on ANZUS and too little on their own efforts.

The Secretary noted the apparent interest of some Indonesian leaders in quiet talks with the UK. He regretted the action of the Tunku in unnecessarily complicating the situation by referring at a press conference to these confidential messages from the Indonesians. The Foreign Secretary replied that the British Government was examining these Indonesian feelers but had to keep the Tunku in step and did not wish to get into the position of an intermediary between Indonesia and Malaysia.

The Secretary commented that Sukarno has the mistaken idea that the oil companies operating in Indonesia can be treated as hostages. As a matter of fact if he were to move against the companies, the immediate consequence would be the loss to Indonesia of $125,000,000 per annum in foreign exchange. Indonesia’s foreign exchange position is very bad with the reserves some time ago down to $25,000,000.

The Foreign Secretary inquired about our assessment of Sukarno’s relations with Peking. The Secretary replied that while Sukarno privately speaks of the Chinese Communist threat, the Indonesian Communist Party has swung from Moscow to Peking.

The Secretary explained to the Foreign Secretary that our Joint Chiefs of Staff believe it is important to continue our training contacts to the extent possible with the Indonesian Army. The Foreign Secretary expressed understanding of this policy but indicated concern at public reaction in Britain. Lord Harlech noted that US training of Indonesians in guerrilla warfare was troubling. The Secretary replied that this training was being phased out.

The Secretary suggested, and the Foreign Secretary agreed, that it would be a good idea to leave the Dutch free to play their own hand in dealing with the Indonesians. He noted that the Dutch, whose relations with the Indonesians have shown some improvement, may turn out to be the principal Western influence in Indonesia.

The Secretary expressed understanding of the need for a tart reply to Indonesian parachute drops and landings in Malaysia. He explained that his public assurances of US support for the Philippines made during the recent visit of President Macapagal were prompted by information [Page 176]we had received of Indonesian meddling in Mindanao and involvement in Manila demonstrations. The Secretary said we planned naval visits to Philippine ports as a further warning to the Indonesians.

The Secretary concluded discussion of this subject by emphasizing the importance of complete precision in understanding between the President and Prime Minister Wilson so that there is no risk of anything being taken for granted. The Foreign Secretary expressed agreement and added that full information concerning any intended or contemplated action should be exchanged between our two countries even if no action is expected of the other party.

  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, POL INDON–MALAYSIA. Secret. Drafted by Shullaw and approved in S on November 9. The meeting was held in the Secretary’s office. Gordon Walker was in Washington October 26–27. The most complete record of his visit is ibid., Conference Files: Lot 66 D 110, CF 2440.