302. Memorandum of Conversation1

PRESIDENT SUHARTO’S WASHINGTON VISIT—SECOND CONCURRENT WHITE HOUSE TALK

SUBJECT

  • Economic Assistance

PARTICIPANTS

  • Foreign:
  • Adam Malik, Minister of Foreign Affairs
  • Soedjatmoko, Ambassador to the United States
  • H. Alamsjah, State Secretary
  • Professor Widjojo Nitisastro, Chairman, National Planning Board
  • Vice Admiral Sudomo, Chief of Staff, Indonesian Navy
  • Soedharmono, Secretary of the Cabinet
  • Dr. Ch. Anwar Sani, Director General for Political Affairs
  • Suryono Darusman, Chief of Protocol
  • United States:
  • Elliot L. Richardson, Acting Secretary of State
  • Marshall Green, Assistant Secretary of State for East Asian and Pacific Affairs
  • Francis J. Galbraith, Ambassador to Indonesia
  • Robert W. Barnett, Deputy Assistant Secretary of State for East Asian and Pacific Affairs
  • John Holdridge, White House Staff
  • Edward E. Masters, Country Director for Indonesian Affairs

Mr. Richardson opened the discussion by returning to the topic of U.S. economic and military assistance to Indonesia, which was introduced by Foreign Minister Adam Malik just before the May 26 concurrent meeting was interrupted.

At the earlier meeting, Malik expressed deep appreciation for the U.S. role, and in particular that of Mr. Barnett, in assuring Indonesia sympathetic treatment at the April meetings of the Inter-Governmental Group on Indonesia (IGGI) on economic aid and of the “Paris Club” on the Sukarno debt problem. Malik added, however, that Indonesia required additional help at this particular state of economic development. He noted that Indonesian efforts to procure aid from “socialist” countries have not been productive but will continue. In the meantime, [Page 652]he wondered if there were additional sources of U.S. assistance which might be tapped, mentioning in particular the Export-Import Bank.

Mr. Barnett noted that the multilateral IGGI mechanism had enabled Indonesia to obtain greater aggregate assistance than if it had dealt bilaterally with individual donors. He added that, again, one of our reasons for supporting a Paris Group solution of the Sukarno debt was to provide Indonesia with essential multilateral leverage in dealing with Eastern European creditors. Mr. Barnett noted that we had not encouraged Indonesia to repudiate its debt to the Soviet Union in light of the latter’s importance as a source of military spare parts, as a potential aid donor, and as an important future market for rubber and other natural resources. Repudiation of the Soviet debt might also damage Indonesia’s credit worthiness, he added. Mr. Malik later expressed appreciation for the U.S. Aide Mémoire in which the U.S. accepted the debt settlement worked out at Paris in April, which he said would help Indonesia to move forward in negotiations with other countries.

Regarding additional sources of U.S. assistance, Mr. Barnett said that progress made in resolving the debt problem would permit the Export-Import Bank to talk with the Indonesians about a possible resumption of the Bank’s financing activities in Indonesia. Mr. Barnett pointed out that the Bank is already offering insurance for suppliers’ credits and is a participant in Freeport Sulphur’s program. Mr. Barnett noted, however, that the Export-Import Bank is not a foreign aid agency and its function is to facilitate U.S. exports. He emphasized the need to consult fully with the Resident Mission of the IBRD in Djakarta on the priority of projects for which Ex–Im financing might be sought. Indonesia should be aware of the risk that aid donors might reduce their aid should Indonesia indicate through Ex–Im transactions that it was entering a phase where it could borrow on normal commercial terms.

Mr. Malik inquired whether the Export-Import Bank could lend to the Indonesian private sector in order to further contacts between private business in the two countries. Mr. Barnett expressed the opinion that the Bank would wish to know about particular projects being considered and the extent to which the Indonesian Government is involved, through guarantees, for example. When queried whether there is not a means to get around a requirement for government guarantees, Mr. Barnett suggested that representatives of the Indonesian Government discuss the matter with the Export-Import Bank.

Mr. Malik referred also to the possibility of doing more in the field of scientific cooperation but did not specify what he had in mind.

  1. Source: National Archives, RG 59, Central Files 1970–73, POL 7 INDON. Secret. Drafted by Masters and Gardner and approved by Stempel (U) on June 10. The memorandum is part I of III; part III is ibid., part II is Document 303. The meeting was held in the Cabinet Room at the White House.