160. Memorandum of Conversation, Washington, June 29, 1976.1 2
DEPARTMENT OF STATE
Memorandum of Conversation
DATE: June 29, 1976
TIME: 9:50 a.m.
PLACE: The Secretary’s
Office
SUBJECT: US-Indonesian Consultations; Aid to Indonesia; The Secretary’s Travel Schedule
PARTICIPANTS:
- The Secretary
- Under Secretary Habib
- Deputy Assistant Secretary Miller, EA
- Mr. Edward C. Ingraham, Country Director for Indonesia, Malaysia & Singapore Affairs, EA
The Secretary: Good morning.
Mr. Habib, Mr. Miller, and Mr. Ingraham: Good morning.
The Secretary: What has happened to Art Hummel?
Mr. Habib: Hummel hasn’t arrived in Washington yet. He is still in Ethiopia.
The Secretary: First of all, can you tell me why we cannot get decent PL–480 terms for Indonesia? Terms like those for India?
Mr. Habib: Part of the problem is that Indonesia is not as badly off as some of the other nations concerned.
Mr. Miller: Part of the problem is also Indonesia’s membership in OPEC. This affects Treasury’s attitude and that of Congress as well. But we intend to try to get better terms for Indonesia next time the issue comes up.
[Page 2]The Secretary: Better terms than what?
Mr. Miller: India and Bangladesh are getting better terms than Indonesia.
The Secretary: But do we have the discretion to offer better terms?
Mr. Habib: One of the problems here is the matter of the most seriously affected nations.
The Secretary: But that affects the amount of PL–480 doesn’t it, rather than the terms?
Mr. Miller: Yes, I believe it does. The next time we negotiate a PL–480 agreement with the Indonesians we are going to try to get better terms for them. One of the problems this time was that, although the Indonesians complained, they signed the agreement on the terms offered.
The Secretary: If I have tried to get anything across in this building since I have been here, it is that there should be better treatment of Indonesia.
Mr. Habib: One difficulty is the Treasury mentality. Haven’t we already raised the question of PL–480 terms with Treasury?
Mr. Ingraham: Yes we have.
The Secretary: I am afraid that within five years the Indonesians will be going back to the Russians, seeking aid from them just like the last time. What about military aid levels?
Mr. Habib: For both fiscal 76 and fiscal 77 the level is $13 million in grant and about $23 million in FMS credit. We had asked for$19 million in grant but Congress cut it to $13 million.
The Secretary: To cut Indonesia from $19 million to $13 million just when Indochina has fallen is insane.
[Page 3]Mr. Habib: We have done better on the economic side this year, better than the Indonesians expected of us. We have gone from about $61 million to $100 million.
The Secretary: What about the Indonesian dinner tonight? Is it formal?
Mr. Habib: No, it is informal. We asked them to make it informal.
The Secretary: How about wives? Are they invited?
Mr. Habib: Yes they are. I have one more item of business to raise at this time: the press statement. We have sent you a copy which you may have seen. It is a fairly simple one. The Indonesians have asked that we add a brief reference to the next round of consultations. We have a one-sentence addition on this that we would like to make in the draft. It would go at the end of the second paragraph.
The Secretary: That’s fine. But if they ask for more than this in the statement, I want us to be accommodating. Now back to the PL–480.
Mr. Miller: They will be seeking an additional 150,000 tons of rice from us, probably around next October. At that time we will try to get better terms for them.
The Secretary: If they are to get better terms, we should be able to give them the better terms rather than making them ask for it. Why hasn’t someone come to me about this? I can discuss it with Simon.
Mr. Habib: I thought we had mentioned it to you.
The Secretary: You should have brought it up with me. I want to get them what they want.
Mr. Habib: In these consultations you will be giving them what they want most. Malik is coming [Page 4] all the way from Manila just to meet with you. The most important thing you have to give them is the assurance of our interest.
The Secretary: On the question of arms, can we get them what (Australian Prime Minister) Fraser said in China. I think it has leaked out. It makes a good deal of sense to me.
Mr. Habib: Yes, I will get it. Also what he said in Japan.
The Secretary: I can see no sense in my going to the ANZUS meeting if Fraser will have just been here.
Mr. Habib: They will be disappointed if you go to Tehran and don’t go to Australia.
The Secretary: What can we say at the ANZUS meeting if we have just met with Fraser here? It doesn’t make sense.
Mr. Habib: Why don’t you mention this directly to Fraser while he is here? I think he would understand.
The Secretary: And what about Manila? Maybe I can fly from Tehran to Manila.
Mr. Habib: It looks now as if the Philippine negotiations will not be finished by then. I don’t think that Sullivan will be able to wrap things up by August 6.
Mr. Miller: They haven’t even reached the key issues in the negotiations. They are not even talking about the money yet.
The Secretary: What about this afternoon’s meeting with the Indonesians? How are we supposed to spend an hour and a half at the meeting after we have just had lunch with them?
Mr. Habib: For the lunch I suggest you handle it just as you always do. For the meeting I suggest you open it with a global review, with some emphasis on Indonesia. Then — and this is not in the briefing papers — I suggest you turn the meeting over to Malik and ask him to spell out Indonesia’s views.
[Page 5]One thing we are anxious to avoid is to create the idea in their minds that we are once again the golden goose when it comes to military aid. The last time they came to discuss military aid they had a $400 million shopping list with them.
The Secretary: That isn’t such an excessive figure for a country of Indonesia’s size.
Mr. Habib: On Timor, they are not unhappy at this time. They are perfectly satisfied with the situation. They will absorb Timor on August 17 and they are now talking with the Portuguese.
The Secretary: How about the guerrillas in Timor?
Mr. Habib: They are down to about 500, and the Indonesians have them penned up in the hills. The only really unhappy ones in this situation are the Australians.
The Secretary: Why is that?
Mr. Habib: Papua New Guinea. They are afraid the Indonesians will move next on Papua New Guinea. Every Australian I have talked to — including five Parliamentarians I talked to just the other night — everyone of them is worried about having 135 million Indonesians on their northern border and about Papua New Guinea. If the Indonesians moved into Papua New Guinea, the Australians think they would have to fight.
The Secretary: They have a reason to be concerned about Indonesia. That is why they should treat them well. Now, back on military aid, how much can we get for Indonesia in the coming months?
Mr. Habib: We have the same figure for both FY 76 and 77. That is$13 million grant and $23 million FMS. They are concerned about terms. They want 8 to 10 years repayment for the FMS credit and we could offer only 7.
[Page 6]The Secretary: The level is far more important than the terms. Why is it so low when they asked for $400 million.
Mr. Habib: The $400 million was only their shopping list. I wanted to get them about $50 million a year but first OMB cut the figure and then Congress cut it further. I think one of the reasons for the cut in Congress was human rights.
The Secretary: You would think that in a country like ours we have enough trouble at home without taking on everyone else’s trouble. What is the human rights problem in Indonesia?
Mr. Habib: They have about 35,000 people still under detention from the 1965 events. They have recently been doing fairly well. They have been trying some of them, releasing others and gradually working their way through the problem. The situation is very different from Korea. The Indonesians have also been a bit more intelligent in their handling of the issue on the Hill. They have been in touch with Fraser and the others on the Hill.
The Secretary: Fraser didn’t get his Korea amendments. It seems to me he is getting worse, even more erratic.
All right, so we’ll see the Indonesians this afternoon.