Foreign Relations of the United States, 1961–1963, Volume XXIII, Southeast Asia

316. Telegram From the Department of State to the Embassy in Indonesia⁰

Washington, September 24, 1963, 3:51 p.m.

363. Interagency group today agreed on following interim position re US aid programs to Indonesia, subject to your comments:

1. Negotiation or other action with GOI on proposed $10 million stabilization loan to be deferred.

2. IMF will be informed of USG opinion that Fund should be in no hurry adjust credit ceilings and reinstate GOI eligibility under standby arrangement. IMF will be encouraged to raise with GOI questions as to Indonesian ability to meet conditions of stabilization program as result their recent actions.

3. AID and Agriculture are undertaking to identify and segregate those PL 480 deliveries considered to meet existing commitments as opposed to those attributable to stabilization effort.

4. MAP deliveries will be considered as previously committed assistance and will be continued, with exception weapons and ammunition now in pipeline or scheduled for early shipment. Latter shipments will be halted pending review.

5. All scheduled shipments weapons and ammunition for MOBRIG be deferred. Other program assistance to MOBRIG will be continued.

6. Other ongoing AID activities will be continued for present, including DG and PL 480 local currency loan actions.

7. License applications for all categories items to be purchased by Indonesian Military through US commercial channels will be subject careful scrutiny. Some will probably be deferred on ad hoc basis.

Request Country Team comments foregoing, and Country Team recommendations other actions which might be taken.¹ None of foregoing should be disclosed to GOI at this time.²

Ball

0. Source: Department of State, Central Files, AID (US) INDON. Confidential. Drafted by Ingraham; cleared in substance by AID, Treasury, and Agriculture, and in draft by OSD/ISA; and approved by Hilsman. Repeated to Manila, Kuala Lumpur, Canberra, London, Singapore, and CINCPAC for POLAD.
1. In telegram 773 from Djakarta, September 28, the Country Team responded that it would be a “serious mistake” to publicly attack or isolate Sukarno. While the team anticipated that the situation in Indonesia would worsen, its principal short-term goal was to retain the U.S. position in Indonesia, maintain contact with key Indonesian leaders, and stall for time when the situation and leadership would make stabilization and development possible. As for the specific recommendations in paragraphs 1–7, the Country Team concurred. (Ibid.)
2. In a press conference on November 14, President Kennedy stated that the United States had suspended aid to Indonesia. Following the press conference, the Department of State spokesman pointed out to correspondents that the President was referring to suspension of current consideration of U.S. contributions to long-range multilateral stabilization; existing bilateral programs were continuing. (Telegram 566 to Djakarta, November 14; ibid.) For the transcript of the press conference, see Public Papers of the Presidents of the United States: John F. Kennedy, 1963, pp. 845–853.