Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

173. Telegram From the Embassy in Indonesia to the Department of State¹

Djakarta, August 18, 1956—1 p.m.

506. Mytel 504 to Department repeated The Hague 14.² At Palace dinner last night had long conversation with Prime Minister in very friendly atmosphere. I took advantage his observations on friendly relationships between United States and Indonesia to say I was very sorry Indonesia decided unilaterally repudiate indebtedness to Netherlands. I said in my opinion this action especially as taken so shortly after Nasser’s precipitate nationalization of Canal would have very bad effect in United States not only upon those interests having investments in Indonesia but also upon people who were concerned over Nasser’s action and other violations of normal international practices. I said in my personal opinion that if press reaction in US had not yet been widespread or marked it was largely due to absorption with Suez Canal question and I would not be surprised if some reaction perhaps even officially would not come about sooner or later.

Ali received my comments quietly but emphasized Indonesian action entirely outcome of whole sad history of Dutch attitude towards Indonesia which had been so completely different from attitude of United States towards the Philippines or British and Pakistan; that there was absolutely no intention of extending this action to other countries and that United States especially need not be concerned about American investments in Indonesia. (Then he observed almost parenthetically that he had been planning soon as he found free moment to call in Stanvac representative to give him some good news—which he did not specify to me—regarding some current discussions in which Stanvac interested).

Ali went on to say he presently preparing note which after examination by Cabinet he proposed send to governments with which Indonesia had diplomatic relations explaining Indonesia’s position regarding repudiation Dutch debts and repeating in formal phrases assurances third country interest would be protected.

In view this conversation I believe recommendation penultimate sentence mytel 504³ should be modified. I now suggest it might be useful if Department authorized me call on Prime Minister (presently Acting Foreign Minister) AH to formalize informal remarks I made to him last night and to do this before his note is despatched. My recommendation is, however, conditioned upon non-notification to Dutch at least at this time as I firmly believe that if Dutch had any inkling that I had made even informal observations and those without instructions that they would be tempted inject matter somehow into Suez Canal discussions thus compromising our position here as well as lending aid and comfort to Soviets.

Cumming

1. Source: Department of State, Central Files, 856D.10/8–1856. Confidential. Repeated to The Hague.
2. Telegram 504 from Djakarta, August 17, reported Cumming’s view that strong U.S. representations concerning Indonesia’s repudiation of its debt to the Netherlands would be unproductive and might make the attainment of U.S. policy objectives more difficult. He recommended that U.S. action be limited to an expression of regret at an action contrary to normal international practice that was, in U.S. opinion, likely to harm Indonesia’s credit standing and discourage prospective foreign investment. (Ibid., 856D.10/8–1756)
3. Summarized in footnote 2 above.