183. Letter From the Deputy Under Secretary of State for Political Affairs (Murphy) to the Ambassador in the Netherlands (Matthews)1
Dear Doc: Ever since our conversation in Paris I have been thinking of the problem we discussed and of course I was reminded of it by your telegram 553 of October 9.2 As soon as I could after my return I had conversations with our people here and succeeded in obtaining a temporary postponement of action on the $15 million credit for Indonesia plan for this fiscal year. As you know, of the total of [Page 312] $25 million, $15 million is for allocation during fiscal year 1957 and $10 million during 1958.
There is of course considerable history attaching to this credit which has been under consideration since 1955. As your telegram indicates, the Indonesians are aware of our plan to grant the credit although no formal commitment has been made.
While I am, I think, fully aware of what you describe as your “strong views”, I am also unfortunately aware of the “strong views” held by Walter Robertson and his associates, including of course Hugh Cumming. In my several discussions here, I have not based my arguments on any thought that the Dutch have any right to monitor credit arrangements that we might see fit to make to any country. In the formulation of their Far Eastern policy, it is quite clear that the Dutch have paid little heed to our views for example on the question of the recognition of Red China and a considerable list of other items in the Far East where they have pursued independent courses of action (and I do not for a moment criticize them for that, because it is their right to do so). My first thought was that we could pin the matter on the question of Indonesian credit-worthiness, but I found that this so-called credit is actually a grant and is a political gesture rather than a banking transaction. Thus, the action of the Indonesians regarding their repudiation of their indebtedness to the Dutch as well as their action in respect of their deposit in the International Monetary Fund are not actually pertinent. This is a political action.
My next point and really the one on which postponement of our action has been based is the line of public utterances of Sukarno on the occasions of his visits to the Soviet Union and Red China. I placed emphasis especially on his public condemnation of capitalism, for example. FE’s tentative appraisal pending more hard information is of course disapproval of Sukarno’s remarks, but emphasis on the fact that our Indonesian policy is not properly described as a Sukarno policy. They point out that the Indonesian press has been highly critical of the extreme statements attributed to Sukarno (thus far we do not have an accurate account of what he said in Peiping) and that there are healthy elements in and out of the Government of Djakarta who deplore these extreme statements and believe that public opinion there will disapprove. FE is confident that its policy of cooperation, which does not imply approval obviously of every action taken or attitude assumed by the Indonesians, is not only sound but necessary for our long-term security in the Far East. They recognize the importance of the Netherlands to us in our Atlantic alliance and in other European matters. They refuse, however, to believe that it is necessary for the United States to prejudice its interests in this Far Eastern area, especially at this time when the atmosphere in Djakarta is still heavily charged with emotions directed against the Dutch. In [Page 313] their opinion only time will bring about a better attitude of the Indonesians vis-à-vis the Dutch. During that period we cannot afford to stand on the sidelines or advocate the Dutch cause in the light of the aggressive overtures of the Sino-Soviet bloc.
I find that the procedure on this credit allocation for the current fiscal year has really gone too far to cancel out now. What I am trying to work out is some delay in the operation and avoidance, if possible, of publicity regarding it. This is not easy to accomplish, but I see no reason, for example why there should be any public announcement of the action at the present time.
I will write you further about this. I realize that from your point of view this is not a satisfactory development of the matter, but I know you agree that there is no easy solution.
I thoroughly enjoyed seeing you in Paris. I wish there could have been more time for more talk.
All the best.
Yours ever,
- Source: Department of State, Central Files, 756D.5–MSP/10–956. Secret; Strictly Personal.↩
- Telegram 553 asked Murphy to review Matthews’ previous messages on the subject of economic aid to Indonesia and added, “Djakarta leak in no way changes my strong views this subject.” (Ibid.)↩
- Printed from a copy that bears this typed signature.↩