856E.51/5–247: Telegram
The Secretary of State to the Embassy in the Netherlands
231. AmConGen Batavia reports probability Van Mook and Lieftinck75 coming US shortly for purpose discussing Exim Bank loan to NEI. One hundred million dollar loan considered 1945 and money earmarked by Exim Bank but agreement not concluded at request Dept view uncertainties political situation.
At early appropriate opportunity please informally indicate to FonOff with reference reported Van Mook–Lieftinck plan that although Exim Bank credit for purposes NEI rehabilitation agreed in principle 1945 agreement never finalized, new negotiations necessary and in view political developments US would wish representatives Rep and also other constituent parts USI participate such negotiations. You should indicate also that nature of any Neth-Rep economic and financial agreements would naturally be one important factor in such negotiations. In this connection you should point out as follows, leaving aide-mémoire:
US has given serious consideration to situation Southeast Asia. Strong nationalist movements throughout area are not isolated phenomena of concern to few colonial powers only. Outcome will have profound effect on future world. Area strategically located athwart Southwest Pacific and of greatest economic importance. US, therefore, has special concern future Southeast Asia.
This Govt believes there is danger that nationalist movements Southeast Asia may tend toward pan-Asiatic or totalitarian philosophy. As either trend would be contrary interests Western democracies, it believes every effort should be made persuade peoples Southeast Asia voluntarily seek association with Western democratic powers. It convinced such voluntary association essential world political and economic stability. Moderate leaders among nationalist groups Southeast Asia recognize such associations with countries with whose mores, laws and languages they familiar would be advantageous their peoples. Such associations furthermore would give component parts political, economic and strategic strength which neither would possess alone.
Accordingly, it has been consistent hope this Govt that Neth Govt would be able peaceably to work out with Indonesians an arrangement which would meet natural aspirations of Indonesians and which would, at same time, establish voluntary association of Indonesian and [Page 925] Dutch peoples. This Govt learned therefore with profound pleasure of signing of Lingga Djati [Linggadjati] Agreement.
While obviously difficulties will be encountered in implementing political aspects of Lingga Djati this Govt is confident that good sense and mutual respect displayed by both Neth Govt and Rep Govt will resolve these difficulties.
Problem of resolving conflicting economic interests may, however, present even greater difficulties and resolution of those difficulties will be no less important than resolution of political problems.
Following views this Govt are offered not in spirit of interference but with hope they may be of assistance in bringing about solutions helpful to objectives which it believes all are seeking.
US believes that immediate opening trade and commerce throughout NEI non-discriminatory basis is first and most imperative step in stabilizing political and economic conditions and in rehabilitating Indonesian economy. This essential as means of strengthening moderate elements of Rep Govt which secured signing Lingga Djati. It is also basic to attraction foreign capital investment in area which would appear essential to rehabilitation Indies.
Dept considered with much interest views of Neth Govt, as communicated to it by Professors Weyer and de Kat-Angelino, on basic principles which Neth Govt believes should be included in an agreement between Neth and Rep Govt for purpose assuring that potential investors will have such confidence. While not disagreeing with basic objective of creating conditions conducive to foreign capital investment, Dept fears lest proposed manner of achieving objective will in fact defeat purpose sought.
Basis of any confidence by foreign investors must be attitude and policies adopted by Rep. Dept queries whether unless Rep itself is convinced of need of attracting investment foreign capital and recognizes that in order attract such capital it must deal fairly and reasonably with such capital, any agreement which would specifically limit powers of Rep in certain respects with relation foreign invested capital would have substantive value; and whether if there is such conviction and recognition by Rep any such formal detailed agreement would be required.
Dept believes moreover there is serious danger that any agreement which appeared to give foreign capital a privileged position in NEI might, when economic conditions improve, become focal point for communist as well as nationalist agitation. Very existence such an agreement might, indeed, tend defeat objectives which agreement designed achieve and political reaction to it might destroy voluntary partnership contemplated Lingga Djati and cause Indonesia incline to pan-Asiatic or communist influence.
[Page 926]Dept recognizes that to urge immediate opening trade and commerce throughout NEI and to offer only critical comments economic plans outlined Weyer and de Kat is scarcely sufficient. It desires therefore express willingness consult with representatives Neth and NEI Govt and with Indonesian representatives looking to economic rehabilitation Indonesia on foundations which will strengthen mutual respect and voluntary association of Neth and Indonesian peoples.76
This entire tel sent Hague as 231 and repeated Batavia as 132.77
Following for Batavia action only.
You should informally communicate substance foregoing Van Mook at early appropriate opportunity (urtel 159, May 278). If Van Mook indicates approval participation Rep and other Indonesian representatives on loan negotiations and US consultation both Neth and Rep on economic policies affecting rehabilitation Indies please report promptly and indicate your view when similar informal communication should be made Sjahrir. In connection Van Mook’s plans Dept desires soonest informal general indication nature and scope loan sought, purposes, and areas funds would be applied.
- Pieter Lieftinck, Netherlands Minister of Finance.↩
- Telegram 251, May 23, 2 p.m., to The Hague, directed that the substance of the first two paragraphs of this telegram should not be included in the aide-mémoire to the Netherlands Foreign Office, but that the substance of the second paragraph should be communicated informally and orally for the information of the Netherlands delegation coming to the United States (856E.51/5–2347).↩
- Also repeated to London in telegram 2269, May 26, 7 p.m.↩
- Not printed.↩