756D.00/6–2151: Telegram
The Ambassador in Indonesia (Cochran) to the Secretary of State
priority
1798. Received by Vice President Hatta 11 a. m. June 21 my request. I sought his assistance become properly oriented on Indo situation considering many changes that had come and problems that had arisen since we last had good talk. I expressed admiration his tours thru country whereon he has recently advocated hard work, law and order and better understanding problems involving foreign investment in Indo. I also mentioned his helpful interest in cooperative enterprises and work STEM has undertaken toward strengthening such organizations. I agreed endeavor see he gets financial support for his scheme of cooperative smokehouses which wld permit native rubber being treated in Borneo and Sumatra to such extent it wld be acceptable for export directly to US rather than be required pass thru remilling process Malaya.
I referred close manner Hatta and I had worked together on economic and financial provisions RTC agreement. I spoke of danger both to Indo and to third parties in abrogating union in such way as to cause bad relations between Neth and Indo or to give third countries less security with respect their interests in Indo than provided or anticipated under RTC agreement. I remarked that no third party cld participate in prospective Neth–Indo negotiations on Union dissolution so Indo wld be lacking outside support. At same time outsiders would have no direct voice in arrangements to be substituted for protective measures for themselves included in RTC provisions. I [Page 677] expressed unhappiness over rather hasty statements made by members Sukiman Cabinet before they had time formulate actual govt policy. I referred particularly to statements re nationalization Java bank and certain industries emanating not only from Cabinet members, but from parliamentarians and other Indo leaders. I said much of press strongly anti-western and anti-capital. I had duty to report actual situation to my govt. I felt obligation toward American investors including both those concerns already operating in Indo which I had encouraged to expand since transfer sovereignty, and those prospective investors who came to me for info and advice.
Hatta insisted that program of present govt is not going to differ from that which he favored at RTC and while he was PriMin. He said no nationalization anticipated except in case Java Bank and public utilities. He recalled that on his recent speaking tour he had argued against leftist ideas of nationalizing rubber factory (Goodyear) or American and Neth petroleum concerns. He said foreign capital invested in these going enterprises shld be left intact. Any new capital that can be raised internally or procured abroad shld be utilized in fostering additional industries. Hatta confirmed that present govt wld follow policy made known at Hague of increasing Indo interest in various concerns. He positively assured me however, that there is no intent to interfere with ownership of foreign concerns such as those specifically mentioned above.
I then told Hatta there were indications Indo was to become purely socialist state and was planning innovations even more extensive than highly developed countries like those of Scandinavia had been able adopt and perfect. I was particularly concerned over plan advanced by Sumitro when he was in Cabinet and over his recruiting campaign now being conducted in Western Europe. Hatta insisted Sumitro efforts were being directed toward procuring managerial talent to help operate Indo enterprises, and to act as advisors to proposed planning board of Indo Govt. He said board wld be made up of Indos. He said Indo Govt itself wld be responsible for planning but seriously needs good foreign technicians for managerial and advisory duties, and particularly for training Indos. I pointed out good job White engineers doing on surveying basic problems such as those of harbor, transportation and power facilities. I thought these three problems shld be first consideration by engineers competent to eliminate port congestion, improve movement imports to final destinations inland, to bring increased amounts Indo products to ports for export, and to improve power facilities required for operating existing industries and taking care needed new ones.
[Page 678]I hoped Sumitro wld recruit technicians of variety nationalities supplement Neth already here and Americans now available under ECA and Eximbank arrangements. I hoped they would, however, be of such reputation and philosophy as not to lead world to conclusion Indo going to become socialist state with Commie sympathies, or state of excessive controls.
I told Hatta US interested much as ever to help Indo with material and technical aid to degree we can spare and to limit Indo can absorb. I pointed out repeated changes in Indo Govt and haphazard announcement of divergent policies restrict both extension and assimilation of aid. Hatta hoped present govt cld continue in office and develop sound, confidence-inspiring policy. He felt fon capital was and wld be welcomed by everyone except critical leftist elements which are opposing Indo Govt well as US and other western govts.
I expressed appreciation Indo Govt subscribing unconditionally to UN embargo particularly on rubber. I thanked Hatta warmly for manner in which he had helped in determining position to be taken by Indo delegate at UN on embargo question. I realized Indo cld not very easily speak out in advance UK in announcing its embargo position. Hatta said Ceylon had not made Indo decision easier and Indos still felt Ceylon wld try trade with China.
I solicited Hatta’s support in seeking early ratification Eximbank projects and ECA agreement if latter found to require parliamentary approval. I expressed hope some members Indo Govt in supporting these measures wld have something favorable to say with respect to Indos relations with US. I said Hatta knew so well honest motives which had inspired US aid for Indo he must feel as badly as do I upon hearing and reading allegations that US extended this aid only for selfish purposes and to get Indo involved politically on our side.
I said I did feel Indo had obligation as UN member to support embargo measure unconditionally. I was sure US wld do everything reasonably possible to help Indo meet problems incidental to such compliance, as should other members UN. I mentioned Kem amendment and explained purposes thereof. I hoped Indo wld study carefully situation arising from that legislation and wld understand sympathetically position US, which is bearing greatest part of load containing Commie aggressor and protecting free nations therefrom, particularly states Southeast Asia. I did not see serious obstacles to Indo meeting US requirement under Kem provisions. I said Indo trade with Sov and satellite countries quite small. Hatta said Indo wld never have negotiated bilateral treaties with Poland, Yugoslavia and Hungary except this was outgrowth RTC whereunder Indo took over or renegotiated treaties with countries with which Neth had bilateral agreements. I said I thought Indo trade with Sov and satellite countries [Page 679] less than two percent of export and import trade of Indo. I said rubber, tin and other exports from Indo to those countries in modest amounts as agreed upon in current treaties cld readily be absorbed by other purchasers. I deprecated extent to which Indo was receiving machinery etc from satellite countries under bilateral agreements. Hatta mentioned problems which Indo faces as result decline in prices rubber and tin. I agreed decline in prices threw out their budget estimates etc, but shld constitute no ground for polit attacks against US. I said US wld continue be excellent customer but shld not be expected pay prices inflated by our war effort in Korea.
Hatta said board directors Java Bank inviting ex-FinMin Sjafruddin become Pres director to succeed Houwink who desires return Neth July 6. He said Sjafruddin inclined accept but some Masjumi leaders desire he remain free for straight political work or at least agree serve as head Java Bank only temporarily. Hatta favors Sjafruddin and wld like for Houwink accept position as advisor. Hatta does not favor Sumitro–Margono family1 controlling all three Indo Govt banks.
- Margono Djojohadikusumo, father of Professor Sumitro Djojohadikusumo, and President-Director of Bank Negara Indonesia (Indonesian State Bank) and Bank Industri Negara (State Industrial Bank), the other two Indonesian Government banks.↩