400.56D9/7–1751: Telegram
The Ambassador in Indonesia (Cochran) to the Secretary of State
priority
77. I prefer not make approach to Indo Govt suggested Deptel 66, July 13.1
Firstly, do not have enough info as to what is being accomplished in legislative and policy developments in Washington to know how to answer questions which might be posed to me with respect to revision Kem amendment and application any final measure.
Secondly, no publicity been given here to fact Indo actually included rubber unconditionally on UN embargo list. Press campaign against US which grew so bitter when both UN embargo and Kem amendment in limelight has subsided. I prefer not bring up matter [Page 691] now since decision not so pressing, considering 3 month study period under Kem amendment, and Indo Govt not pondering question insofar as I am aware.
Thirdly, Indo Govt and Parliament shld not be disturbed by this question while concentrating on draft Japanese peace treaty which is meeting considerable criticism.
Fourthly, I do not consider such approach as Dept suggests as best method achieving results with Indo if we seriously desire gain their solidarity with free World and stop their material assistance to Commie countries unfriendly to US and UN.
To accomplish result of getting Indo Govt put rubber on UN embargo list required strong reference to Kem legislation. This had much more effect than stressing obligation Indo as member UN. To approach Indo Govt now seeking their excuses for not complying with Kem or replace legislation likely give impression inconsistency our part in urging Indo observe UN embargo while not pressing for compliance with US domestic legislation. Furthermore Indos not likely understand why shld they be called upon in advance to help develop loopholes in legislation enacted by US Congress.
I believe our best results will continue to be achieved in Indo if we adhere to definitely firm and consistent policy of expecting Indo comply with UN precepts and to respect Amer position in World affairs. I feel this can be progressively accomplished working thru present govt. This coalition has as strong parliamentary support as any foreseeable govt can command. It is possible it may last for sometime if its composition can gradually be improved by filling vacancies and replacing certain weak members with stronger. If this govt does not succeed it may be followed by presidential cabinet which would be bitterly opposed by left with possible serious internal disorders or it might be followed by leftist coalition with Sjahrir and his socialists. It is present endeavor this latter group to draw army into their camp. My point is that we may be doing present govt and Indo great service by strengthening determination this govt to maintain moderate regime in Indo and to advance by single and slow steps toward bringing this new state into line with policies of friendly western countries. This does not mean that I am optimistic as to any immed breaking down of so-called “independent” policy.
Reference is made to Deptel 1379 reporting Sudarpo’s call on Lacy. Sudarpo clearly intimated that it might be to Indo’s political advantage to comply with certification requirements of Kem amendment. Irrespective of motives which might influence Indo toward such decision, I am confident that it wld also be to Indo’s economic advantage to comply. This is on assumption US really intends achieve some enforcement of Kem amendment. If all or most of countries which [Page 692] we have considered as sufficiently friendly or vital to our security interests to give financial and economic aid are exempt from application Kem amendment, then we shld not exact compliance from Indo.
Since sending mytel 1685, June 1 on consequences stopping all types economic and financial assistance to Indo, this country has witnessed decline in tin and rubber prices. Export–Import Bank projects for loan of $52 million have been approved by Indo Parliament. ECA allocation for Indo for FY 1952 appears to be around $8 million unless altered by Congress. For Indo now to fail to be able receive payment from Export–Import Bank on projects already approved and underway wld work serious hardship particularly considering extent to which decline in prices principal exports has upset budgetary calculations. Indo counting importantly upon remaining $48 million under Export–Import Bank line of credit to assist with capital goods required for building up Indo economy. Approach has also been made with view to procuring consumption loan from US. I am not yet convinced latter will be necessary. At same time, cutting off Amer aid wld work more hardship that it wld have caused in circumstances obtaining as of June 1.
Without approaching Indo Govt I offer fol brief analysis of situation with respect Indo trade with Commie countries:
As of April 30, 1951, Indo had recd from Czechoslovakia, Poland and Hungary under annual trade agreement contingents deliveries of goods valued at rupiahs 24.5 million out of overall contingents totaling rupiahs 30.8 million. Agreement with Poland expired April 1, agreement with Hungary June 1 and agreement with Czechoslovakia will expire Aug 1. New agreement recently concluded with Poland but no details available. While other agreements apparently not renegotiated, it is generally customary for agreements to continue in force for second year pending renegotiation.
No detailed info re Indo’s annual deliveries (exports) to these countries available. Trade agreement contingents visualize shipment (to three countries combined) of fol strategic commodities: 5550 metric tons rubber, 100 tons sole crepe rubber, 3200 tons tin (in ore) and 5000 tons copra.
All products imported from satellites, with possible unimportant exceptions, can normally be obtained from Allied bloc. Conversely, Indo can easily market to Allied bloc quantities of strategic commodities earmarked for satellites. Abrogation of trade agreements, or refusal to renegotiate lapsed agreements, cld be accomplished by Indo without major dislocation of trade and without adverse effect on Indo economy. Trade agreement problems therefore do not appear of sufficient magnitude to prevent Indo compliance with requirements of Kem amendment nor to warrant our seeking specific exemptions for Indo from application Kem amendment.
On other hand, Indo adherence to UN embargo was facilitated by Indo Govt’s ability utilize as talking point its membership in UN and its intent to abide by majority decision reached according to democratic [Page 693] processes. Compliance with unilaterally imposed Kem amendment will be more embarrassing from point of view of domestic polit considerations, but Indo Govt cld stress consistency with purposes UN embargo.
In this connection however, Indos have at hand powerful economic argument in above-mentioned fact that Export–Import Bank loan agreement of $52 million (with possible additional 48 million) and ECA assistance of $8 million in FY ’51 (with contemplated additional 8 million in FY ’52) far exceed annual value of import contingents of present trade agreements with satellites. Latter total annually slightly less than $10 million. There is no known trade with USSR or North Korea. 1950 level of imports from China was rupiahs 12 million.
Any arguments presented by Indos defending inability make certifications required by Kem amendment shld be closely scrutinized in light of above info. Latter, while incomplete, is indicative of relative insignificance of Indo–Soviet bloc trade.
- The Department of State, in telegram 66 to Djakarta, July 13, requested that Ambassador Cochran try to obtain a reply from the Indonesian Government to the three numbered questions put forth by Assistant Secretary Rusk to Dr. Thajeb on June 11, as described in telegram 1359 to Djakarta, June 12, p. 672. (400.56D9/7–1351)↩