756D.5–MSP/12–551: Telegram
The Ambassador in Indonesia (Cochran) to the Secretary of State
priority
811. For Rusk from Cochran. Have delayed replying your letter Oct 301 recd Washington requesting evaluation US aid program Indo until cld return post and review situation and development after six week’s absence US and Europe. Understand urgency now warrants telegraphing.
Original proposal to aid new repub through US grants made by Griffin mission April 1950 with explanation this was one-time operation to break econ bottlenecks. Proposal advanced gratuitously on Amer initiative viewed with Indo skepticism and required considerable insistence for Indo acquiescence even as one-time operation. By time actual imports of ECA farm tools, insecticides, etc began arriving summer 1951, Indo had reached such degree financial recovery that foreign grants not required.
There has been at no time clear-cut definition ECA objectives Indo or consistently through-out program for achieving any aims. Volume of pleas and publicity for continuing and expanding ECA program has grown with influx more personnel. As finan recovery Indo has progressed, ECA has abandoned argument sums involved in its grants were required for or wld accomplish econ impact on country of such wealth and potentialities as Indo. Trend was for a while to stress need for introducing large number doctors and pursuing village-level projects. STEM itself has reported on general infeasibility village-level programs. New tack recently followed of specializing on education which field USIS had already explored exhaustively and into which Emb has been reluctant go further unless and until lack Indo receptivity to our advances might be changed to genuine interest and request for assistance. While successive Indo ministers have avowed interest in US proposals for educational projects, they have failed accept Fulbright or Point IV agreements or otherwise permit implementation of such projects. Recently as Nov 5 Indo Govt formally requested Emb leave more control in govt’s hands of still modest program of scholarships, fellowships and visitorships which US Govt financing. Indo Govt has not yet moved to obtain required parl ratification of ECA bilateral agreement signed Oct 1950.
With recent passage MSA, it appears ECA trying enter even further into polit policy field and wld have President declare as new extension US foreign policy that US proposes give particular support for four or five years to newly independent countries to help them stand [Page 741] on their own feet. Suggestion made at ECA conference Baguio2 that initials “ECA” be retained as symbol for operations MSA on SEA rather than converted to designation “MSA” could be interpreted as effort veil from Asian peoples mil character or purpose of assistance or to disregard congressional legislative intent.
On finan side Indo has made great progress in first two years sovereignty involving important purchases gold, favorable balance payments and approach to balanced budget. Almost half of hundred million dollar Export-Import credit extended Feb 1950 not yet allocated. Recent survey in Indo by Export-Import Bank group on utilization of credit to date and plans for balance resulted in such favorable impression by Export-Import that understand it wld be disposed grant expanded credits to Indo if and when required. With this source credit initiated before Griffin mission entered field and available for reasonable needs country, I see no justification for ECA developing its own loan program. To continue grant aid in face actual finan situation surely cannot be justified. No one can tell these days when crises may come but outlook Indo does not warrant STEM standing by with large sums earmarked for calamities or depressions. They could be taken care of by such facilities as existed prior ECA. Talking with Harriman3 in Paris well as with top officials Washington, I gained definite impression there would be tremendous demand on available US resources for econ and mil aid to Allies desperately needing it to continue their struggle in our common cause. While amount envisaged by ECA for Indo 1953 not large, still it could be advantageously utilized in areas where real need exists.
To ascertain and weigh any accomplishments ECA Indo, I prefer leave to Dept analysis of reports submitted by STEM to ECA. They are voluminous but cover admittedly small results. Imports of fishing equipment, fertilizers, laboratory apparatus, et cetera may be recd with some appreciation, but are not vitally significant, and could be bought with Indo’s own resources. ECA endeavors along public health lines could be consolidated with those of various UN organizations operating Indo or relegated in part to such private organizations as functioned here before war, including Rockefeller.4 Indo has had for decades and still retains many Neth technicians on agriculture, forestry, et cetera so this no pioneer field for ECA. UN active in small industries and education, but ECA endeavoring function in same fields.
[Page 742]Line on which, helpful services being rendered is that constituted by White engineering survey of harbors, railway facilities, hydroelectric power, telecommunications, mining, civil aviation, et cetera, under two-year contract with Indo Govt financed by ECA. This has provided Indo Govt objective technical assistance on part top flight engineers without polit connections and definitely here at specific request Indos for particular jobs requiring their individual qualifications.
Indo Govt not sufficiently well-organized to work out and absorb extensive aid in manner proposed by ECA. Overworked depts manned by inadequate number of inexperienced and sometimes incapable officials spend much time drawing up projects and providing data called for by ECA and lose face when unable meet requirements or when projects not approved or realized.
Following independent foreign policy Indo Govt embarrassed by ECA program of publicity which emphasizes under-developed character of country and need for aid from great friend. Indo officials from President down have constantly told me any assistance US may see fit to give should be extended in modest fashion with purpose strengthening govt in which we choose have confidence and permitting it acquire increased support from its own country as result improvements accomplished in its name. Emphasizing degree to which US aiding Indo, by repetitive publicity and excessive personnel prominently established in capital, results in leftist criticism of govt. Efforts of ECA economists and planners to infiltrate into Indo Govt and have prominent part in planning and administration increases inherent suspicion on part Indos and gives rise to fear US endeavoring succeed and supplant Neth as colonial power in Indo. STEM itself has discovered and reported to ECA reluctance Indos to use US Govt personnel as advisors.
Under independent foreign policy Indo declined accept aid proffered by Melby mission and desires procure only such mil equipment as it can pay for. Difficulties envisaged if US endeavors publicly to justify continuing aid to Indo as Mil Security Program. It would be unfortunate if modest early US aid to Indo civil police constabulary should now be publicized and tied in with new program under MSA.
Indo especially resents any US endeavor picture Indo as strategic archipelago which US must build up as bastion against communism for protection our own interests. Indos have demonstrated by mass arrests summer 1951 well as by putting down Madiun Commie insurrection 1948 that these repubs are as sincere and effective as any people in suppressing Commie dangers when they become acute. They need no lead from US in this field and do not want either ECA or [Page 743] USIS make Indo arena for US combatting Commies. Thru Indo decisions and their own efforts much progress made recent months in checking growth Commie-inspired labor organizations, in deterring Chinese diplomats from flooding country, in changing attitude Chinese residents who had accepted People’s Repub, and in blocking Commie propaganda in press, schools, clubs, et cetera.
Thru adhering to UN embargo on strategic materials, including tin and rubber to China, and thru signing Jap peace pact San Francisco, present moderate Indo Govt has surely demonstrated trend of polit philosophy in direction free nations. Dept aware of particular feeling that responsible Indo leaders have for US altho they refrain from formalizing statements in assertion thereof. Foregoing can be attributed solely to State Dept policy followed consistently from time of GOC to date.
Am convinced Indo does not require American grant aid. Finan needs can be met from own resources or bankable loans which Indo capable obtaining. Believe prior US official attention should be given to protecting American capital already here and in encouraging Indo develop along econ and other lines that invite and guarantee such investments. Indos themselves beseech me not to contribute to their finan delinquency. They do not want charity. They do not want develop wasteful habits. They want opportunity sell US their products at remunerative prices and obtain our goods at fair prices reciprocally.
Recommend ECA grant aid be stopped as of June 1952 with exception continuation White contract until expiry date January 1953, and such clean up personnel as absolutely essential. Indo knows where and how to hire any foreigners it may require to follow up surveys being made by White engineers and to supplement such technical aid as may be carried on by UN. I feel US Congress being misled if Dept and ECA endeavor justify continuing grants to Indo on any pretense whatever. Would not Congress be most favorably impressed if Dept would take responsibility for reporting one country in SEA that is sufficiently on its feet and sufficiently virile and independent to be able and to desire carve out its own future after its own mind and within its own means. We cannot expect Indo leaders take initiative in saying they do not want ECA aid. I believe however that formula could be jointly worked out with Indos for terminating aid. This might arouse some adverse press criticism, some genuine disappointment and some misunderstanding. I believe nevertheless present period prosperity is propitious time end program and that improvement rather than worsening US–Indo relations would soon ensue.