1. Memorandum From the Assistant Secretary of State for Far Eastern Affairs (Robertson) to Secretary of State Dulles^Source

Washington, January 2, 1958.

• SUBJECT
• United States Policy Towards Indonesia

The Special Report

Late in December 1956 regional dissatisfaction with the Central Government erupted into proclamations of defiance of central authority issued by Army-led local “councils” in the outer islands. President Sukarno proposed as a solution to the Cabinet crisis growing out of this development the formation of a new government in which all major parties, including the Communist, would be represented, and the creation of a National Council representing the “functional groups” in society to advise the government. He also advocated an ill-defined political theory of “guided democracy” which appeared to be inspired by the material accomplishments if not the ideology of Yugoslavia, the Soviet Union and Communist China. The new government formed in the spring of 1957, while without open Communist party representation, included three extreme leftists, and the National Council created shortly thereafter had a strong leftist representation. In Regional Council elections on Java during the late spring and early summer of 1957, the Communists scored substantial gains. Because of the indications of progressive growth in Communist strength and concern that anti-Communist forces on Java were unwilling or unable to resist adequately this trend, a special group was appointed by the National Security Council on August 1 to evaluate developments in Indonesia and submit recommendations on what action the United States should take. The Committee’s Report, which was submitted to the National Security Council at its meeting on September 23, can be summarized as follows:¹

The Committee finds that the most promising approach for the United States at this stage of developments in Indonesia lies in exploiting the political resources and economic leverage available in the outer islands and recommends that we utilize and develop these assets. Specifically the Committee’s main recommendations are:

• 1. In the outer islands. The U.S. should employ all feasible covert means to strengthen the anti-Communist forces in the outer islands in order through their strength to affect favorably the situation in Java and to provide a rallying point if the Communists should take over Java; and that more forthright means be undertaken if the situation in Java continues to deteriorate.
• 2. Java. The United States should a) seek to promote effective action among the non-Communist elements against the Communists, b) seek to prevent the growth of the military potential of the government forces on Java while at the same time utilizing and supporting the non and anti-Communist forces in the military and para-military forces on Java and in the Central Government, c) induce a psychological awareness of the menace of Communism on Java, d) seek to focus world opinion on the Communist menace on Java.
• 3. U.S. Aid Programs. The abrupt termination of economic aid and information programs in Indonesia is not desirable but they should be handled so as to give no indication that we are reconsidering our policies, and our Technical Assistance Program and our Economic Development Program should be oriented toward the outer islands.
• 4. Military Action. There is a split position on Par. 9 of the paper. Defense representatives took the position that not only should the United States Government proceed with planning for action in case the Communists gain control of Java or having gained control of Java attempt to acquire control over the outer islands, but also that we should at this time decide that we will act under such circumstances if necessary with U.S. armed forces. The Department’s position was that we should go no farther at this stage than to plan for such an eventuality in accordance with the provision of Par. 12 of NSC 5518 on Indonesia² and that no decision should be reached now on what action we will take at a future date under circumstances not now known. Also that even if such a decision were taken at this time it should not be set forth in the paper which will be distributed throughout the government.
• 5. Diplomatic Relations. For the time being our official diplomatic relations with Indonesia should be maintained as near as possible to what they have been in the recent past.

A copy of the NSC Action on the Report is attached at Tab A.³

Mr. Allen Dulles, who will also be present at the meeting, will wish to brief you on implementation of the Report in the covert field. A summary of the pending requests from the Indonesian Government and of the status of our overt programs is attached at Tab B.

Ambassador Allison had certain reservations concerning the Report of the Special Committee and was of the opinion that certain possible courses of action which might have been helpful had not been considered. He was of the opinion that Sukarno is not “beyond redemption” and that it was still possible to reduce his reliance on the Communists. He also felt that we should support the Indonesian position on West Irian as a means of winning Sukarno over, at the same time weakening the Communist position in Indonesia. The Ambassador has also felt that we should have supported the efforts of the present Indonesian Government since, in his opinion, the main influences in the Cabinet are non-Communist. He has also felt that we should make an effort to influence President Sukarno through Djuanda, who is a moderate. The Ambassador has also made specific recommendations on the sale of military equipment to Indonesia and the extension of economic aid. A more detailed discussion of the policy recommendations made by Ambassador Allison is attached at Tab C, with the telegrams and despatches containing his recommendations attached at Tab D.⁴