MEMORANDUM

THE WHITE HOUSE

SECRET /NODIS/XGDS

WASHINGTON

DECLASSIFIED

E.O. 12958 Sec. 3.6

MEMORANDUM OF CONVERSATION

MR 01-34, #6, oz. LSW 6/20/01
By **dce** NARA, Date **7/2/01**

**PARTICIPANTS:**
* President Ford
* President Suharto, President of Indonesia
* Dr. Henry A. Kissinger, Secretary of State and Assistant to the President for NSA
* Lt. General Brent Scowcroft, Deputy Assistant to the President for NSA
* Mr. Widodo (Indonesian Interpreter)

**DATE & TIME:**
* July 5, 1975 - Saturday 12:40 p.m.
* 2:00 p.m.
* (1:44 Secretary Kissinger joined)

**PLACE:**
* Laurel Cabin, Camp David, Maryland

**President:** Let me reiterate how pleased we are to have you visit. Secretary Kissinger told me you were here in 1970 when President Nixon was in office. We are just as concerned about our good relations with Indonesia as we were earlier.

Let me say now that we are as firmly committed and interested in Southeast Asia. The events in Indochina have in no way diminished our interest or commitment in the area.

We are committed to detente with the Soviet Union, but it has to be a mutual relationship. We will not let them have a bigger piece of the benefits. We will continue it as long as it is mutually beneficial. We recognize that the Soviet Union keeps assisting and strengthening its friends, just as we do. But they cannot take advantage of us.

In my trip to Brussels, I told my NATO allies that we were committed to them completely, and I want you and the countries in your area to feel the same.

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**CLASSIFIED BY** Henry A. Kissinger
**EXEMPT FROM GENERAL DECLASSIFICATION**
**SCHEDULE OF EXECUTIVE ORDER 11652**
**EMPTION CATEGORY** 5 (b)(3)
**AUTOMATICALLY DECLASSIFIED ON** Imp. to Det.

Declassified
Photocopy from Declassified 11. Ford Library

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We want to continue our assistance programs. As you know, that depends on the Congress, which has been cutting our program in recent years. This Congress is interested, but it is my intention to increase aid. We are able to make available some military equipment items to help you in your situation - four naval vessels, which may not be in tip-top condition, some tanks, aircraft such as C-47, and four C-123 transports.

Suharto: May I first convey my appreciation and gratitude, Mr. President, for your invitation to visit the United States. And on behalf of the Government and people of Indonesia, may I convey our heartfelt congratulations for the 4th of July. I would take this valuable opportunity and discuss the problems affecting not only Indonesia but all of Southeast Asia in light of recent changes which have swept the peninsula. I had already obtained valuable information from Mr. Habib and from you in respect to furthering American responsibility to its allies in the Southeast Asia region. After obtaining that information and valuable assessment, we have no fear that the United States will abandon its responsibility toward peace in the Southeast Asia region. Considering the bitter and sad experience of the American people in Vietnam, the U.S. has given such great help and to have it turn out so it is necessary to assess why it happened to come out so very badly after such American sacrifice.

If you would allow me, I will elaborate on Indonesia's problems in our struggles for independence against Communism; it will help us understand. It is not the military strength of the Communists but their fanaticism and ideology which is the principal element of their strength. To consider this, each country in the area needs an ideology of its own with which to counter the Communists. But a national ideology is not enough by itself. The well-being of the people must be improved so that it strengthens and supports the national ideology. From the experience of Laos and Vietnam in the past, they seem to have forgotten this national ideology to get the support of the people. Despite their superiority of arms in fighting the Communists, the human factor was not there. They lacked this national ideology to rally the people to fight Communism.

It is in this spirit that Indonesia has been unifying and nationalizing the people to prepare to fight the threats which eventually will be made against our independence. So we are busily engaged in encouraging and consolidating in Southeast Asia this national ideology and cooperating with others in the areas of culture, economics, and so on. This is of course to prepare for any eventuality of an Indochina eventually dominated by the Communists.

What will happen after Vietnam? There are two possibilities: Whether they will apply Communism just within their borders in order to improve the

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Photocopy from Gerald R. Ford Library

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conditions of their peoples. If so, we are okay. Ho Chi Minh has always wanted to unify all of Vietnam. We don't know yet what is going on and whether they will unify or whether there will be two separate Vietnams.

**President:** How long do you think it will take for them to decide this?

**Suharto:** I have been trying to find out from the Communists and Tito, and the judgment is that the consolidation will take five years, but by then, they will be unified.

**President:** How about the relations between Vietnam, Cambodia and Laos?

**Suharto:** Let me explain. As far as Cambodia, they recognize the GRUNK and Sihanouk -- although he is still in exile. I asked Tito why he didn't support Sihanouk's return and he said it would take some time. Tito's reply was that due to prevailing conditions in Phnom Penh, it is not safe for Sihanouk to return. There are still some dangerous elements. But my personal opinion is that they don't want him back yet. My information is that it will take Cambodia about five years to consolidate, so it will be similar to Vietnam. Considering that the time for consolidation is so long -- five years -- they might want two Vietnams and one Cambodia, all three joining a non-aligned world. So they may want to stay separate but with their policies aligned.

Even if it takes some time to consolidate, events will certainly encourage similar elements in Thailand, Malaysia, the Philippines and elsewhere. Of course, this Communist ideological solidarity will take the form of encouraging these elements to step up their activities among labor, farmers and youth. When they have built up the Communist movements, the Vietnamese will be able to supply the military equipment necessary for them to undertake military activities.

**President:** Are all the Communists working together?

**Suharto:** The Soviet Union and the Chinese don't work together. They are competing to expand their own individual influence in the region.

The second possibility is they may not stay within their borders but seek to Communize the region and the world. If so, we have to find out whether they will support the Soviet Union and China. Right now, I think Vietnam won't take sides, because then it would become a target between the two. Instead it will work for independent national Communist movements. But in any case, these events will have brief impact on the neighboring countries. The question

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is how to counter it. Knowing well the Communist tactics -- infiltration, fanaticism, etc., it is essential for each country to have a strong national ideology -- to strengthen itself in the political, economic and military areas.

We are fortunate we already have this national ideology -- Pantchestita(?). The question is, is it strong enough? Here it is important that we strengthen our economic development so we can support our Pantchestita(?). Therefore if we fail in economic developments, it will create a lack of confidence of our national ideology and create doubts in the people and leave them susceptible to other ideologies.

**President:** You have done very well in controlling inflation. We have had problems in that regard, but we are now making progress. I understand if you don't make economic progress there will be the growth of a Communist ideology in Indonesia.

**Suharto:** The principal factor is creating a national stability principally in the economic and monetary fields. The role of the US in her responsibility toward this area -- the U.S. won't abandon her role, but the American assistance role should be reviewed, both in relation to Indonesia and all of Southeast Asia. Particularly in assisting and supporting those countries in establishing national resilience. That would help in creating a regional resilience and help keep out Communism. But we are running against time because the Communists are working very hard in these countries to convert them to Communism.

The best way of fighting subversion is intelligence and territorial operations, so we can detect Communist activity when it first arises. In carrying these out when the people are participating, we rely heavily on communications. Therefore, communication between areas is very important to knowing when problems emerge, so we can deal with them immediately. If the danger becomes greater and the insurgency becomes greater, we will require mobile units to send to these areas to squelch subversion. To supply and maintain this mobility we will need both sea and air transport so we can put down insurgency before it becomes too big to stop. Especially in the navy field, we need to improve the conditions of the navy -- not big ships but to be able to transport men and materials to be able to carry out these operations. Particularly, ships which can fight any attempts to interfere with these operations to cope with insurgency. Indonesia has many islands so we will need many of these ships with great mobility.

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Especially at this moment, intelligence and territorial operations are
very important. We are in a better condition to do this than other Southeast
nations. With American assistance, we have built a national resilience
and we are working hard at building it further.

President: How big a Navy do you have and how big do you need?

Suharto: We have many capable navy men prepared to man the Soviet ships we have -- that were gathered to liberate West Iran. These ships are now mothballed and useless, however.

If you will agree with those principles to strengthen the national resilience -- especially in the military field, we can set up a joint committee to decide what is needed in the Navy, Army and Air Force. We don't need new equipment, just to make them serviceable.

President: I think we should set up a joint commission to decide what is needed and what we can do to supply those needs. I will talk to Secretary Kissinger.

Suharto: But the most important need is not in the military field but in the economic area. This is where we must build the nation. Indonesia can be an example to other countries of the importance of strengthening their national resilience.

President: Our Ex-Im Bank has been working with your people. I would expect we would continue to work with you on providing more credits and grants. It is important that we help with everything we can make available in order to contribute to the essential development you have described.

Suharto: In view of our efforts to accelerate developments, we have four sources: The IGGI (Inter-Governmental Group for Indonesia), international organizations like the World Bank, the Ex-Im Bank, and private banks. These four go from soft to hard terms for loans. We are already obtaining joint Ex-Im commercial loans, and terms are still lower through commercial banks. We hope to continue these loans.

President: In Fortune I saw a ten-page story urging private investment. Is the investment picture encouraging?

Suharto: The figure has now reached $5 billion. What remains is for industry which requires having capital input. Examples of these huge projects are liquefied natural gas ($800 million), nickel ($900 million), copper, and others. These will require the assistance of other countries to get the credits.

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With regard to our efforts to strengthen our national resilience, I want to mention the archipelago principle. This principle has been followed by the Indonesian people for years. The purpose is to force ourselves in as a unified nation without any territorial ambition. From various countries we have gotten favorable response, but I see some hesitancy in the U.S. about this principle. Indonesia doesn't want to create difficulties with other countries establishing this principle in its territory.

**President:** We were encouraged at the progress of the Law of the Sea Conference and we hope for further progress. We do understand your problem. We do have reservations, and we would be happy to meet with your people to work it out. We must have maneuverability if we are to carry out our responsibility in the world. I assure you we will work with your people to try to work out a mutual understanding.

**Suharto:** Talks have been conducted bilaterally between us already. The third point I want to raise is Portuguese decolonization. Starting with our basic principle, the new Constitution of 1945, Indonesia will not commit aggression against other countries. So Indonesia will not use force against the territory of other countries. With respect to Timor, we support carrying out decolonization through the process of self-determination. In ascertaining the views of the Timor people, there are three possibilities: independence, staying with Portugal, or to join Indonesia. With such a small territory and no resources, an independent country would hardly be viable. With Portugal it would be a big burden with Portugal so far away. If they want to integrate into Indonesia as an independent nation, that is not possible because Indonesia is one unitary state. So the only way is to integrate into Indonesia.

**President:** Have the Portuguese set a date yet for allowing the Timor people to make their choice?

**Suharto:** There is no set date yet, but is is agreed in principle that the wishes of the people will be sought. The problem is that those who want independence are those who are Communist-influenced. Those wanting Indonesian integration are being subjected to heavy pressure by those who are almost Communists. The Communist elements practically sabotaged the recent meeting in Macao. I want to assert that Indonesia doesn't want to insert itself into Timor self-determination, but the problem is how to manage the self-determination process with a majority wanting unity with Indonesia. These are some of the problems I wanted to raise on this auspicious meeting with you.

**President:** I greatly appreciate the chance to learn your views, especially on the events in Vietnam as they consolidate -- and the thought it would take five years to consolidate.

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I would like to mention OPEC.

[Secretary Kissinger enters.]

We appreciate your not joining the embargo in '73-74. We are concerned about OPEC raising prices in the fall meeting. We are concerned about the effect on the economic recovery of the United States, the world, and the Third World. I know you feel badly about the Trade Bill's penalties against OPEC members. We are trying to get Congress to change that to make the penalties selective, not comprehensive.

**Suharto:** We share with the other OPEC states the view that we should not confront the consumers in this energy crisis. We are also aware that some producers have taken a tough stand. We are a small producer, but the others still listen to us. The September meeting I don't think will focus on a price increase but how to keep the purchasing power of the producers from falling. Therefore Indonesia, with the others, is studying the problem seriously so that oil revenue will benefit the people despite the inflation and recessions which have beset the world.

**President:** We have been through difficult times and we are now coming out of it. The oil price increase would have an injurious effect on our recovery and thus our ability to help the world's economic recovery.

In the past you have sent a special emissary to contact Secretary Kissinger on occasion. I would like that arrangement to continue under me if you agree.

**Suharto:** I fully share the importance of sending an emissary to contact Secretary Kissinger. I haven't done it so much recently because of the problems that both our countries have been facing recently. I would also agree to resuming these contacts so we can maintain a similarity of views on problems, like with Japan and Australia.

**President:** Lunch is ready.

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DEPARTMENT OF STATE

Washington, D.C. 20520

SECRET

THE SECRETARY'S PRINCIPAL'S AND REGIONAL STAFF MEETING,
TUESDAY, AUGUST 12, 1975

pp 2 - 5 Reports of coup in Portuguese Timor. Habib recommended that the US not get involved. Secretary agreed that we should express no public opinion.

pp 5 - 7 Leaks re question of Presidential visit to India. Secretary referred to Gwertzman article in N.Y. Times. Atherton was certain source was not NEA; he undertook to assure that all hands would keep quiet on this subject.

pp 7 - 9 Argentina sitrep by Rogers. Secretary requested ARA briefing memorandum on dynamics of internal situation in that country.

pp 9 - 12 Panama Canal negotiations. Rogers mentioned favorable reaction to announcement of Bunker's return, and Secretary agreed that Defense group could visit Panama in early September. Rogers discussed Defense desire to play larger role in negotiations. Secretary stated that he would not permit DOD reps to be on negotiating team because of larger considerations related to such a step. Rogers promised Secretary a memorandum on subject.

pp. 13-16 CSCE implementation on maneuvers. Armitage discussed situation with respect to Autumn Forge series of NATO exercises. Secretary agreed with Hyland-Lord view that maneuvers should be notified. Armitage promised memorandum on subject.

p. 17 Secretary said that Somali Ambassador should have appointment with President in order to deliver message from President Siad.

pp 17-20 Rhodesian situation. Mulcahy gave status report on prospective negotiations and South African interest in settlement.

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pp 21-28 Articles in press (e.g., Zumwalt) re allegations of Soviet SALT violations. Hyland suggested possibility of classified "white paper" for selected Congressmen. Secretary approved idea of paper and requested that it deal with origin of agreement as well as question of violations. Secretary said he would not testify before Senator Jackson, but was willing to appear before Morgan.

pp 29-31 Indian situation. Atherton discussed reimposition of pre-censorship and resultant problem for VOA correspondent. Secretary agreed that correspondent should be withdrawn quietly in event of pre-censorship. Secretary requested NEA to get Prime Minister Chavan's visit dates changed to avoid conflict with Japanese Emperor's visit.

pp 31-34 Sitreps by Buffum on Vietnam UN membership issue, Israeli UN expulsion question, and North Korean UN resolution. Habib discussed North Korean desire to negotiate peace treaty with US, noting US requirements that South Koreans and Chinese be included.

pp 35-38 Secretary's speech at UN Special Session. Secretary requested from Enders, by end of day, listing of unresolved issues and general outline of speech. (Needed for discussions with President at Vail.)

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PROCEEDINGS

SECRETARY KISSINGER: Joe.

MR. SISCO: Nothing.

MR. EAGLEBURGER: Nothing.

SECRETARY KISSINGER: Phil.

MR. HABIB: We have had an incomplete series of reports on a coup in Portuguese Timor, which is creating a little bit of flak in Indonesia and Australia. We are not sure what happened, but evidently one of the Timorese Liberation for Independence groups has taken over the government one way or another. We don't know what their intentions are.

The Indonesians are quite upset and are mobilizing some forces very quietly.

When the situation becomes clear, we will know whether or not it is sufficiently serious that the Indonesians will take action. It is quite clear the Indonesians will not let a hostile group -- that is to say a Communist-dominated group -- take over.

SECRETARY KISSINGER: Yes. But who is that group?

MR. HABIB: As best we can tell, it is a group called the UDT, the Democratic Union of Timorese, which is not a Communist-controlled group. There is another group on the island which has some armed forces which is a

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Communist-dominated group.

If it is the UDT, it may very well be that the Indonesians are behind it and are not telling anybody yet. But from intercept traffic, we are not sure that the Indonesians are that fully clued in. And we will just to have to wait. We should have some more information today.

In any event, whichever way it goes, if it is an Indonesian move, or the Indonesians move against it, I think it is a situation in which we should just do nothing. It is quite obvious that the Indonesians are not going to let any hostile element take over an island right in the midst of the Indonesian archipelago.

SECRETARY KISSINGER: It is quite clear that the Indonesians are going to take over the island sooner or later.

MR. HABIB: Eventually. That is always expected. The only ones liable to react verbally will be the Australians, who will feel impaled to say something.

SECRETARY KISSINGER: Why should Whitlam care about the disappearance of a vestige of colonialism?

MR. HABIB: Whitlam has said over and over again they don't mind what happens to Portuguese Timor so long as it is with the consent of the people -- and he has taken

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that high posture, and his party is on record.

As a matter of fact, he said something like that to
you when he was here. And they have assumed that it eventually
if it will be free, the preferable thing would be to let it
stay in Portuguese hands for a couple of years while it sorts
itself out.

SECRETARY KISSINGER: What does "sort itself out" mean in Timor?

MR. HABIB: The answer is until the Indonesians
have organized sufficiently the Timorese into some kind of
pro-Indonesian enosis group.

SECRETARY KISSINGER: Aren't you getting carried away a little bit?

MR. HABIB: It is a Greek word I learned from
Tom Enders, who speaks Greek fluently. Or is that Latin you
speak?

But in any event, the important thing is that we
should not get ourselves sucked into this one by having
opinions, unless you disagree -- I mean publicly.

(Laughter)

I think it is just made to order --

SECRETARY KISSINGER: You didn't mean that last
phrase at all.

MR. HABIB: Well, subject to your confirmation,

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I have provided the guidance yesterday we should have no
comment.

SECRETARY KISSINGER: Our Indian desk takes the news for this week, doesn't it. Why is there a daily comment on what is going on in India about the cancellation of the Presidential trips?

MR. ATHERTON: I have seen one story in the *Times* this morning.

SECRETARY KISSINGER: I saw another story in the *Times* on Sunday. I didn't even know there was such a study going on.

MR. ATHERTON: There was a memorandum to you on this.
That is the only thing.

MR. HYLAND: This intelligence quote -- by Binder.

MR. ATHERTON: There is an intelligence study on internal developments. But on the question of the President' visit, the only thing I know of is the memorandum we had with you.

SECRETARY KISSINGER: Has that gotten to me?

MR. ATHERTON: I think so.

SECRETARY KISSINGER: I don't want to hurt Gwertzman's
feelings that I have seen a memo before he does.

MR. ATHERTON: Gwertzman's story today refers to

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Indonesian side an overly optimistic impression of our ability to assist Indonesian development and security programs and an inadequate appreciation of the growing constraints that are acting to depress US aid levels everywhere. Your visit can be helpful in alerting Suharto to the likelihood of a declining US aid level and making him understand the reasons.

Our goal now is to encourage Indonesia's sense of self-reliance commensurate with its importance to the region, and to focus our dialogue increasingly on broader issues of continuing major interest of the two governments:

- The US role and US interests in East Asia, both for their own sake and to balance Soviet and PRC pressures;

- Indonesia's perceptions of its place in Southeast Asia against this broader backdrop;

- Indonesia's importance in North-South and other multilateral issues and our growing efforts to make a constructive contribution on such issues;

- Regional cooperation in Southeast Asia;

- And our increasingly varied and close bilateral relations.

## II. BACKGROUND AND STRATEGY

In the post-Vietnam environment, U.S. interests in Indonesia are based both on its present position in the region and, especially, on its anticipated future role. Indonesia, the fifth most populous nation in the world, is more than three times the size of any other Southeast Asian country and includes within its border about half the region's total population. It is potentially one of the richest. Its geographic location and resources are of major strategic importance in the region. Flanking the Southeast Asian mainland, Indonesia controls the sea passages between the Pacific and Indian Oceans, including

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Japan's life line to Middle East oil; its own oil fields provides a significant portion of Japan's oil consumption and a small but increasing part of our own oil imports. Its other major resources -- rubber, tin and tropical products -- are also of some significance to the United States.

On the international scene, Indonesia, under Suharto has sought to carve out for itself a somewhat unique diplomatic position as an anti-Communist but non-aligned country capable of carrying on a dialogue with both radical "third world" states and the west while cautiously pursuing policies generally compatible with the latter. The government's desire not to offend politicized Moslem elements in Indonesia, however, influences it to side with the Arab states on certain issues, such as zionism; moreover, it values highly its membership in OPEC and supports OPEC actions, although it has never played a very active role at OPEC meetings.

Within the region, Indonesia is generally recognized as "first among equals" in the five-nation Association of Southeast Asian Nations (ASEAN) and increasingly regards the organization as the cornerstone of its regional policies.

Realization of Indonesia's potential is hampered by severe domestic problems and by economic backwardness which even its increased oil revenues have scarcely begun to overcome. Because of the Suharto Government's decision in the late 1960s to favor economic development over military preparedness, Indonesia's armed forces are poorly equipped and inadequately supplied. At best, it will be years before Indonesia can play a significant regional security role. The speed with which Indochina fell upset Suharto's calculations that Indonesia would have an extended grace period to develop its internal strength before confronting a communist threat from the north. To meet the changed situation following the loss of Indochina, President Suharto appears to have become, if anything, even more convinced in the months since your meeting at Camp David that Indonesia's policies must be based on the maintenance of close ties with the United States -- although not to the extent that its non-aligned image is tarnished.

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President Suharto will want to hear about your dis-
cussions in Peking, particularly as they relate to Southeast
Asia, and may also express some uncertainty about detente.
He undoubtedly will take the opportunity to explain Indo-
nesia's own views on regional security, and the future of
ASEAN. He will probably describe the GOI's own tactics of
gingerly approaching the question of restoring relations
with the PRC and the GOI's assessment of the potential
communist threat to Southeast Asia (which he sees largely
as one of insurgency and subversion in the short run).

We expect Suharto will reaffirm Indonesia's non-
aligned posture and its commitment to the doctrine of
"national resilience", a somewhat mystical "do it yourself"
concept of developing internal strength by combining equal
parts of military self-reliance, broad based economic
development and a political identity between the government/
military and the people. Nevertheless President Suharto
will probably try to obtain further general US understand-
ings regarding economic and military assistance. He may
express concern that, despite indications we gave at Camp
David, the prospect for future aid seems uncertain.

President Suharto may also bring up other issues raised earlier at Camp David or of mutual interest to the two governments: Law of the Sea, Portuguese Timor, Indonesian exclusion from receiving tariff preference under the 1974 Trade Act and U.S. policy on Liquefied Natural Gas (LNG) imports. We anticipate, however, that his comments will be general and philosophic in character and that he will not expect detailed definitions of U.S. policy in response.

A straightforward, low-keyed, generally frank presentation will be most effective with Suharto. He may still harbor latent concerns as to the constancy of US policy toward Indonesia and Southeast Asia, and he is especially anxious that we recognize the magnitude of Indonesia's need for outside aid. Our desire to move away from preoccupation with aid toward a more balanced dialogue should thus be projected with caution, avoiding the impression of a change in the U.S. attitude toward Indonesia. The main forum for more detailed exchanges on this subject will be the Joint Commission.

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### III. US-INDONESIA JOINT COMMISSION

A key aspect of our strategy for the visit will be the announcement of the formation of a Joint US-Indonesia Consultative Commission. The announcement should specify that its first meeting is to be held in Washington next spring. Although the Indonesians have clearly intended that the first meeting be held in Jakarta, your visit and the fact that the announcement itself is being made in Jakarta should help us persuade the Indonesians to agree to Washington as the venue.

As worked out with the Indonesians, the Commission's purpose will be to broaden the range of our consultations with the Indonesian Government on major issues -- the latter to include cooperative programs in various fields, although the Commission will not actually negotiate programs or supervise their execution. The two co-chairmen will be Foreign Minister Malik and Secretary Kissinger, with representation on our side to include Treasury, Defense and such other agencies (AID, for example, or Commerce) as may be indicated by the agenda topics. The Commission is being created for renewable two-year terms and will meet annually, alternating between the two capitals. It will be supported by informally constituted subcommissions, initially a Joint Economic Subcommission and a Joint Security Subcommission, which will meet annually and be chaired on the U.S. side at the Under Secretary or Assistant Secretary level.

In discussing the Commission with Suharto, you may wish to stress the following points:

- We are especially pleased that agreement has been reached on establishing the Commission, and we look forward to the first meeting in the Spring.

- We see it as a most useful device for broadening the range of consultation and cooperation between our two countries and, on our side, as an indicator of the special importance we attach to our ties with Indonesia.

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## IV. ISSUES AND TALKING POINTS

### 1. Indonesia and the People's Republic of China

Of all the non-communist Southeast Asian countries, Indonesia has remained the most cautious about establishing (or in Indonesia's case, re-establishing) relations with Peking. Many Indonesians believe the PRC was behind the 1965 communist coup attempt and are highly skeptical of PRC pledges of non-interference in the internal affairs of its neighbors. They see their problem complicated by a sizeable Chinese minority in Indonesia (more than three million). Although Indonesia will probably normalize its relations with the PRC eventually, opinions differ within the GOI as to how quickly to proceed.

Suharto will be looking forward to your comments on your discussions with the Chinese and will be curious about our own plans for normalization with the PRC. You may wish to pass on any insights gained from your talks in Peking on Chinese intentions towards Southeast Asia (a topic in which Suharto will be keenly interested), while avoiding any appearance of advising the Indonesians on how they should handle their own relations with China. It is not in our interest to push Indonesia toward the PRC.

### 2. US-Soviet Detente

Indonesia's relations with the USSR are correct but wary. The GOI seeks aid from the Soviet bloc and receives a small quantity. (Aid from the USSR itself, terminated in 1965, will be resumed with a $100 million Soviet credit for hydroelectric projects announced in November 1975). The GOI, however, remains innately suspicious of Soviet intentions. Especially in the context of your comments on China, Suharto may inquire briefly about detente. He will be seeking primarily a reassurance that we, too, are careful to keep our guard up in dealings with Moscow.

### 3. Indonesia's Regional Policies

Indonesia's answer to the potential threat by a communist Indochina is to build up the Association of Southeast Asian Nations (ASEAN - pronounced AH-see-an) as a cohesive regional organization (but without provoking Hanoi by portraying it as a defensive alliance); to encourage

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greater "national resilience" in each of the ASEAN countries; to step up its own defenses without diverting excessive resources from its economic development programs; to hold out a wary hand to Hanoi and Saigon (both of whom it recognizes) as an inducement to choose cooperation rather than confrontation with their non-communist neighbors; and to persuade the U.S. to maintain its presence in the region, especially in the form of "over the horizon" forces. As he did at Camp David, Suharto will want to acquaint you with his views of the region, Indonesia's position therein, and perhaps how he envisages the U.S. role. He will probably express concern about Malaysia's growing internal security problems (see below) and possibly about Thailand's as well.

## Your Talking Points

- We welcome Indonesia's lead in developing regional cooperation, particularly through ASEAN. In our view, ASEAN represents an encouraging and constructive Southeast Asian effort to work toward regional self-reliance and security.

- We recognize that ASEAN is, and must remain, an organization of the Southeast Asian states themselves. We want to cooperate both with ASEAN's member countries and with ASEAN itself in way that ASEAN states find useful, but we look to ASEAN itself to give the lead in determining the extent and nature of our cooperation.

- For our part, we intend to maintain an effective presence in the region. We will honor our treaty commitments and we are determined to maintain our close ties with friends such as Indonesia.

- (If Suharto asks) We intend to retain our bases in the Philippines and certain facilities in Thailand with the agreement of the governments concerned.

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## 4. The Malaysian Insurgency

The Indonesians profess great concern over the situation in Malaysia, where the chronic communist insurgency has become appreciably more active in the past year. Indonesia sees this as an opportunity for the Vietnamese Communist regimes to open a new and (for Indonesia) dangerous front by moving in with material support for the insurgents. While Malaysia is among their closest friends, the Indonesians fault the Malaysian Government for failing to take the domestic measures Jakarta believes necessary to minimize the threat -- particularly an easing of the legal and economic discrimination that favors the Malay plurality (44%) at the expense of the wealthier Chinese minority (38%). The Indonesians have some justification for their concern, but we believe their fears exaggerated. They are also concerned, but less immediately, with the insurgent threat to Thailand.

### Your Talking Points (if raised by the Indonesians)

- We share Indonesia's concern over developments that could give the communists an opening to support subversion in the ASEAN region. Thailand and Malaysia appear particularly vulnerable in this regard. We hope that Indonesia, as Malaysia's close friend will help with advice and counsel.

- For our part, we sent a small military team to both Malaysia and Singapore at the request of those governments to discuss defense equipment needs. We are helping both governments in selecting military equipment and are planning to offer Malaysia credit (about $15 million) for some of the purchases the year.

## 5. US Security Assistance to Indonesia

At Camp David President Suharto expressed concern to you about the potential threat of arms smuggled from the north to support insurgencies in Indonesia's neighbors and eventually in Indonesia itself. He sought our cooperation in reviewing Indonesia's equipment requirements.

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During subsequent consultations in September with an Indonesian military mission we agreed to provide a modest military package ($30 million in grants and $12.5 million in credit for a total of $42.5 million) of helicopter, ships, communication and radar equipment to meet Indonesia's primary threat -- the sea infiltration of arms -- and to maintain more effective control of the archipelago. Since we could not supply all their requirements, we agreed to work with them on a longer term effort to rehabilitate their military forces.

The level of military assistance which we told them they would receive this year, however, was later readjusted by switching approximately $10 million from grant to credit. Given Congressional attitudes, overall prospects for security assistance in future years are not bright, a fact that the GOI may not adequately grasp. They could, in fact, be disappointed next spring. if FY 1976 security assistance is significantly reduced as is quite possible.

## Your Talking Points

- We recognize the seriousness of Indonesia's security concerns and have proposed to Congress approximately doubling the present level of our overall security assistance to Indonesia in the present fiscal year.

- For budgetary reasons we have had to make certain readjustments this year in the mix of grants to FMS credits. Increasingly, in the future, security assistance will be in terms of credit.

- We will continue to cooperate with Indonesia in the security assistance field within the limits of our capabilities. At the same time, Indonesia should not gauge US interests in Indonesia solely by our bilateral aid levels.

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## 6. North-South Economic Issues

Indonesia supports restructuring the world economy to bring greater equilibrium between rich and poor countries, but prefers to deal with practical questions rather than ideological confrontation. The Indonesians responded favorably to the U.S. "comprehensive" speech at the UNGA Special Session, but remain skeptical about our willingness to fulfill our promises and differ with us on such fundamental issues as our reliance on market forces to bring about changes in world economic structure. They dislike our criticism of OPEC and the non-aligned.

Indonesia exerts a moderating influence among Third World and OPEC countries. A sustained dialogue with Indonesian leaders could narrow the gap between our differing views of the policies best suited to improve the economic position of the Third World. Indonesian leaders have to be persuaded about the sincerity of U.S. North-South policies. At the same time they should be aware that U.S. domestic public support is essential for policies to benefit the developing countries and that several recent third world actions, particularly in the UN, have endangered that support.

### Your Talking Points

- We sympathize with the Third World desire to bring a better equilibrium between the developed and developing countries, and we also recognize Indonesia's commitment to this goal.

- We have demonstrated the seriousness with which we propose to deal with these issues. Secretary Kissinger's speech to the UNGA Special Session contained more than 30 proposals covering trade, commodities, agriculture, finance, and technology. Many of them should be of particular benefit to Indonesia.

- In some areas we may differ on how best to pursue North-South objectives. We think market forces have a key role to play, for example, and their exclusion leads only to inefficiencies and dislocations.

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We believe both producer and consumer interests should be taken into account in discussing commodity policies.

-- If we deal with the specifics of these issues we should be able to narrow our differences and reach practical solutions. We hope to discuss these matters with Indonesian policy makers in all appropriate fora: The Joint Commission, the Conference on International Economic Cooperation and elsewhere.

-- Indonesia should also be aware of our political problems in this area. We need the support of the U.S. public to pursue policies to benefit the developing countries. We would welcome Indonesia's help in discouraging Third World positions which can only erode U.S. public support for a forthcoming U.S. posture.

## 7. Energy Issues

The Indonesians place considerable emphasis on solidarity with OPEC. Nevertheless they have played a passive moderate role at OPEC meetings and during the latest round kept their price increases significantly below those of other OPEC countries. They did not participate in the Arab oil embargo. The United States accounts for the bulk of Indonesia's oil investment (about 86%) and an increasing amount (about 11%) of our crude oil imports are from Indonesia.

There are two energy related issues which the Indonesians could raise in discussions: (a) Indonesian mandatory exclusion (as a member of OPEC) from the 1974 Trade Act benefits and (b) their hope for a favorable FPC ruling which would permit the GOI to go ahead with a major project to export liquefied natural gas (LNG) to California.

### Your Talking Points (if the subject is raised)

-- We have noted Indonesia's recent decision to hold its oil price increases below that sanctioned by OPEC. We have also appreciated Indonesia's moderate stance in other issues relating to OPEC. But we believe that in the long run Indonesia stands to gain most from increasing production and sales.

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-- The Federal Power Commission will be taking up the Indonesian LNG case in the very near future. Meanwhile, the Administration's Energy Resources Council will be working toward decisions on our overall energy policies, including the question of LNG imports. While we cannot foretell what these decisions will be, we are very much aware of Indonesia's interest in LNG.

-- We favor Congressional action to enable Indonesia to become eligible to receive those tariff preferences conferred by the 1974 Trade Act. However, Congressional concern over OPEC policies will make this difficult.

## 8. US Economic Aid to Indonesia

At Camp David President Suharto emphasized that "Indonesia's most important need was economic rather than military", reflecting the realistic Indonesian view that domestic socio-economic and political problems are the chief threat to the country's stability. Particularly on Java, where 80 million people are already densely crowded as anywhere on earth, unemployment and grinding poverty are endemic. Compounding Suharto's political problems are signs that despite ten years of development under the "New Order" the gap between the rich and poor is growing, while corruption and maladministration remain widespread.

In response to Suharto's comments at Camp David, you expressed your intention to increase aid to Indonesia. Subsequently you proposed to the Congress an additional $20 million in loans for Indonesia, bringing the total proposed U.S. assistance package of $85 million for FY-1976. (Japan this year is providing almost twice as much, while the other members of the Indonesia aid consortium are providing roughly $230 million). Prospects for future U.S. economic assistance are less clear since there are proposals now under interagency review which could cut our aid significantly as part of worldwide budgetary reductions.

### Your Talking Points

-- We fully recognize Indonesia's continuing need for developmental assistance. We have asked Congress for $20 million in additional development loans to Indonesia this year for a total of more than $80 million in aid, the biggest single increase we have proposed this year for any Asian country.

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-- We intend, within Congressional limits, to maintain a meaningful aid contribution to Indonesia. At the same time, Indonesia should not gauge U.S. interest in Indonesia solely by bilateral aid levels.

-- Private foreign investment can become an increasingly important source of capital and technology for Indonesia's economic growth. We hope your Government will actively continue to encourage the foreign investor.

-- We also hope that Indonesia will support our proposals at the UNGA Special Session to protect developing countries against cycles in their export earnings, to provide them with better access to western capital and to expand international facilities to finance development, to promote the transfer of technology, and to achieve an international consensus governing relations between trans-national enterprises and governments.

## 9. Indonesia and the UN

Indonesia walks a tightrope in its UNGA voting, maintaining a show of solidarity with the non-aligned majority while attempting to avoid too frequent opposition to the U.S. and the West. This is reflected in abstentions and behind-the-scene efforts at compromise. In 1974 Indonesia worked hard to defend the seat of the Lon Nol delegation. The 1975 record has been mixed: On Korea Indonesia voted for the friendly resolution and abstained on the hostile one; on Zionism, however, it voted with the majority, to some extent because of internal political considerations arising from the pressure of Moslem political parties in Indonesia.

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## Your Talking Points

- Despite the continued tendency of the UNGA non-aligned majority to use its voting strength irresponsibly, we are making every effort to avoid acrimonious confrontations.

- We understand Indonesia's dilemma in wanting to avoid taking issue with the non-aligned majority, and we appreciate Indonesia's support when we receive it.

- If the UN is to retain its importance, however, greater realism and consideration for the actual issues must be injected into the UNGA. It is in the interest of major countries such as Indonesia to ensure that the UN acts more effectively and responsibly. If every country voted forthrightly for what it actually believed, the extremists in the UN would find themselves a small minority.

## 10. Indonesia and the Law of the Sea

Indonesia has long sought international recognition of the archipelago principle, under which all waters within the Indonesian archipelago would be under extensive Indonesian control. We have not accepted the principle, but we have indicated that we could accept an objectively defined archipelago as part of an over-all Law of the Sea treaty which effectively guarantees our transit and over-flight rights through both archipelagos and international straits. After over two years of negotiation, we have narrowed our differences with Indonesia. We are prepared to resume bilateral discussions with the GOI on this subject whenever the Indonesians wish. A short while ago they expressed a desire for bilateral talks, but most recently seem to have backed away again.

- We understand Indonesia's position on the archipelago question.

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-- The United States can accept the archipelago principle in the Law of the Sea negotiations as part of a comprehensive treaty protecting our interests in transit through and over archipelagoes and international straits.

-- We are willing to continue detailed law of the sea consultations with Indonesia to find a mutually acceptable solution to this important problem.

## 11. Indonesia and Human Rights

The human rights problem in Indonesia concerns about 35,000 suspected communists still under detention from the 500,000 or so arrested in the chaotic months following the attempted communist coup of September 1965. Held without trial or in many cases formal changes, these detainees have attracted a good deal of world (and Congressional) attention and criticism of Indonesia.

The Indonesians recognize the issue as a serious problem and are troubled by the criticism. They feel themselves in a dilemma. However, they are convinced the wholesale release of the detainees would lead to civil strife and a recrudescence of the Indonesian Communist Party.

We have frequently discussed the issue with the GOI in a quiet, non-accusatory manner, seeking to speed resolution of the problem, and we have alerted them to the human rights provisions of our aid legislation. The Indonesians have been responsive. During a recent US visit by a high level Indonesian delegation headed by General Ali Murtopo, one of Suharto's close advisors, the group raised the issue with Members of Congress and told them that they plan to step up the phased release of more detainees.

We believe it would be helpful if you raised this issue in a low key.

## Your Talking Points

-- The matter of the detainees in Indonesia has attracted a good deal of attention and concern in the U.S. and has affected Congressional and public attitudes toward Indonesia.

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-- The Congress has placed human rights restrictions on both economic and security assistance legislation which could make implementation of these programs more difficult. We understand that the delegation led by General Murtopo (Moor-TOE-poh) discussed this constructively with Members of Congress.

-- Indonesia's release of about 1,500 detainees during the past year and the implementation of what we understand are present plans for the phased release of more detainees has already had a favorable impact on Congress and the U.S. public.

## 12. Indonesia and Portuguese Timor

Indonesia was content to leave in Portuguese hands the small colony (600,000 people) that shares with Indonesia the island of Timor. With the dismantling of the Portuguese empire, however, Jakarta has become concerned that the backward and resource-poor colony would attain what the Indonesians expect would be a weak, unviable in-dependence leaving it susceptible to outside -- especially Chinese -- domination.

For about a year Jakarta has been maneuvering to absorb the colony through negotiations with Lisbon and covert military operations within the colony itself, showing considerable restraint. A small scale civil war between quarreling Timorese parties has opened the way to wider Indonesian intervention in-support of pro-Indonesian factions. Portugal, meanwhile, has almost completely lost control of the colony.

A merger with Indonesia is probably the best solution for the colony if the inhabitants agree. Indonesia use of US-supplied weapons in an overt occupation of the territory, however, would contravene U.S. law. We have quietly pointed this out to the GOI, and it appears to have been a restraining factor.

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DEPARTMENT OF STATE
BRIEFING PAPER

INDONESIA AND PORTUGUESE TIMOR

Portuguese Timor is a small (population 600,000) hitherto neglected Portuguese colony occupying half the island of Timor. The other half is Indonesian territory. The inhabitants of the two halves are ethnically indistinguishable, although centuries under separate rule have created social and cultural differences. Indonesia does not claim the colony, and the Suharto government has been content to leave it indefinitely in Portuguese hands. The GOI does, however, look with concern at the idea of an independent Portuguese Timor, fearing that its backwardness and lack of economic viability would open it to pervasive outside -- especially Chinese -- influence which could spread into Indonesia.

Background

A small scale civil war broke out between rival political parties in Portuguese Timor last August. Unable to restore order, the Portuguese evacuated their remaining citizens and moved their administration to a small offshore island. Fretilin, a vaguely leftist party favoring early independence, quickly gained ascendency when it won the support (and the weapons) of the 2,000-odd Timorese soldiers from the disbanded Portuguese garrison. The Indonesians, however, have trained and equipped units from the two main rival parties and sent them back into Portuguese Timor with a stiffening of disguised Indonesian special forces troops. The latter have been pressing Fretilin back toward Dili, the capital. Latest reports indicate that hostilities have decreased while the pro-Indonesian forces consolidate their position.

Meanwhile, the Indonesian Foreign Minister, meeting recently in Rome with his Portuguese counterpart, obtained the latter's agreement to a statement reasserting Portugal's responsibility for the territory and calling for a conference between the Timorese parties and the Portuguese to end the fighting and resume the "orderly" process of decolonization disrupted last August. The statement favors Indonesia, in that it refutes Fretilin's claim to control of the territory and has Fretilin outnumbered in a conference by the two rival parties now under de facto Indonesian control.

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## Current Situation

Preoccupied with the crisis at home and with their focus on colonial problems limited to agonizing over Angola, Portugal's chief interest is to get out gracefully, leaving behind a semblance of order on which legal factions can agree. The Portuguese have called a conference of the three main Timorese parties, suggesting Darwin as the site. None of the three parties have rejected the proposal, but there is disagreement and bickering over the location.

Meanwhile, the Indonesian UN Mission has circulated a policy statement emphasizing Portugal's continuing responsibility for "orderly decolonization" of Timor, calling for an act of self-determination by the "entire people", pledging to abide by the outcome, and welcoming them to "become independent through integration with Indonesia" if they wish. In a passage aimed at Fretilin, the statement declared that "Indonesia cannot accept a solution imposed by any party through armed force".

## Prognosis

A Portuguese sponsored conference of the three main Timorese parties (assuming it is eventually held) could result in a cease-fire call and perhaps a token return of the Portuguese administration to Dili, although an actual restoration of Portuguese authority seems most unlikely. Although the Indonesians would probably give a cease-fire their public blessing, we expect that they will keep up their clandestine pressure on Fretilin until the party is defeated or breaks up. The GOI has displayed patience and some subtlety in its efforts to date, however, and will try to reach its objective with minimum outside impact.

## U.S. Interest

We have taken the position that the U.S. should eschew involvement in the Timor situation and leave its resolution to the Indonesians, Portuguese, Australians and Timorese themselves. There are no present calls for our involvement, with the parties concerned in direct touch with each other and none seeking our help.

A particular concern for us has been the possibility of an overt Indonesian military move into the territory, inevitably using US-supplied weapons in the process. We have brought the matter quietly to the attention of the Indonesian leaders, however, and this has been a major factor in restraining Jakarta to date.

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1. FOLLOWING IS MEMCON OF MEETING BETWEEN PRESIDENT FORD AND PRESIDENT SUHARTO IN JAKARTA DECEMBER 6. ALSO PRESENT WERE SECRETARY OF STATE KISSINGER, FOREIGN MINISTER MALIK, MINISTER OF STATE SUDHARMONO, AMEMBASSADOR NEWSOM, AND AN INTERPRETER.

2. SUHARTO-I WISH TO EXPRESS MY THANKS AND VERY GREAT APPRECIATION FOR YOUR WILLINGNESS, MR PRESIDENT, TO ACCEPT MY INVITATION TO VISIT INDONESIA. ALTHOUGH THE VISIT IS VERY SHORT, I BELIEVE IT WILL BE MOST USEFUL. THE PROMOTION OF PERSONAL CONTACTS BETWEEN US IS IMPORTANT AND SIGNIFICANT FOR BOTH OF OUR COUNTRIES.

3. FORD-MY DELEGATION IS EXTREMELY GRATEFUL, MR PRESIDENT, FOR THE SPLENDID ARRANGEMENTS FOR THE VISIT. I REGRET THAT THE TIME IS SHORT BUT AFTER ELECTIONS, I HOPE TO COME BACK AGAIN FOR A LONGER PERIOD. THE OPPORTUNITY FOR SUCH FACE TO FACE MEETINGS IS ALSO HIGHLY IMPORTANT FOR ME. THE CONFIDENCE ESTABLISHED THROUGH SUCH MEETINGS IS IMPORTANT TO THE DEVELOPMENT OF OUR POLICIES. I CONSIDERED THE MEETING AT CAMP DAVID TO BE MOST FRUITFUL, AND I AM CERTAIN THAT THIS CURRENT VISIT

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WILL EVEN FURTHER ENHANCE OUR RELATIONSHIP. THE UNITED STATES INTENDS TO CONTINUE A STRONG INTEREST IN AND INFLUENCE IN THE PACIFIC, SOUTHEST ASIA AND ASIA. AS A WHOLE, WE HOPE TO EXPAND THIS INFLUENCE DESPITE THE SEVERE SETBACK OF VIETNAM. OUR COUNTRY-TO-COUNTRY RELATIONSHIPS ARE VERY IMPORTANT TO THE DEVELOPMENT OF THESE POLICIES.

4. AS YOU KNOW, I HAVE JUST RETURNED FROM CHINA WHERE WE HAD DISCUSSIONS OF THE INTERNATIONAL SCENE AND AN IN DEPTH REVIEW OF OUR BILATERAL RELATIONS. WE MADE IT CLEAR THAT WE ARE OPPOSED TO THE EXPANSION OF ANY NATION OR COMBINATION OF COUNTRIES. WE HAVE NO TERRITORIAL AMBITIONS. WE VALUE OUR RELATIONSHIP WITH INDONESIA AND RESPECT YOUR REGIONAL AND NON-ALIGNED RELATIONSHIPS.

5. SUHARTO-WHAT ARE YOUR IMPRESSIONS OF CHINA'S ATTITUDE TOWARD SOUTHEAST ASIA AFTER VIETNAM?

6. FORD-THEY WILL VIGOROUSLY EXPANSIONISM. BY OTHERS INTO ASIA. IN THIS THEY THINK PARTICULARLY OF THE USSR. THEY DON'T APPEAR TO HAVE AMBITIONS OF THEIR OWN.

7. KISSINGER-WE BELIEVE THAT CHINA DOES NOT HAVE EXPANSIONIST AIMS NOW. WE CANNOT PREDICT WHAT THE SITUATION WILL BE IN FIVE YEARS. RIGHT NOW THEIR FIRST CONCERN IS THE SOVIET UNION AND THEIR SECOND VIETNAM.

8. FORD-I HAD THE IMPRESSION OF A RRESTAINED CHINESE FOREIGN POLICY LARGELY DIRECTED AT MEETING THE CHALLENGE OF RUSSIA AND VIETNAM.

9. SUHARTO-AT CAMP DAVID WE DISCUSSED THE QUESTION OF UNIFICATION OF VIETNAM. THAT SEEMS NOW TO BE MOVING AHEAD. LAOS AND CAMBODIA SEEM ALREADY UNDER VIETNAMESE INFLUENCE. DOES THE UNITED STATES BELIEVE THE THREE WILL BE INCORPORATED INTO ONE COUNTRY?

10. FORD-THE UNIFICATION OF VIETNAM HAS COME MORE QUICKLY THAN WE ANTICIPATED. THERE IS, HOWEVER, RESISTANCE IN CAMBODIA TO THE INFLUENCE OF HANOI. WE ARE WILLING

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TO MOVE SLOWLY IN OUT RELATIONS WITH CAMBODIA, HOPING
PERHAPS TO SLOW DOWN THE NORTH VIETNAMESE INFLUENCE
ALTHOUGH WE FIND THE CAMBOODIAN GOVERNMENT VERY DIFFICULT.
THE SITUATION IN LAOS IS DISTURBING AND APPEARS TO DEMONSTRATE
AN ACCELERATED INTEREST ON THE PART OF NOTTH
VIETNAM.

11. KISSINGER-IT IS INTERESTING THAT IN LAOS SOUVANNAVONG IS NOW IN A SUBORDINATE POSITION. THE CHINESE WANT TO USE CAMBODIA TO BALANCE OFF VIETNAM AND ARE KEEPING TROOPS IN CONNECTION WITH ROAD BUILDING IN THE NORTH. WE DON'T LIKE CAMBODIA, FOR THE GOVERNMENT IN MANY WAYS IS WORSE THAN VIETNAM, BUT WE WOULD LIKE IT TO BE INDEPENDENT. WE DON'T DISCOURAGE THAILAND OR CHINA FROM DRAWING CLOSER TO CAMBODIA.

12. SUHARTO-THE FACT REMAINS THAT SIHANOUK, DESPITE SUPPORT FROM CHINA, HAS NO AUTHORITY AND THE KHMER ROUGE LEADERSHIP IS CLOSER TO HANOI. THEY ARE GUIDED BY THE WILL OF HO CHI MINH.

13. KISSINGER-LE OOC THO USED TO TELL ME THAT THEIR AMBITION WAS ALL OF INDOCHINA AFTER WHICH THEY WOULD PROCEED TO TAKE OVER SOUTHEAST ASIA.

14. SUHARTO-IN RECENT POWER POLITICS THE THREE INDOCHINESE COUNTRIES ARE TRYING TO SEPARATE THEMSELVES FROM THE BIG POWERS AND BECOME MEMBERS OF THE NON-ALIGNED MOVEMENT. CAMBODIA AND LAOS ARE MEMBERS ALTHOUGH HANOI IS NOT YET A MEMBER. THIS CAN CAUSE NEW PROBLEMS FOR THE NON-ALIGNED MOVEMENT. SEVERAL COMMUNIST COUNTRIES NOW WANT TO BE NON-ALIGNED. YUGOSLAVIA, CUBA AND ROMANIA ARE EXAMPLES. NOW AMONG THE NON-ALIGNED COUNTRIES THERE ARE NO CONSISTENT POLICIES AND NO SOLID BLOC.

15. ONE OF INDONESIA'S MAIN CONCERNS IS THE DANGER FROM INDOCHINA WHETHER THERE IS ONE STATE OR THREE. THIS DANGER APPLIES TO ALL OF THE NON-COMMUNIST COUNTRIES IN THE AREA.

16. FORD-FROM PAST HISTORY IT IS CLEAR THAT INDOCHINA
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OF OPINION. THAILAND AND MALAYSIA, WITH A COMMON BORDER WITH INDOCHINA, SAW NO IMMEDIATE THREAT AND WANTED TO ESTABLISH RELATIONS WITH HANOI. INDONESIA ADVISED THEM THAT EVEN THOUGH THERE WAS NO PHYSICAL THREAT THIS DID NOT MEAN THERE WAS AN ABSENCE OF DANGER. THE LOCAL INSURGENCIES REPRESENT A GREATER DANGER THAN WOULD AN OVERT PHYSICAL THREAT. THE ASEAN LEADERS HAVE NOW CONCLUDED THAT THE INSURGENT ELEMENTS HAVE STEPPED UP THEIR ACTIVITIES. THE ASEAN LEADERS WILL SEEK TO CONSOLIDATE THEIR ACTION IN THE FORTHCOMING ASEAN SUMMIT. THE AGENDA WILL INCLUDE ECONOMICS AND POLITICS AS WELL AS SECURITY.

18. ON THE ECONOMIC SIDE THE OBJECTIVE WILL BE TO STRENGTHEN NATIONAL RESILIENCE. IT IS IMPORTANT TO COOPERATE CLOSELY TOGETHER SO THAT NO COUNTRY IS A WEAK LINK. IN THIS CONNECTION THE ASEAN COUNTRIES WISHED TO TAKE A COMMON STAND ON TRADE RELATIONS AND AVOID COMPETITION AMONG THEMSELVES. A RELATIONSHIP NOW EXISTS WITH THE EEC AND CONSULTATIONS ARE CONDUCTED THROUGH A SPECIAL COMMITTEE CALLED SCAN. INDONESIA WOULD LIKE TO SEE THE ESTABLISHMENT OF CONSULTATIONS ON ECONOMIC MATTERS BY ASEAN WITH OTHER COUNTRIES AND PARTICULARLY THE UNITED STATES. HOW THIS WOULD BE DONE IS NOW BEING DISCUSSED. INDONESIA IS THE LEADER OF THE GROUP TALKING WITH THE EEC AND THE PHILIPPINES WILL BE THE LEADER OF THE GROUP IN DISCUSSIONS WITH THE UNITED STATES. (THIS POINT WAS SUBSEQUENTLY CLARIFIED WITH GENERAL SUDHARMONO.)

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DOOM FORD-WE WOULD WELCOME SUCH DISCUSSIONS AND WILL WAIT UNTIL THE INITIATIVE IS TAKEN BY THE PHILIPPINES FOR THE GROUP.

20. SUHARTO-THE ASEAN COUNTRIES DO NOT WISH TO EMBARK ON OVERLY AMBITIOUS PROGRAMS BUT WISH TO FIND PROJECTS BENEFICIAL TO ALL. PART OF THE EFFORT WILL BE IN INDUSTRIES IN WHICH PRODUCTS ARE CLEARLY IN DEMAND SUCH AS IN FERTILIZER. INDONESIA IS NOW PRODUCING UREA FERTILIZER AND THE PHILIPPINES HAS THE PROSPECT OF PRODUCING PHOSPHATES.

21. FORD-WHERE WOULD THE CAPITAL COME FROM FOR SUCH PROJECTS?

22. SUHARTO-WE ENVISAGE JOINT VENTURES WITH ALL FIVE COUNTRIES INVOLVED.

23. KISSINGER-WE WOULD WELCOME SUCH PROJECTS AND HAVE LONG SUPPORTED THE IDEA OF REGIONAL ARRANGEMENTS. WE BELIEVE THAT THESE WOULD HAVE AN IMPORTANT EFFECT.

24. SUHARTO-WE UNDOUBTEDLY WOULD BE LOOKING FOR CAPITAL FROM THE US ALSO FOR SUCH PROJECTS.

25. IN DISCUSSIONS OF SECURITY AMONG THE ASEAN COUNTRIES, WE ARE SEEKING TO AVOID ANY OUTWARD INDICATION OF A PACT. WE INTEND TO BEGIN BY AN EXCHANGE OF INTELLIGENCE ANALYSES AND ESTIMATES. WE WILL THEN DECIDE WHAT METHODS WE SHOULD USE TO REINFORCE OUR SECURITY.

26. FORD-DO YOU CONSIDER THE INSURGENCY IN THIALAND AND MALAYSIA YOUR MOST IMMEDIATE THREAT?

27. SUHARTO-EXACTLY. IT IS THERE THAT WE ARE NOW TRYING TO ANALYSE WHAT WE SHOULD DO. WHAT WE DO MUST BE CLOSELY RELATED TO OUR CAPABILITIES, TO ADETERMINATION OF HOW STONG WE ARE. THESE CAPABILITIES ARE CURRENTLY LIMITED. IT IS IMPORTAT, THEREFORE, THAT WE CONSOLIDATE THE STRENGTH OF THE PEOPLE'S IDDEOLOGOGY, POLITICALLY, ECONOMICALLY AND MILITARILY. ALL VILLAGES SHOULD BECOME

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Lodestar
Photocopy from Gerald R. Ford Library

Department of State

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FORTRESSES. THIS REQUIRES SUBSTANTIAL SMALL ARMS, THAILAND AND INDONESIA ARE STUDYING THE MEANS OF PROVIDING SUCH ARMS. BOTH MALAYSIA AND THAILAND ARE INTERESTED IN SMALL ARMS PRODUCTION BUT FOR SECURITY REASONS WOULD BE PREPARED OT SEE THIS PRODUCTION IN INDONESIA. WE WOULD LIKE TO BUILD A PLANT TO PRODUCE M-16 RIFLES. WOULD THE UNITED STATES CONSIDER ASSISTING IN THE CONSTRUCTION OF SUCH A PLANT?

26. KISSINGER-WE WOULD FAVOR THIS AS A GOVERNMENT BECAUSE OF ITS INDICATION OF WIDER COOPERATION.

29. FORD-WE WOULD BE MORE THAN SYMPATHETIC, WE WOULD BE ENTHUSIASTIC ABOUT SUCH A CONCEPT.

30. SUHARTO-WE ARE NOW TAKING FORMAL STEPS. HE LEADER-SHIP ON THE PROJECT O IS LEFT TO INDONESIA.

31. FORD-WE WERE NOT ANXIOUS TO WITHDRAW FROM THAILAND AS RAPIDLY AS THE THAIS WANTED.

32. KISSINGER-WE WILL KEEP UTAPAO AIR BASE.

33. FORD-WE ARE STILL IN THAILAND. WE ALSO HAVE HAD SOME CONTACTS WITH MALAYSIA AND SINGAPORE ABOUT INCREASED MILITARY AID.

34. SUHARTO-INSURGENCY HAS NOW REACHED THE CAPITALS IN BOTH THAILAND AND MALAYSIA. IT IS BECOMING INCREASINGLY DIFFICULT TO FACE THIS INSURGENCY. FOR ONE THING, THERE ARE CONFLICTS OF INTEREST IN BOTH THAILAND AND MALAYSIA. THE RECIAL PROBLEMS IN MALAYSIA ARE AN EXAMPLE. THE COMMUNISTS ARE TRYING TO SUBVERT BY CUTTING LINKS BETWEEN THE ASEAN COUNTRIES. THEY WANT TO CUT MALAYSIA FIRST.

35. FORD-WHERE ARE THE INSURGENTS COMING FROM?

36. SUHARTO-MAINLY FROM CHINA. 40 PCT OF THE POPULATION IN MALAYSIA ARE CHINESE. VIETNAM AND THE SOVIET UNION WILL NOT STAND STILL IF THEY FEEL THERE ARE OPPORTUNITIES IN MALAYSIA. WE NEED TO FORTIFY MALAYSIA BUT THIS IS NOT EASY TO DO BECAUSE OF THE CHINESE INFLUENCE IN MALAYSIA.

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