431 Embassy in Washington to Department of External Affairs

Cablegram 1300 WASHINGTON, 22 December 1948, 5.19 p.m.

IMMEDIATE RESTRICTED

1. E.C.A. Administrator [1] announced today that E.C.A. has suspended the issuance of authorisations for the procurement of supplies destined to be used in Indonesia. For the present no new contracts will be concluded under outstanding procurement authorisations.

2. Announcement continued, 'E.C.A. funds can appropriately be spent for the shipment of supplies to Indonesia only if there is reasonable assurance that United States aid can be efficiently distributed among the people of Indonesia and that it will contribute to economic recovery there and in Europe. Pending clarification of the present situation in Indonesia, it is impossible to determine whether the economic assistance programme can be effective in those respects. Otherwise until this determination is made, the further commitment of E.C.A. funds would be unjustified. The Administrator's action does not affect the E.C.A. programme for the Netherlands.' 3. So far as we can learn shipments en route and contracts already concluded, will not be affected by today's action. [2]

1 Paul G. Hoffman.

2 Cablegram 1028, dispatched at 9 p.m. on 23 December, instructed the Embassy in Washington to 'keep pestering State Department at highest level on all Indonesian matters', particularly the need to obtain a cease-fire resolution in the Security Council.

[AA:A1838, 403/3/1/1, xx]