Embassy thinking on Australia's part in the Colombo Plan in Indonesia has been expressed in Djakarta Despatch No.3/542 and also Mr. Kevin's letters to Mr. Casey and Mr. Tange of 31st July 19543 and 23rd October 19544 respectively. In brief, the Embassy expressed itself in favour of:
(a) intensifying technical assistance, primarily training and expert advice, to build up urgently needed skills of various kinds;
(b) restricting capital aid, in the form of heavy equipment, to avenues where need was clearly established and the ability to use it clearly available.
2. In coming to these conclusions, the Embassy had to assume, in the absence of specific advice, that Australia's objectives were (not necessarily in the following order of priority):
(a) to develop goodwill in Indonesia towards Australia;
(b) to strengthen the Indonesian economy (presumably as a counter to communism).
3. In considering how to further these objectives it was necessary to bear in mind the following (tested) factors:
(a) that the volume or monetary value of our Colombo Plan aid had (or would be likely to have in future) little relation to the amount of goodwill generated
(i) because Indonesians generally believed our motives as a donor to be selfish;
(ii) because foreign aid is regarded in Indonesia somewhat as the repayment of a debt long owed by Western countries; and although these two views have not been expressed previously by the Embassy
(iii) because only a handful of Indonesians are yet accustomed to thinking in practical terms about national housekeeping;
(iv) a significant minority regard Western aid, in the form it has so far been given as unsuitable for Indonesian conditions (for which it is not hard to point to some justification);
(b) that Indonesia is unable to make even moderately effective use of many types of large-scale capital aid
(i) because of the shortage of technicians (especially in government instrumentalities to which such aid is usually directed);
(ii) because of inadequate local funds (there is a huge budget deficit);
(iii) because of organisational deficiencies (especially in the civil service);
(c) that Western aid manufactured or devised in accordance with Western (technological) environment is by no means always of benefit to the Indonesian economy;
(d) that we could see in Indonesia no evidence to support the assumption that an improvement in living standards (or at least any foreseeable improvement, taking into account any likely volume of foreign aid) would act as a counter to communism.
4. From these conclusions and observations we were led to the opinions
(a) the assistance given should not place too great a burden on the already overstrained Indonesian administration or finances;
(b) there should be much more emphasis on quality and direction of aid than on quantity;
(c) aid should be directed as far as possible where it will be most appreciated, which implies concentration on areas where the Indonesians themselves recognise (voluntarily) a clear-cut need.
5. The kind of aid which meets these conditions includes:
(a) assistance in training tradesmen in Indonesia, based upon blue-prints already drawn up by United Nations and United States experts with
(i) equipment } largely
(ii) instructors } largely
(iii) (i) equipment facilities for heads of institutions, senior instructors
(b) (ii) assistance where urgently needed in the field of health and medicine in the form of
(i) equipment for laboratories;
(ii) lecturers or instructors in certain fields to be specified for universities, clinics, etc.;
(iii) overseas training facilities where facilities are not available in Indonesia e.g.
(c) assistance to secondary and university education with
(i) scholarships at Australian universities and (if accommodation in Indonesia permits)
(ii) professors and lecturers (carefully selected);
(d) assistance to public works programme:
(i) university scholarships
(ii) basic equipment e.g. trucks;
(e) provision of equipment (heavy and small-scale) to replace equipment already usefully employed but wearing out, or to supplement a development scheme for which resources have already been committed and money is available (e.g. wharf-handling equipment);
(f) provision of plant for setting up industries which will eventually help to relieve the strain on foreign exchange reserves;
(g) provision of equipment or training facilities for purposes which if not high priority in the economic scheme, offer unusual opportunities for encouraging goodwill in these quarters e.g. assistance for Rehabilitation Centre and Crippled Children's Society at Solo.
6. In endeavouring to follow out a programme of this kind we will probably meet increasing difficulties because:
(a) local rupiah funds are becoming more and more scarce and may seriously hamper if not altogether stop larger scale training projects (which may demand some consideration of ways of financing local costs incidental to our aid);
(b) some sections of the Indonesian administration are growing more and more tired of the formalities which their own Government imposes on them if they wish to obtain Colombo Plan aid, and it may be desirable for us to consider at least an approach to the Indonesian Government with a view to finding a way of simplifying procedures on both sides;
(c) there is some dissatisfaction in Ministries at the delay which occurs after the submission of formal request and before delivery.
7. In attempting to sum up what we have done so far I would say:
(a) that our promptness in giving capital aid in 1953 made a good impression in official circles but was received with some scepticism in political quarters and made little impact elsewhere;
(b) that the consideration shown for Indonesian points of view in the negotiation of aid has met a favourable response in official quarters (this must be the keynote of our policy if we are to achieve our aims);
(c) that the delays which have occurred in finalising specifications of equipment requested since 1953 has given Ministries budgetary problems and (not unnaturally) caused some dissatisfaction;
(d) that our training programme, although it has probably generated some goodwill among those who visited Australia, has not greatly impressed official Indonesian circles because in general it (and other overseas programmes) has not produced very tangible results. (This is particularly true of our public administration seminars, the purpose of which was never fully understood and the substance of which is far too remote from Indonesian experience to be of much value);
(e) that our moderation in the last year or so in seeking through the obvious channels for publicity for our efforts has been appreciated, (although we have not lost anything, by it) e.g. Djuanda, Director of the Planning Bureau, commented favourably to Mr. Kevin on this feature of our operations;
(f)that our recent offers of scholarship facilities (although riot intended apparently to be as extensive as the Indonesians imagine) have been extraordinarily well received outside official circles, particularly among young people.
For the future I would suggest:
(a) greater attention to Indonesian needs, conditions, values etc. (not Australian experience) in devising new offers of aid;
(b) in the interests of forestalling disillusionment in short-term training, a more selective attitude towards the acceptance of candidates for scholarships and fellowships and a more accurate initial assessment of what they need and how to supply it;
(c) stepping up (if possible) of expert recruitment as long as the candidates we supply are what may be termed 'good examples' of the living values we admire and good at displaying those values;
(d) continued co-operation with U.N. and (more discreetly) United States' F.O.A. experts in determining needs (especially for equipment) and facilitating the intelligent operation of projects;
(e) concentration on types of assistance which, while allowing due scope for goodwill and having due regard to our resources, are clearly needed by Indonesia and are clearly likely to be admitted by Indonesians at some stage to be in their own best interests. (This precludes, to my way of thinking, the over-insistent prompting which induced the Planning Bureau to submit to us in 1954 a number of capital aid projects some at least of which were probably not in the first-rank of national priorities, but does not exclude discreet stimulation of requests by the Embassy);
(f) restrained publicity (if our assistance is confined to what is wanted, the publicity will come of its own accord);
(g) discreet follow-up of contacts with returning fellows and scholars and maintenance of the many contacts made in the negotiation of aid;
(h) the expert staff at both ends (and representation funds) to carry out these objectives efficiently and adequately;
(i) regular personal consultation between headquarters and field office.
[NAA: A11604, 704/1]