Indonesia
Ambassador saw acting director, Far Eastern Office, State
Department, this morning to examine situation in light of radio
reports that Security Council had failed to order withdrawal of
Dutch forces. He asked whether United States was prepared either
(a) to make a further attempt before adjournment of Security
Council to obtain resolution calling for withdrawal, or,
(b) to take further steps unilaterally to put pressure on Dutch
e.g., by termination of ECA to the Netherlands.

2. Allison said that in view of opposition of two permanent
members, (United
Kingdom and France), United States did not believe there was any
possibility of securing a resolution now. United States had never
had much confidence that a withdrawal order would be complied
with, particularly if such a resolution had the minimum majority.

It might even be more damaging to United Nations prestige to pass
such a resolution and to have it defied by the Dutch than to have
no resolution at all.

3. Allison said categorically that the United States would not
proceed unilaterally to impose Economic sanctions against the
Dutch. He did not say that in no circumstances would the United
States terminate ECA aid to the Netherlands but made it quite
clear that no such step was contemplated at the present time.

4. The Ambassador pointed out that the United States had publicly
advocated the withdrawal of Netherlands forces. The effect of the
present resolution was to allow Netherlands troops to retain their
objectives while Republican counter attacks would become a breach
of the Security Council Directive. He urged that the United States
re-examine the possibility of taking further action in the
Security Council and also of terminating aid to the Dutch at least
in the NEI. He pointed out that the United States had ample
justification for terminating all aid to the Netherlands on the
ground that the Netherlands' budget could never be balanced (as
required last ECA agreement) while large forces were being
employed in the NEI. To leave the Netherlands in military control
of the whole of Indonesia would be to abandon a United States
objective and would be a further blow to the Security Council.