129 Memorandum to Jakarta

Canberra, 23 April1975

CONFIDENTIAL

Economic Aid for Portuguese Timor

As you know, we have been thinking for some time about the possibility of a modest Australian aid program for Portuguese Timor. Before we get down to serious drafting on the lines and size of the program we would like you to talk things over with the Indonesians. We will also, of course, have to have discussions with Portuguese officials in Lisbon and Dili.

  1. We are thinking mainly in terms at least initially of commodity aid and possibly some forms of technical assistance including training. In order to help point up Portuguese Timor's place in the region we might look into the possibility of untying some commodity aid for purchases fromASEAN countries (say, rice from Thailand), and also of making some 'third country' training scholarships available. All this would need to be cleared with the Aid Agency and the Treasury, and there could be internal problems, for example over untying. Nevertheless, we believe that the time has come to press ahead. There are domestic pressures on us to do so and, as you know, we have already informed the Portuguese of our intention to provide some assistance.
  2. We should therefore like the Embassy to make an early approach to the Indonesians to inform them of our thinking and to say that we envisage commencing an aid program with an allocation of about $Al million [in] 1975/76, mainly in commodity assistance (which would amount to balance of payments support).
  3. We recognise that this may cause some difficulties with the Indonesians. We already know from our conversations with Ali Murtopo in Townsville that he has reservations: Indonesia might not be able to compete with a large Australian program and foreign aid might encourage the Timorese in their thinking about independence.1 (Ali Murtopo said that he would put his ideas on paper for us, but has not yet done so.) Also, when the Prime Minister raised the matter briefly with President Soeharto in Townsville, he was told that care must be taken to ensure that the provision of aid did not give rise to 'misinterpretations'.2
  4. We are not quite sure what the President was driving at. But you should make it clear to the Indonesians that we are thinking of a modest program only and that we would probably not be involved in major projects on the ground. The Indonesians should by now be aware that we are not seeking to influence the thinking of the Timorese on their political future. We would be making every effort to put any Australian aid program into an entirely non-political framework. In any event, we are virtually committed domestically to some form of aid program. You will have noticed in this regard the Minister's answer to a question without notice in the Senate on 10 April.3
  5. You could make the point that we are hoping that Indonesia will also be giving aid (but not 'in competition' with us) as a means of increasing its political influence in Portuguese Timor and establishing its credentials there. In addition, we continue to feel that the provision of aid by Australia and Indonesia would help encourage Portugal to approach its decolonisation responsibilities in Timor in a measured and deliberate fashion which it was agreed in Townsville was an important policy objective of both the Indonesian and Australian Governments.
  6. We expect to examine Portuguese Timor's aid requirements during Mr Curtin's visit to Dili in late May. It is possible that an officer of ADAA will be making the trip also. We will thus need a response to this memorandum by 20 May at the latest.4

LANCE JOSEPH — Assistant Secretary South-East Asia Branch

[NAA: A10463, 801/13/11/1, ix]