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The Indonesian injection

by Lambert Giebels De Groene Amsterdammer, 5 January 2000 (translated from )

ON 27 DECEMBER 1949 in the palace at the Dam, Queen Juliana signed the sovereignty transfer of Indonesia, and the Netherlands ceased to exist as a colonial power. The Netherlands was then comparable to a state such as Denmark. In the previous months, negotiations about the conditions were held at the Round Table Conference, the RTC, in The Hague. There were four parties present around the table: a Dutch delegation, led by Van Maarseveen, the former Minister of Overseas Territories; a delegation of the Republic declared on August 17, 1945 by Sukarno, led by Prime Minister Hatta; a federalist delegation from the Indonesian states, led by Anak Agung, Prime Minister of the largest state, the Big East. The fourth party was the United Nations Committee for Indonesia (UNCI), which had been created by the United Nations to reconcile the Netherlands and the Republic. This delegation was led by Merle Cochran, the American chairman of UNCI. Prior to the RTC, the Republic and the federalists had set their feet on the same ground. They had drafted a constitution for a sovereign Indonesia: The United States of the Republic of Indonesia, Republik Indonesia Serikat: RIS. The deployment of both Indonesian delegations at the RTC was to safeguard the sovereignty of the federal republic. They were therefore willing to make concessions. They accepted that Indonesia and the Netherlands were linked in a union under the Orange crown. Exactly what the Union meant remained unclear, but in all cases the Indonesians prevented that this would affect the sovereignty of their new state. A subject about which the RTC took lengthy negotiations was the debt issue. The Netherlands let Indonesia pay dearly for its sovereignty. Whereas Suriname, thirty years later, got a bridegift of two billion guilders, Indonesia was saddled with the total debt of the former Dutch East Indies. This debt was calculated to be 6.5 billion Dutch guilders. This meant that Indonesia would even have to pay for the cost of the police actions. Cochran found this too much. While Drees was angered (by Cochran), the American managed to persuade the Dutch financial negotiators to drop two billion guilders - roughly equal to the estimated cost of the police actions. There remained a debt worth 4.5 billion guilders of that time. Businesswise the Dutch delegation also achieved (an additional) unnegligible advantage. It was agreed on the RTC that the Netherlands had a status of the most privileged trading partner with Indonesia. This meant that the revenues from approximately three billion guilders of Dutch private investment would be preserved, and that these could be transferred to the Netherlands using an attractive exchange rate. These agreements were formulated in a financial-economic system: the Finec. Had the Netherlands stopped there, it would have been able to take advantage of its old colony till the end of days. The Netherlands, however, overplayed his hand. It did not want to give up Western New Guinea. Various arguments were used: New Guinea was to be a settlement area for Indo-Dutch and Dutch farmers, the interests of mission and mission were brought into discussion. In chambers there was also speculation about the rich mineral resources of New Guinea, bauxite, copper, gold and especially oil, and then there were also people who wanted to make New Guinea a permanent foothold for our Navy in the Pacific.

The main argument in the RTC was that without retaining New Guinea, a two-thirds parliamentary majority for the ratification of the RTC agreements could not be achieved. The Indonesian delegation was caught between two fires: on the one hand, the Dutch negotiators who would not yield New Guinea, and on the other hand, President Sukarno, who had proclaimed the independence of Indonesia from Sabang to Merauke. The chairman of UNCI managed to break through the impasse by taking New Guinea out from the RTC. Under heavy time pressure, on the last day of the RTC, it was decided that the Netherlands and the RIS would convene within one year after the transfer of sovereignity on the status of New Guinea. Herewith a time bomb was laid under the RTC agreements that (later) would bring a chain reaction of explosions. Soon after the sovereignity transfer a distrust grew between the two Union partners. On the Dutch side, the Prime Minister Drees was the most suspicious. It already started when in Jakarta the Boulevard van Heutz was renamed after the Acehnese guerrilla leader, Teuku Umar, and the Orange Boulevard was renamed Jalan Diponegoro. Drees also did not like it when the Indonesian government designated August 17 as the National Independence day, not December 27. The ultimate proof of distrust of the Union partner for Drees was that within eight months the federal government was terminated and Sukarno declared a state of unity on August 17, 1950. People in the Netherlands failed to envisage that the (federal) states were seen by the Indonesians as an attempt by the Netherlands to conduct a divide and rule policy. The RIS did not collapse because Sukarno let it explode, but because it had little supporters amongst the Indonesians. Indonesia on its part had reason to distrust the Netherlands when in January 1950 Captain Westerling with approval from KNIL seemed to want to resume the Dutch rule in West Java, and later that year the RMS was declared with the support of the KNIL in Ambon. Indonesia and the Netherlands definitely drifted apart due to the issue of New Guinea. The fact that the RIS was torpedoed had convinced the Dutch politicians that New Guinea must not be surrendered to the Sukarnos Indonesia. Therefore, the discussions on the status of the area that took place in the course of 1950 led to nothing. A whole new argument was put forward on why New Guinea should remain with the Netherlands: the Netherlands had a duty to lift the Papuans from the stone age. For this ethical standpoint, the socialist Drees got a powerful ally in the Catholic Luns in 1952. Neither Drees nor Luns trusted this noble task to Indonesia that had its hands already full with its own development. Both saw the insistence of Indonesia to yield New Guinea as merely a hobby of Sukarno. They saw him as the evil genius behind the increasingly critical attitude Indonesia towards the Netherlands. Indeed, "Irian Barat" (West New Guinea) constituted the main theme of the speeches given by the President at every conceivable occasion, stirring the mass anti-Dutch sentiments. The Dutch government did, however, overlook the fact that in the parliamentary democracy already known in Indonesia at that time, constitutionally the Indonesian President had no more political power than for example the President of the German Federal Republic. Thus, they also overlooked that all Indonesian political leaders were of the view that New Guinea belonged to Indonesia, as such that the first item in the governmental program of any Indonesian Cabinet was the transfer of Irian Barat to Indonesia. INDONESIA kept trying to persuade the Netherlands to fulfill the RTC agreement with respect to New Guinea. But after 1950 the Dutch government put the question of New Guinea in an icebox, and in the constitutional amendment of 1956 New Guinea was declared a Dutch

territory. Late 1955 early 1956, in Geneva, the Netherlands and Indonesia convened again to resolve all straining issues: the Union not coming alive, the Finec which in the perspective of Indonesia only favored the Netherlands, and the increasingly desperate New Guinea issue. The initiative for this dialogue, that would eventually end dramatically, was taken by KabinetHarahap who was cooperative to our country. The foreign Minister Anak Agung was the leader of Indonesia's delegation. The Dutch delegation was led by Joseph Luns, who kept close contact with Father Drees in The Hague. The Luns delegation was prepared to let the Union meet a quiet death and to adapt the Finec. As a condition for that, Indonesia must accept international arbitration for any economic conflicts between the two countries. The Indonesians saw an international arbitration as an infringement on the sovereignty of their country, and were not willing to accept the condition, while the Dutch delegation was not willing to swallow it. Luns did not want to talk about New Guinea. Nevertheless, Anak Agung put it forward on a discussion paper. Luns took the paper between the thumb and forefinger and throw it in a wastebasket. The Balinese Raja was deeply hurt. The Geneva conference was a complete failure. The Indonesian delegation returned home provoked. At their recommendation, the KabinetHarahap unilaterally terminated the Union on February 13, 1956. This was the beginning of a chain reaction. The termination of the Union was immediately followed by termination of the Finec on August 4, and the Indonesian government stopped paying the debt to the Netherlands. A year later the Dutch companies would also fall victim to the issue of New Guinea. Moreover, they made it difficult themselves. The Indonesian government wanted to Indonesianize foreign companies, and in such a way transform the old colonial economy into a national one. This policy was frustrated by the Dutch management, top positions remained inaccessible for Indonesians and Indonesianization of the capital was made out of question. The little Dutch elite in Indonesia maintained its old colonial lifestyle and kept his strongholds, such as the Harmony club and marina in Priok, closed for Indonesians. Because the bilateral negotiation on New Guinea had appeared to be hopeless, the government-Ali Sastroamidjojo sought an international intervention in 1953. For three years in a row, Indonesia submitted a draft resolution to the General Assembly of the United Nations, calling for a UN mediation in the New Guinea. The draft resolution did not achieve the required two-thirds majority. The reason was that the Eisenhower-Dulles administration, for the sake of Netherlands as a NATO ally, do not want to give support to the Indonesian resolutions, and other countries dependent on Uncle Sam dared not to vote for the resolution. On November 27, 1957, for the fourth time, the Indonesians draft resolution did not achieve a two-thirds majority. Indonesia reacted furiously. A few days after the rejection of the resolution, instigated by the Communist trade union, Indonesian workers occupied Dutch companies. The companies were then taken under control by Djuanda government, subsequently transferred the control to the army, and finally, without compensation, became nationalized. In the COLLECTIVE remembrance of us, the Dutch, an idea persisted that the Sukarnos Indonesia refused to pay his debts. Something from this memory has been taken out. In 1956, when Indonesia stopped paying his debts to the Netherlands, the remaining debt was 650 million guilders. This means that, between 1950 and 1956, Indonesia has paid almost four billion guilders. The importance of this amount can be measured in terms of the Marshall Plan. Over the period 1948-1953, the Netherlands received 1,127 billion dollars from the Marshall Plan, as a loan. At the then exchange rate of 3,80 guilders to the dollar, this help is not much more than what Indonesia paid between 1950 and 1956. Many believe that the

Netherlands owed only the Marshalls post-war reconstruction, overlooking the Indonesian contribution. Part of the collective national memory is also that the Sukarnos Indonesia has robbed the shareholders rightful ownership of plantation companies. Little known is that the investment income, pensions, savings transferrred from Indonesia to the Netherlands, plus any income generated Dutch businesses in Indonesia, have made important contributions to our national income in the meager fifties. In the early fifties, this contribution was around eight percent; in the last year before the New Guinea affair was ended, the capital value of the Dutch income was nearly one billion guilders. It appears that the Indonesian injection into our economy between 1950 and 1957 was not without effect on the rapid postwar industrialization of our country, who was called le miracle hollandaise. In short, the Indies lost did not mean a disaster born, because the Netherlands at that crucial post-war phase in which the foundation was laid for our present prosperity, was quite able to benefit from its former colonial possessions.

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