OUTLOOK IN INDONESIA WITH SPECIAL REFERENCE TO WEST NEW GUINEA

Created: 3/7/1961

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OUTLOOK IN INDONESIA. WITH- SPECIAL REEERENCE TO WEST NEW GUINEA

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INTELLIGENCE AOENCYDISSEMINATION NOTICE

his estimate was disseminated by tbe Central Intelligence Agency. This copy is for the information and use ol the recipient and of persons under his Jurisdictioneed to know basis. Additional essential dissemination may bo authorized by the following officials within their respective departments.

- Director ol Intelligence and Research, for the Department of State b. Assistant Chief oi Staff for Intelligence, Department of tbessistant Chief of Naval Operationsor the Department of the Navy

. Director of intelligence, TJSAF, for the Department of the Air Forceo. Director for Intelligence, Joint Staff, for The JointS- f. Director of Intelligence, AEC, for the Atomic Energy Commission . - Assistant Director, FBI, for the Federal Bureau of investigation

h- Assistant to the Secretary of Defense, Special Operations, for the."lot

Agency

separately frcm the text, should be classified:

L Director of NSA for the National Security. Assistant Director for Central Reference, CIA, for any other Department or

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-oltaational Security Council Department of State

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TABLE OF CONTENTS

THE

INTRODUCTORY STATEMENT .

DOMESTIC POLITICAL

Non^ommunlat Political

Indonesian Communist

ECONOMIC TRENDS AND

FOREIGN POLICY TRENDS AND

THE WEST NEW GUINEA

OUTLOOK IN INDONESIA WITH SPECIAL REFERENCE TO WEST NEW GUINEA

THE PROBLEM

To analyze the most significant political and foreign policy trends in Indonesia and to estimate Indonesian intentions toward West New Guinea over the next year or so.

CONCLUSIONS

The present balance of political forces in Indonesia Is not likely to changeduring the next year or sa We believe that President Sukarno will continue to be successful In balancing the army and the Communist Party off against each other while retaining for himself the controlling power position. At the same time, the anti-Communiat stand of the army may be somewhat eroded as Soviet military aid andprograms are implemented. In any event, army efforts will probably not halt the steady Increase of Communist strength and influence.

he Indonesian economy will probably continue its trend of slow decline, despite Sukarno's ambitious development plans and the availability of substantialassistance from the USSR. The economic pinch Is most acute among the Communist dominated urban labor force, but we do not believe that economicalone are likely to causepolitical repercussions.trade with the Communist Bloc will almost certainly increase over its present level ofercent.)

Sukarno will probably continue toalance in Indonesian relations with the major Communist andnations. However, the Soviet effort to capture Sukarno and Indonesia through personal diplomacy and military and economic assistance has reachodproportions and appears to be making significant progress. We believe that Sukarno's recent tendency to move closer to the Bloc is likely to continue.)

The Indonesians will probably continue toigorous campaign to assert sovereignty over West New Guinea but will probably seek to do so primarily by political means. They will probably also at times resort to military threats, patrol

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nd small unitclainls.

frustration

DISCUSSION

munists.

n the international scene, Sukarno has tended to draw Indonesia closer to the Bloc. He has accepted extensive Soviet economic and military aid and is seeking to close the rift in relations with the Chinese Communists which developed over Indonesia's treatment of its Overseas Chinese population.ukarno hasew and (orceful phase in his continuing campaign to gain recognition of Indonesia's claim to sovereignty over West New Guinea and to force out the Dutch. The USSR is lending bothand active support to his campaign, thereby bolstering his determination lo press the issue.

II. DOMESTIC POLITICAL TRENDS A. The Non-Communist Political Partialukarno has long been convincedarliamentary system based upon politicaltheir rivalries, internaland lack of organizationalis unsuitable to Indonesia's needs. Since his first visit to Communist Chinahere he was much impressed by the political unity and concentration of effort achieved by the Communists, he hasampaign to concentrate authority at the topo eliminate Parliament's ability to obstruct pcJicy. and to replace political parties by functional groupings, such as military, labor,eterans, and peasants. Inthe Indonesian military has shareddisillusionment with the manner in which the Parliament and political parties have performed in ImloneslB. and has backed his efforts toystem which Sukarno calls "guided.ukarno and the army forcedtoestoration of5 Constitution, which greatly strengthenedpower and confirmed Sukarno'sover the political parties.ukarno moved farther toward his goal. By decree heegulation to "simplify" the political parly system whichumber of splinter parties and required. In effect, that the major oneshis policies. The two leading antl-Com-munistSocialist and thehad strongly criticized theand had resisted his policies were banned. Deprived of patronage, power, and legal status, both are disintegrating rapidly as political organizations. The two remaining major non-CommunistNational-

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1st Party and the Islamic Scholarshave submerged their own policy views, if any, under Sukarno's "guided democracy" and Ids latest political slogan

To consolidate further his position.by decree, dismissed Parliament infter it had withheld approval of0 budget for three months.was reconstituted in June as anbody including representation ofgroupings approximately equal lo that of the remaining political parties. Clearly the body's only purpose is to provide prompt approval to legislation submitted to it by the government.

At present the fortunes of theparties are at an all-time law. They suffer from serious internal dissensions and organizational weaknesses. Considering the strength of the forces arrayed againstthe Communists, the army, and Sukarnois highly unlikely that any of the non-Commumst parties will be able toajor political role or exert any real influence on the political scene for the foreseeable future..-

B. The Indonesian Communist Party

Indonesian Communist Partythe best-organized, the best-led, andthe largest political party In themembership isillion and Ifelections were held In the nearwould probably poll more votes thanparty. Although most of itsstill in Java, the party is makingin recruiting and expandingIn the outer islands,Sumatra. The party has organized orat allumber ofand mass organizations, Includinglargest and most effecUveSOBSI, and the peasants'BTL The party also possesses anparamilitary potential throughamong various veterans groupsdefense units.

1 USDEKord coined from the initial letters ot five slogans: "Return loIndonesianGuidedOuldednd "Indonesian Nationalism."

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The dominant figure in the Indonesian Communist Party isyear-old chairman, Aldit, an able organizer and the party'stheorist. The first and second deputy chairmen, Lukman and NJoto, rank closehtm in influence and power. In the past there have been policy disagreements within the top party leadership, but party unity and effectiveness have not been seriously impaired. Although the Indonesianunder Lukman. apparently sided with the Chinese Communist position at theConference ofommunist Parties inhe party appears to receive most of its support and external guidance from Moscow.

The Indonesian Communist Party has prospered for several years by posingatriotic, nationalistic party rendering strong support to Sukarno and his policies. Sukarno sees in thearge, disciplined groupand able to give him its political support and to work to Implement his programs.order banning the Masjumi andparties has significantly undermined political opposition to the Communists. The Communists are now strongly represented in every Important body of the centralexcept the cabinet, and bringing them into bis cabinet appears to be an objective of many of Sukarno's political maneuvers.

C The Army

The Indonesian Armyen) has neverohesive militaryfully responsive to the authority of the central government, and its commanders have always exercised considerable localA major objective of GeneralArmy Chief of Staff and more recently also Minister of National Security, Is tothe Indonesian Armyodern,unified force. He has madeprogress toward this goal.

The army, which had always been involved in politics to some extent, particularly In the provinces,ajor political factor on the national scene as the result of the armed rebellion in the outer islands which began late To cope with the internal

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curlty situation Sukarno promulgated mar-tlal law decrees which Increased the army's responsibility for local administration and placed supervision of extensive aspects of the national economy In army hands. The army's economic functions were furtherwhen it was given responsibility for managing the extensive Dutch holdings seizedasutlon. ax Central Warwas responsible for Implementing the rnartial law decrees, and he rose rapidly in political power. Sukarno has now taken over the Central War Administrator post and has somewhat reduced martial law controls. However, tho army under Nasutlon continues to be the implementing agency exercising broad political, economic, and administrative authority.

lthough the army is far from united on the Communist Issue, it is the only element in Indonesian society capable of opposing the expansion of Communist strength andThe army leadership is, In general, favorably disposed toward the West, and among army commanders there is increasing recognition of the Indonesian Communistshreat to tlie army and to their ownpositions. Consequently, the army and the Communists have become the majoron the Indonesian pollUcal scene. Sukarno, with his mystical appeal to themasses and his skill in political manipulation, maintains his position byone against the other.

ukarno and the army: Sukarno has been uneasy with the growing political power and potential of the army and OeneralHis suspicions have been encouraged by the Communists, leftists, and antiarmy elements which now dominate his "palaceukarno has been nettled by army resistance to some of his policies, particularly his desire to Include Communistin hts cabinet, and by the Intensiveagainst the Indonesian Communist Party conducted by the army during theand fallbat campaign has now lost much of Us earlier momentum. It failed to turn Sukarno against theand Naxulion did not press the campaign

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in the face of Sukarno's opposition. While seeking, unsuccessfully thus far, to turn the President against the Communists. Nasutlon's anti-Communist efforts have been little more than rear guard actions which harass and slow down, but have not halted or reversed, the steadily growing strength and Influence of the Indonesian Communist Party.

Although there are many areas ofbetween the two men, It Is clear that Nasutlon differs with Sukarnoumber of fundamental issues. Nasutlon willcontinue to resist Sukarno on those issues which he feels vital to army interests, and he will seek by army pressures to keepfrom enlarging the rolo of thoIn Indonesia's national life.Nasution appears toasic sense of loyalty to Sukarno, and he is probablythat Sukarno is necessary to hold the country together at this stage of Indonesia's history. Moreover. Nasutlon probablythat he would not have the necessary army and public backinguccessful move to oust Sukarno. Consequently. Nasutlon will probably continue his past cautious tactics In dealing with Sukarno, and howill seek toonfrontation with Sukarno on any issue which Sukarno clearly considers Important.

For his part, Sukarno has movedto dilute Nasution's army role byhim additional tasks in the government. He has also restricted Nasution's area olby obliging him to become Involved with, and therefore committed to support, such matters as the reorganization of thebranch, an arms purchasing mission to the USSR, and the West New GuineaSukarno almost certainly leels that he can continue to play off the army and the Communist Party and to control both. At present he apparently feels that the Internal balance is threatened more by the army than by the Communist Party. However, we do not believe that his efforts to undercutand toertain amount of disunity among army commanders areto weaken the army to such an extent that It could no longer serve to counterbalance

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the Communists. What he does desire is lo control and dominate army leadership and thereby eliminate army restraints on hisHe feels no compulsion to control and dominate the Communist leadership because the Communists seldom oppose his policies.

and the army: NasuUon'sunder to Sukarno's wishes on aas reducing the paceof the army's anti-Communistthe banishment of Colonel Sukendro,most vociferous politicalto have caused some restlessness andamong some membersumber of keyVice Chief of Staff Subroto,for Operations Jani. Deputy ChiefMagenda, and his assistanturged NasuUon tomore forceful position. Althoughof opinion over methods and timingwith Sukarno and thecontinue and may increase at theof army command, the key officerscontinue to follow Nasution's

D. Proipech

do not believe that anyin the internal political balanceis likely over tlie next year or so.roles and tactics of Sukarno,and the Communists will probablyessentially as they now are. Thewill probably continue totheir organisational strengthinfluence in various governmentaland advisory bodies. Althoughprobably make some changes in histhe Communists will probably notrepresentation in it.of Indonesia's diverse problems,will not deliberately add to theircomplexity unnecessarily bythe inclusion of major Communistin the cabinet in the face ofthe army andumber ofnon-Communist politicalCommunists, aware of the delicacy ofwill probably not push Sukarno toosettle, temporarily,urtherof the issue or for minor

may within the year oflerthe Vice-Presidency in an effort toto relinquish the Army Chiefove being aimed atinfluence in the army.already served well beyond therotaUon period. Nasution'stoove would depend uponhis successor would be tohis circle of key army leaders. If Itto them that Sukarno wereto weaken the army to Communistor to removo them from theirinfluence anderiouscould develop. However, webelieve Sukarno is likely toa situation.

III. ECONOMIC TRENDS AND OUTLOOK

ercent of Indonesia'speasants, and most of these arefarmers only slightly affectedmoney economy. For tbe mostpeople are not actively discontentedeconomic lot This characterisUcIndonesian economy provides itery low level, and hastoemarkable amountmismanagement and neglectsharp social or poliUcal repercussions.

the politically important urbanamong the country's smallforce, the economic pinch of lowhigh prices Is more acutely felt, andconsiderable dissatisfaction.boutercent, and about SOthe urban labor force wasunderemployed. The Communistdominates organized labor, couldthis dissatisfacUon and turn ltgovernment However, the party'sUedonsiderable extent by itsof supporting Sukarno and by thedecrees against strikes in

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the Indonesian economy showed some improvementwing largely to high rubber prices, lor several years it has been In slow decline. National production has been virtually static2 while the population has been increasing at about two percent per year. Per capita GNP remains at0 per year. Distribution,and taxation remain serious problems, and there are major- intra island and Inter-island transportation bottlenecks. Aboutercent of the export trade moves throughchannels, cutting into the country'sexchange revenue. Most of the economy is now government controlled andadministration is inefficient and often corrupt. There is an acute shortage ofand managerial talent,ignificant number of the more able economists andfor political reasons, are into the government.

Indonesia la preparing an ambitious eight-year development plan which presentlyamong lis goals an increase8 percent in the national Incomeany Important aspects of the program are stillnd probably will remain so for some time to come. However. Sukarno is encouraging very high hopes for the plan as the vehicle lor dramatic economic andprogress. The nation's last majorfive-year planinto get off the ground. Itoorly conceived plan and itswas complicated by theeffects of the rebellion in the outerand or the nationalization of Dutch holdings. The present program is also poorly planned, inadequately financed, and likely to generate further inflationary pressures. The economy will probably make some gains under the eight-year planesult of the major emphasis Sukarno appears determined to place on it and the possibility of further aid and assistance from the Bloc. However, the prospects for significant economic improve-

1 For example, there Is wide controrersy over which agency Is to be assigned responsibility lorthe plan. The amount ol plannedIs also undecided, with fifores rantinglllWn.

ment, at least for the next two or three years, are poor.

Indonesia has serious foreign exchange problems. Repayment and servicing of its foreign debts already absorbf Indonesia's foreign exchange receipts. This burden will remain heavy for the next decade. The continuing shortage of foreign exchange will restrict imports and couldIndonesia's ability to borrow, at least from non-Bloc sources, for projects under its eight-year plan.

Indonesia is looking to the Communist Bloc for important contributions to itsand military development, and the Bloc appears willing to meet most IndonesianTotal Bloc loans offered to Indonesia now amount to aboutillion for military aid0 million for economic assistance.0 the Blocfor nearlyercent of the nation's total trade, as againstercent8 and lessercentn0 Indonesia and the Soviet Unionhree-year trade, Indonesia's first such agreementloc nation. The Bloc will almost certainlyto expand Its portion of Indonesia'strade.

The Western owned oil industry Is an important source of Indonesia'sercentnd the Indonesian Government is apparentlymajor and unrealistic increases in Its revenues from oil exports to help meet Its foreign exchange commitments and to help finance the eight-year plan. The oUarc the only major foreign ownedwhich havo not yet been taken over by the Indonesian Government. Thehas. however, restricted oil company operations and from time to time put great pressure upon the companies to increase its revenues from oil exports. Such pressures win probably continue and becomeacute when the government encounters serious foreign exchange problems in meeting Its loan commitments and financing itsplan. It Is likely that the Western owned oil companies will be brought under

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more stringent controls, end the threat of nationalization will continue to hang over them.

IV. FOREIGN POLICY TRENDS AND

Since Indonesia became independentukarno hasoreign policy based upon nonallgnment and friendlyIndonesianall nations except the Netherlands. Sukarno, and most Indonesian leaders, are convinced of theof theirindependent" foreign policy, which seeks to keep in balancerelations with the major Communist and non-Communist nations. They tend to become resentful when they believe pressures axe being applied to align them with either aide in tho East-West conflict. Manybelieve that the West neithernor sympathizes with their problems as an underdeveloped and former colonial country. They differ with the Westthe threat posed to thfcir country'sby the Communist Bloc. Many of them also differ with the West as to theand extent of the internal Communist threat.

The Soviet effort to capture Sukarno and Indonesia through military and economic aid, as well as personal diplomacy, has reached very substantial proportions and appears to be making significant progress. The USSRmade available to Indonesia more aid than It has to any other non-Communist nation except the United Arab Republic, and the terms of the aid agreements are more lenient than previously given bysignificance, the army has forThc first time apparentlyizable amount of Soviet aid. thereby giving the Sovietotentially important advantage. The anti-Communist stand of the army may beeroded as Soviet military aid andprograms are implemented. Military spokemen have made clear their preference tor US-supplied equipment and training, but they have been disappointed with the amounts of aid they have received from the US and increasingly outspoken in their criticism of the delays and red tape involved in receiving US equipment.

hrushchev assiduously cultivatedduring the latter's visits to the USSR and at0 UN General AssemblyParticularly Important from Sukarno's point of view, Khrushchev supports theclaim to West New Quinea.

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V. THE WEST NEW GUINEA ISSUE'

lthough the Indonesian leaders,Sukarno, consciously and cynically use the West New Guinea issue to play upon pub-

' The status of West Now Guinea has officially been disputed si neehen Ihe Republic of Indonesia achieved Independence. Al that time the Netherlands and Indonesia aexeed that the status of west New Oulnea would remain unchanged, with the provision that Dutch-Indonesian nesotlaUons would be held within one year to determine lis final dlspodUon. Seeotialions were held1 and further nefioUaUons were held Inn allowever, lliey ended In failure.1 west New Oulnea wu lutedethertandi New Guinea" in the revised list of territories of theor the Nemerlands as lt appeared tn the Nether-lands constitution.6 Indonesia formallythe "Province of West Irian" in the territories of the Republic of Indonesia. Indonesia placed the West New Guinea issue on the UN agendaSM, and twice4ere passed by the Political Committee but failed to obtain the required two-thirds majority In plenary. Since the failure of7 UNno further action has been taken and the issue remains deadlocked.

lie emotions, most of thom genuinely believe tbat continuing Dutch control overotential threat to Indonesianand that Indonesian independence will not be complete until West New Guinea is under Indonesian control. There can be no doubt that the "liberation of West Irian"ajor objective of Indonesian foreign policy and that failure, thus far, to make any real progress toward that objectiveource of frustration to most Indonesian leaders.

particular, Sukarno and theParty are exploiting for their own purposes the emotional and nationalisticwhich the issue arouses among

Military leaders, mcluding* Nasutlon, have little choice but to swing into line behindon the West Now Guineaumber oi those leaders may be more moderate and realistic than Sukarno on the West New Guinea issue, most of them echo Sukarno's views that the Dutch presence in West New Guineahreat to Indonesian security and an affront to Indonesia'sSome military commanders have an intensely jingoistic and activist attitude toward the West New Guinea issue.

Indonesia's growing Intransigence on the West New Guinea Issue has been helped along by encouragement and assurances of support from the Soviet Union. Bloc interests would be servedcolonial" struggle, whetherolitical nature in the UN orilitary nature In West New Ouinea, which arrayed the Bloc on the side of antlcolonialism and placed the US in the position of having to choose between remaining neutral or siding with one ol the contestants. Such awould not only tend to increasedependence upon the Bloc, but could also exacerbate CS-Indonesian relations.

The Indonesians have organized special forces for small unit Infiltration of West New Guinea. The purpose of these forces is to attempt to propagandize and subvert the peoples of the area and to organize an anti-Dutch resistance movement among them. Although It is easy to put small groups ashore on West New Guineu, the Indonesians have had Utile success in keeping such groups in being and making them effective. Theare widely scattered, and there are not many promising target groups forand organization by the Indonesians. Tho Indonesians will probably step up the tempo of such infiltration operations, but their prospects forignificantmovement within the near future are slight.

The indigenous Papuan,erypeople. Most of them are probably reasonably satisfied with the present order of things. Theeneral, and the handful of semieducated ones in particular, distrust and consider as rivals the people of Indonesian descent living in West New Guinea. The more0 resident Indonesians are probably the chief target of covertand subversive activities from without.

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uallyesult of Soviet aid to the Indonesian Air Force and Navy. However, the recent Soviet military aid agreements will notignificant impactear or more due to the lag in training Indonesians to operate and maintain their new equipment, which is scheduled to begin arriving in quantity inhe Indonesians now have the military capability to capture one or two of the small settlements In western and southern West New Guinea and meetrequirements for maintaining at least minimum supplies. They almost certainly lack the capability to coordinate and sustain combined operations of the scale necessary lo seize and bold the main Dutchand defense center at Biak.

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or the next year or so the Indonesians will probably continue to wage theirto assert sovereignty over West New Guinea primarily by political means. The Indonesian leaders probably do not believe that at present they couldNwhich would force the Dutch to relln-

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uring the post year, the prospects for serious hostilities over West New Guinea have Increased significantly. Indonesian leaders have become increasingly impatient, and some apparently now doubt that Indonesia will be able to gain control over the disputed area by peaceful means within what they consider toeasonable time. The reduction ininfluences on the government and continued strong moral and material support from the Communist Bloc favor anmilitant stand by Indonesia. Although we believe that military weakness and the chanceettlement through International Intercession will probably restrain Indonesia from Initiating large-scale hostilities over the next year, Indonesian frustrations in seeking their objective plus the prospect of new Soviet military equipment will Increase progressively the danger of larger scale military action by Indonesia.

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