NIE 50-61-OUTLOOK IN MAINLAND SOUTHEAST ASIA

Created: 3/28/1961

OCR scan of the original document, errors are possible

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table of contents

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THE

N HISTORICAL

II. TRENDS IN THE

and Trends Affecting Internal

and Trends Affecting International Orientation

PROBLEMS AND OUTLOOK IN THE SOUTHEAST

ASIA

The Military and Political

EFFECTS IN SOUTHEAST ASIA OF MAJOR COM-

MUNIST GAINS IN LAOS OR SOUTH

outlook in mainland southeast asia

the problem

analyze the basic political and social conditions and trends inAsia;'

identify potential political-military crisis situations and to estimatedevelopments over the next year or so in domestic stability andof the countries of the area; and

estimate the probable effects on the peoples and governments ofin the event there were significant Communist gains in Laos or

conclusions

Southeast Asian countries are either now experiencing or will encounter in the next year or two serious political crises arising out of foreign intervention, domestic strains,omplex of factors attributable to their basically unstable and unhealthy political, social, andstructure. By far the most serious problems are the deteriorating situation in Laos and the mounting Communist threat and precarious governmentalin South Vietnam. )

The Pathet Lao probablyreater mililary capability than they have yet chosen to exercise. They could sharply step up the action at any timeeries of local victories.

' Laos, South Vietnam. Cambodia, Thailand,and Malaya.

This would increase the likelihood of the disintegration of the Laotian Army and the subsequent collapse of theposition. The Laotian crisis hasatter of contention among the major powers and its resolution restsin non-Laotian hands,)

n South Vietnam, the situation of the Diem government seems likely to become increasingly difficult, not only because of rising Communist guerrilla strength and declining internal security but alsoof widening dissatisfaction with Diem's government. Since the coupofiem hashis control of the government and made some cautious moves toward government reform; he has taken action

to improve the antiguerrilla capabilities of the army and stepped up militaryagainst the Viet Cong.the factors which gave rise to the0 coup attempt still exist, and we believe that the odds favor another coup attempt by non-Communistin the next year or so. Thewould attempt to exploit any new efforts to unseat the government. We are not confident that the army would be able to keep the situation from getting out of hand. )

There is deep awareness among the countries of Southeast Asia thatin the Laotian crisis, androfound impact on their future. The governments of the area tend to regard the Laotian crisisymbolic test of intentions, wills, and strengths between the major powers of the West and the Communist Bloc.

Those countries which are In close alignment with the US favor stronger measures to assure at least aand preferably anwestern-oriented regime in Laos; neutralist Burma and Cambodia, as well as Malaya,eutralist but not Communist-dominated government. These latter governments favor some form of international political agreement to end the crisis. They would be alarmed if Laos were lost under conditions which indicated to them that the US position in the area had gravely weakened.

The loss of Laos to the Communists, or perhaps even the division of thewould almost certainly incline the Thai toward accommodation topower in Southeast Asia. ACommunist-controlled Laos would vitally threaten South Vietnam's independence: it would greatly extend the Communist frontiers with Southit would bring substantially greater Communist military power to bear on the crucial Saigon defense complex; and it would greatly facilitate Communistand subversion. The close proximityommunist state would make more difficult Western efforts to starch up local resistance. In short, the loss of Laos would severely damage the US position and its influence in Thailand and South Vietnam.

he future course of all of the countries of Southeast Asia would be stronglyby the actual circumstances in which the loss or division of Laos hadas well as the local appraisal of the attitude and actions of the US into the situation. The extent to which these countries would go inBloc pressures or in withstanding local Communist threats would depend In great degree on whether they still assessed that the US could stem furtherexpansion in the area. They would feel more keenly thantrong temptation toeutral position between the two power blocs, even though they recognized that the US is the only country with sufficient power tothe Communist Bloc in the area. Although they probably would be deeply disillusioned regarding US resolution after the loss or division of Laos, they would nonetheless welcomeof US firmness and might inmodify their appraisal of their own future in due course.

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although the communist threat to south vietnam has reached seriousthe chancesommunist takeover in the next year or so areless than they are in laos. nevertheless, peiping and hanoi almost certainly attach greater importance to their efforts in south vietnam than they do to their ettorts in laos us prestige and policy are particularly deeplyin south vietnam. diem's policy of close alignment with the us is on trial in the current crisis. all countries of the area would attach great importanceailure of the south vietnamto cope successfully with the rising tempo of communist subversion and armed insurrection. if south vietnam were to fall to the communists or be forced to swing toward neutralism, the impact upon the countries of southeast asia would be similar in kind butmore severe than that resulting from the loss or division of laos.

discussion

an historical perspective

throughout their histories the countries and peoples ol southeast asia have been caught in the crossfire of outside influences. in early times they lived in the shadows of the great clvluzauoru of india and china irom which they derived many characteristics of their diverse cultures and social orders. later, during the period of colonial domination, western civilization left its stamp on cultural, social, and political institutions of the area. more recently. southeast asia has been caught up in the competition between the two great modern political and ideologicalcommunist totalitarianism anddemocracy.

0 the peoples or southeast asia have been involvedevolutionarywhich has few parallel* in history for diversity, scope, and speed. during thissoutheast asia has experienced major war. the military defeat in world war tj of the western colonial powers by an asianisillusioning occupation byreat upsurge of nationalism, the defeat of france in indocluna. and the rapid growth of communist pressures and influence. since the end of the second worldave ol independence has swept mainland southeast

asia, leaving in itsumber of new sovereign states. traditional social andpatterns and values have beenchange. economic and politicalhave multiplied in number and increased in complexity. every state in southeast asia, except thailand, has experienced communist insurrection or invasion. their immediateemergedew and threatening asian power, and the us, partly in response, has greatlyits activities and presence in their area thus, regardless of the wishes of the peoples and governments of the area, the issues of the global cold war between two great world power blocs hare focused sharply in southeast asia. historically, the peoples and leaders of southeast asia, when caught between overwhelming outside forces orhave taken the line of least resistance and have accommodated to superior power.

here is great political, cultural, ethnic, and historical diversity among the countries and peoples of southeast asia. there is among them no sense of regional unity. most of the peoples of the area identify themselves with their ethnic groups. more recently, and thus far only within limited circles, they have begun to identify themselves with their na-

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Despite their great diversity the peoples and leaders of the area face Ina number of basic problems concerning economic development, political stability, ethnic antagonisms, Communist pressures, and national security. They also share,to varying degrees, an emotionalcompounded of anticolonialism, racism,rowing demand for equality, respect, and prestige among nations.

IN THE AREA

A. Conditions ond Trends Affecting Internal Development

Mo strong sense of national unity has yet developed among the diverse peoples within the countries of Southeast Asia. They all contain sizable unassimilated ethnicIn Malaya, for example, the population Is split chiefly between the indigenous Malays and the Overseas Chinese. The ethnic Lao constitute only about half the population of Laos; the remainder are made up of aof ethnic and tribal groups, several of which overlap into the adjoining countries of Burma, China, and North Vietnam. Even in Cambodia and Thailand, which have the advantage of considerable linguistic, cultural, and ethnic homogeneity, there are largeChinese and Vietnamesewhich wield economic influenceto their size. The historicand antagonisms among the various ethnic groups continue, and there are very few instancesrend toward mutualor assimilation.

None of the nations of Southeast Asia has yet firmly established institutions and traditions necessary for peaceful and orderly political change. British tutelage hasromising impact on the political life of Malaya and Burma, but this is largely offset in the former case by the potential forwhich exists In the communal nature of Malaya's society. Throughout the area there exists an unwillingness among the moderate and conservative national leaders to submerge their individual or groupand rivalries for the sake of national welfare. We can discern no trend towardcohesion among the moderate and conservative leadership groups.

Despite postwar efforts to establishdemocracy, the present trend is for political authority lo become increasinglyin very small groups. In most In-stances, political power also means economic power and personal gain, and in manypolitical power Is regarded as the means and economic power the end, The groups in power aremall part of the educated elite in each country. Although the elite groups are at least superficially attracted to Western political concepts, the political and social realities in their countries retard, and in some cases preclude, the development of conceptsoyal opposition and an orderly transfer of governmental authority.

Thereast intellectual, economic, and social gulf between the leadership elites and governing circles on the one hand and the mass of the population on the other. In all the countries of the areaoercent of the population are peasants or villageFor the most part they are Illiterate, suspicious of central authority, and out of touch with national and internationalMany of them live outside the national money economy. Although most of the peasants tend to be politically apathetic, they are often resentful of local and provincial officials, and they are gradually becoming aware of the vast difference between their lot and that of the leadership elites. Agap exists between the elites and the bulk of the people who live in the urban centers, where the dissatisfaction growing out of the situation is more acute. The smallgroups are under Increasing pressures from the educated elites and, to some extent, even from the masses whose politicaland economic expectations are on the rise. Consequently, governments In the area are finding It increasingly difficult to evoke positive public support.

The military has generally come to play an Increasingly important political role in the area except in the cases of Cambodia and Malaya. Thailand has been ruled almost

tinually2ilitary Junta.leaders throughout the area accountignificant part of the educated elite, and they are becoming increasingly conscious ol their potential political power and increasingly dissatisfied with the performance of their civilian governments. Their grievancesgovernmental inefficiency andand dissatisfaction with themeans of dealing with internalwithin the military.esult, the governing groups cannot count so heavily as they once did on military backingime of political crisis. For their part, military leaders in the Southeast Asia countries are prone to factionalism. In general, the more they become involved in political andaffairs, the wider spreads the circle of corruption among their ranks and the more acute their factional rivalries tend to become.

matter how well motivated, thehave at times shown themselves toInept and incapable ofpolitical action. Moreover, theybeen able to overcome theof the peoples of the area tomilitary with suspicion and hostility.other hand, despite their shortcomingsInstruments, the armies of theAsian nations have been importantforces on the national scene andin inhibiting Communistconstitute the largest and bestelement in the society of these nations.

onditions and Trends Affecting International Orientation

of the peoples of Southeast Asiavaguely aware of developmentslocal communities. Among theand semieducated groups In thehowever, there has developed anin international affairs. Ingroups are highly nationalisticsensitive to real or Imagined slightsnation's sovereignty. Many of theparticularly those dissatisfied withor political lot, are attracted to

Marxist and Socialist economic theoriesin many instances understanding them, Anticolonlal and antiwhite sentiments are likely to be strong and vocal among these urban groups.

The peoples of Southeast Asia arewith their own problems andThey have no desire to seeattlefield In the cold war and resent being treated as pawns by the major powers. Thererowing tendency among them to view the Communist Bloc as on the rise and the West as on the wane in the rhythm of history. They have no real enthusiasm for alignment with either the Communist Bloc or the West, and among them thererowing tendency to believe that neutralism provides greater security and freedom of action at less risk than close relations with the West.

To the educated elites and the smallgroups alike, the proximity ofChina, with its vast population and growing military power, is an omnipresent fact of life. The foreign policy questionbefore the Southeast Asia governments is how best to deal with the looming threat ofto depend upon Western policy and strength, or to make some degree of accommodation with Communist China. In either case, the intent is thenational integrity andand the method Isavoid complete commitment and to maintain the maximum flexibility.

In sum, while the Southeast Asians are in no hurry to place themselves at the Bloc's mercy, they are in general becoming more reluctant totrong stand into China in the absence of certainof swift, successful, and painless Western protection. This is caused principally byto offend an increasingly powerful China; growing concern over involvement in modern war; uncertainty, fed by recent events in Laos, as to US consistency and promises ofelief that they can survive and successfully play off East and West through neutralist tactics; and concern that growing Sino-Soviet power may deter the US from effec-

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tive action to prevent an eventual Chinese Communist hegemony in Southeast Asia.

III. MAJOR PROBLEMS AND OUTLOOK IN THE SOUTHEAST ASIA COUNTRIES

The following series of brief countryconcentrates on the two or threein each country which have reached crisis proportions or are likely Lo do so in the near future. Except for the situations in Laos and South Vietnam, the most pressingare the result of particular Internalrather than Communist activity.

The Communist threat in Laos is critical and has reached serious proportions in South Vietnam. Elsewhere in mainland Southeast Asia the immediate security situation is reasonably good. The protracted Communist insurrection in Malaya is virtually liquidated and the major Communist effort there has shifted from armed "national liberation" to the establishmentase for future political activities. In Thailand, Communist assets are still quite limited. Local Communistwithin Burma and Cambodia appears to be proceedingow key.

A. Loos1

The Military and Political Situations

ountry divided by twofactions. The pro-Communist forcesXieng Khouang, Sam Neua, Phonglarge parts of Luang Prabangare consolidating their political andauthority in these areasresistance. The Pathet Lao andcapitals still claim Souvanna Phoumathe legal Prime Minister. Athat at Vientiane has beenXieng Khouang, with Khamsouk Keolaas Premier while Souvanna remainsthe country. The Pathet Lao have begun

' See also., "The SlUiaUon and Snort-Term Outlook in, "Probable Communist IntenUons Inatednd, "Probable Communist Reactions to Certain US Courses of Action With Respect toated

to organize the territory under their control along Communist lines.

The Laotian Government of Prince Boun Oum and General Phoumi is ineffective and has become increasingly corrupt. II isroadly representative government and its efforts to generate non-Communist support have been largely Inept and unsuccessful. The National Assembly delegates are for the most part apathetic, neither opposing thenor providing it strong support. Badly needed social and political reformhave been pushed into the background by the exigencies of the military situation.

The military situation in Laos hasinto sporadic civil war. Military action has been characterized by repeated Pathet Lao probing actions, Laotian Army withdrawals, and subsequent regroupings. Since the Communist Pathet Lao-Kong Le forces seized the Plaine des Janes in January they have concentrated much of their strength in that area and appear to haveajor training effort. The logistic buildup has reached substantial proportions, The Soviet airlift into Laos, especially Into Xieng Khouang province, continuesigh and sustained rate. Additional supplies are being brought in by truck from North Vietnam. Some North Vietnamese artillery crews are working with the Pathet Lao forces, InNorth Vietnam is providing trainingand tactical guidance.

The Laotian Government forces arein number to the Pathct Lao andreater amount of equipment available to them. However, problems of internal security and transportation prevent them fromtheir strength. The Laotian Army is poorly led and In generalill to fight. It has been very slow to initiate any effective military operations and will beto retake the Plaine des Jarres and Xieng Khouang in the near future.

Outlook

Pathet Lao tactics appear toconsolidate, politically and militarily,in the north. However, the Pathet

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reater military capability In both the Plalnes des Jarres and Plateau des Bolovcns areas than they have thus (ar chosen to exercise. They could sharply step up their military activities at any time and coulda variety ol tactics. They could expand their attack on such governmentas Luang Prabang with sizable forces or they could launch widespread guerrillathroughout Laos. Southern Laos isvulnerable at this time to suchactivity.

A dramatic, though Limited, victory by the Pathet Lao.eries of local victories, could occur at any time, in turn, such acouldollapse of theposition, leadeneralof the Laotian Army, and toro-Communist "neutralist" regime in Vientiane.

Assuming that the Laotian Army does not dissolve under military pressure or lose all Its will to resist, it Is possible that, in time, some basis for negotiated settlement maysolution" to the Laotian crisis hasatter of contention among the major powers. Any agreement which would end the armed struggle in Laos and resolve the political impasse in thatrests primarily in non-Laotian hands.

B. South Vietnam '

extremely critical period forDtnh Diem and the Republic ofimmediately ahead. During the pastthe internal security situationto deteriorate and has nowproportions. Communist Northhas stepped up its covert directionof the Viet Cong, Its paramilitarySouth Vietnam, and intensified itspropaganda pressures on Souththis same period, non-Communistopposition to Diem and his regimemarkedly, and there areof dissatisfaction within theestablishment. Both factors were ln-

' Supplement*aO. "Short-Term Trends in Soulh3

volved in the abortive coup d'etat of last

The Internal Security Problem. Thephase of the North Vietnamese drive for "reunification" has been proceedingising level sinceince that time, the size of Viet Cong guerrilla-terrorist apparatus in South Vietnam has increased greatly and now numbersesult of infiltration and increased localLocal recruits and sympathetic or intimidated villagers have enhanced Viet Cong control and Influence over increasing areas of the countryside. For example, more than one-half of the entire rural region south and southwest of Saigon, as well as some areas to the north, are under considerablecontrol. Some of these areas are in effect denied to all government authority not immediately backed by substantial armed force. The Viet Cong's strength encircles Saigon and has recently begun to move closer in on the city. There has been an increase In guerrilla activity in the central highlands, notably In regions directly bordering on Laos. The guerrillas have increased their terrorist attacks on villagers and local officials.often in sizable groups ofor more, they have moved with growing boldness against the Vietnamese Army itself.ivilians, mostly government officials and sympathizers, were assassinated or kidnapped by the Viet Congespite growing Vietnamese Army aggressiveness andcasualties Inflicted by the army, the Viet Cong guerrillas continue to retain theIn the field.

Political Problems. The deterioration in the position of the Diem governmentew extreme In November when army para-troop officers Joined forcesumber of civilian oppositionistsarrowly defeated attempt to overthrow Diem. On the surface, Diem's position appears to have Improved somewhat since then. He has reasserted his control of the government, made some cautious moves toward government reform, and proceeded with plans for the presidential election to be held In April. He has taken action to improve the antlguerrllla capabilities

of the army and stepped up military activities against the Viet Cong. However, the factors which gave rise to the coup attempt have not been seriously dealt with and still exist.with the Diem government continues to be prevalent among intellectual circles and,esser degree, among labor and business groups. There has been an increasingwithin official circles and the army to question Diem's ability to lead in this period. Many feel that he Is unable to rally the people in the fight against the Communists because of his reliance on virtual one-man rule, his toleration of corruption extending even to his immediate entourage, and his refusal toigid system of public controls. Moreover, the people in the countryside are becoming increasingly disillusioned regarding theability to protect them fromand taxation by the Viet Cong.

The November coup attempt encouraged the North Vietnamese to strengthen theirand propaganda drive against Diem. New efforts are being made by the Communists to stimulate "united front" action byand groups in South Vietnam which are known to oppose Diem. The objective is to intensify and exploit anti-Diem sentiment, and to supplement their guerrilla activitiesolitical campaign against the regime.

The Vietnamese Army has also beenby the present politicalignificant part of the November coup group came from hitherto trusted army units. In view of this and the apparent hesitancy of some top military leaders to act quickly in his support, Diem is now more suspicious of the armyotentially serious source of antigovemment activity. The coup attempt has probably opened the eyes of many army officers to their political potential.

Outlook

key issue facing the Diemover the next six months arisesCommunist internal threat. If theable to make substantial progressthe Viet Cong guerrillas, theposition of the government will beimproved. However, If there is noimprovement in the Internal security situation and Diem continues to be arbitrary in dealing with the military and government leaders, their support for Diem will become increasingly uncertain. There would belikelihoodefinite split in the army and government leadership between those backing Diem and those opposed to him.ituation would substantially add to the regime's instability and increase thefor another coup attempt.

iven Diem's precarious politicaland the strength of Communist guerrilla and subversive pressures, we believe that the oddsecond coup attempt sometime in the next year or so. The Communists would like to Initiate andoup against Diem, and their armed and subversiveIncluding "united front" efforts aretoward this purpose. It Is more likely, however, that any coup attempt which occurs over the next year or so will originate among non-Communist elements, perhaps aof disgruntled civilian officials andand army elements, broader than those Involved in the November attempt. Ifoup appeared to have good prospects of succeeding, various groups such as the sects and labor unions probably would join In. We believe that if this were to happenoup attempt wouldetter than even chance of succeeding.

ny coup group not primarily sponsored and supported by the Communists would be likely to maintain South Vietnam's pro-US orientation and to seek US help in resisting Viet Cong attempts to capitalize on the coup. The leaders of any anti-Diem coup originating within the present government or the army would probably maintain Vietnam's pro-US orientation. Nevertheless, Hanoi would seek to exploit the confusion attending achange of government In Southand It is uncertain that the army would be able to keep the situation from getting out of hand.

iem's removal from office would probably resultcramble for power. Under such circumstances, Vice President Nguyen Ngoc Tho would seem tolightly better than

even chance of succeeding Diem. Tho is the constitutional successor. He is generallywithin the government and considered to be one of its most influential members. Moreover he has some support within the army and he has been on good terms with two of Diem's brothers, Ngo Dinh Luyen and Roman Catholic Archbishop Ngo Dinh Thuc. However, Tho or any other successor would probably exercise less personal power than Diem, and would have to control orto the power of the army which willcertainlyajor role in any new government.

presidential election nowearly Aprilotentialexplosive developments on theThe Viet Cong almost certainlyto exploit the confusion thatelection campaigns in Souththey may seek to force the governmentthe elections. They mayactivate their announced NationalLiberation, publicly establishing it interritory in South Vietnamsupport to all antl-DlemOn the government side,Diem's regime will probably tamperelections andesult his victoryan overwhelming one. If these effortsmajor demonstrations and riotsin Saigon.

C. Thailand

Minister Sarit Thanarat7ilitary coupis the undisputed leader of thegroup. Throughout the course ofSarit has kept Thailand closelythe US and the West. The US inbeen instrumental in building up theestablishmentajor sourcepolitical strength) and In helpingthe Thai economy. There is somewith the existing political order,among urban and educatedthe majority of the Thai people,those in the countryside, feel with the political activities in

Bangkok, and tend to focus their loyalty on the King.

Political. The immediate course ofevents within Thailand hangs primarily upon Prime Minister Sarlt's uncertain health If Sarit should depart from the political scene because of incapacity or death. It is probable that General Thanom KJttlkachorn, Deputy Prime Minister and Minister of Defense, would succeed to the Premiership. Thanom, who served as Prime Minister loronthsias been named by Sarit as the heirHe appears at this time to have the support of the powerful and ambitiousof Interior. General Praphat Charusa-thlen.

Members of the middle grade officerare dissatisfied with their present status and their share of the graft available toof the regime. Another weakening of Sarifs physical condition conceivably could encourage an attempt to grab power by some of these officers.

Sarit's death or incapacity would almost certainly be followed by increasing tensions within the ruling military group Latentbetween Generals Thanom andcould developerious schism. In the eventerious power struggle within the ruling group, prospects would beelatively brief period of governmentfollowed by the eventual assumption of power by one of the contending factions and the continuation of military control of the government essentially along present and past lines.

Foreign Policy. Thai foreign policy is highly sensitive to the Thai assessment of developments in the Far East, particularly those Involving Laos, and of US reaction to these development* Neither the present leadership nor any successor military ruling group is likely to divest itself of its close ties with the US and the West as long as itthat these connection* provide adequate assurance of Thailand's survivalree and independent nation. On the other hand, if Thai leaders should reach the conclusion that the US is either unwilling or unable to

tee the security of the Kingdom, they would probably seek an accommodation with the Communist Bloc. Thai society in general is not sympathetic to communism; Thailand's traditional enemy is China, Communist or non-Communist. Nonetheless, Thailand's for-eign policy is pragmatically based, and the Thai would reacteal or apparent swing of the balance of power in favor of thein the Far East.

US-Thai relations remainsince the0 Kongin Laos have at times strained theThe Thai leaders not onlyneutralist and Communist-Influenced Laosto Thai security, but also viewin Laosest of US Intentionsin Southeast Asia. Theyrivatetheir unequivocal alignment with thethe West, and they have madethe USSR which werearning to the US.have apparently concluded that thenot arrived for any significantlear hardening of attitudeUSumber of top ThaiSarit, who believe that theirwith the US has not beenA perennial source ofto the Thai is the US policy oflarge amounts of aid toparticularly to neighboringto convince Sarit and most otherleaders that US assistance toeven Cambodia, benefits the FreeThailand, have met with

D. Burma

the past year, since control ofwas returned to Primeand the politicians by General Ne WinBurmese military, economic andin Burma have generallylevels have begun to rise again,rates are up, and the security ofhas worsened. The rulingis showing signs of coming apart atand local Communists are againactive.ime of unprecedented Burmese rapprochement with Communist China, US relations with Burma have become Inflamed over the issue of the Chineseirregulars in Burma.

Political.0 electionsreat personal triumphu who returned toovernmentwo-thirds majority in the Chamber ofu's personal prestige throughout Burma remains high despite growing factional dissension within his own Union Party and despite accumulating unresolved political problems, many of them involving the ethnic minorities. The mostthreat to the stability of Nu'slies In the increasing factionalism within the Union Party, and the scramble among competing groups for control of partyandu will probably be able to avert an open break In the party, but internal disputes will probably continue. The unsettled condition of the Union Party will continue to detract from the government's ability to act decisively.

Probably the most difficult problemU Nu arises from his electionpromise to make Buddhism the stateThis has caused growing unrest among many Christian and non-Buddhist tribal groups in Burma, particularly the Ka-cbins in the north. There has been aresurgence of political activity by Communist and left-wing elementsu returned to power and dropped themeasures directed against them. The Burmese political scene will probably be marked by Increasing turbulence andover the nest year.u will probably continue to head the government al least for the next year.

The Army. During0 considerable pressure built up within the army for new political action to reinstitute army control. This pressure was leadingeriousbetween General Ne Winumber of army political activists. Ne Win wanted no change in the political situation, at least until the China-Burma bordernow underway was completed, while the other army group believed that a

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new move against the government was needed immediately. The matter apparently was settled in1 when General Ne Win summarily directed the resignationubstantial number of the army's most senior officers. An attempt by these officers to counter Ne Win's actionwould not succeed.

We believe that Nc Win will continue to dominate army policy and that he will not for the time being choose lo Involve the army directly In national political affairs. Hiscould changeu's partyand serious political Instabilityto be threatening the country. If that happened Ne Win would probably move to shoreu's position and effect somearrangement with him which wouldarmy participation In government and administration.

Foreign policy. The Nu government has made no major changes In Burma's traditional foreign policy of nonalignment In the cold war and of general cooperation with theAsian countries. However, owing partly to the personal Initiative of Uwho strongly desired to reaffirm "peacefulas the cornerstone of Burmeseand to complete the settlement of the Sino-Burmese border question initiated by General Nehas establishedmore friendly diplomatic relations and closer economic ties with Communist China than have existed heretoforeurma signed an agreement on economic and technical cooperation providinghinese Communist long-term interest-free loan ofillion to financeequipment and technical advice foreconomic development projects. This loan agreement, the largest Communist China has offered to any non-Communist country, is to come into force Inith repaymentyear period beginning

il nation of Communist China'sassistance in Burma's Four-Year Plan may give Peiping substantial Influence over the general orientation of Burma's economic planning efforts. Closer Slno-Burmese trade relations will probably develop if, as expected. Burma concludes trade arrangements forrice exports to China during the next months. However, In keeping with Burma's avowed policy of accepting aid from both Blocs, the Nu government will probablyto draw on existing US grant and loan aid. Burma will probably also seek economic, and perhaps military, assistance from theUnion sometime In the near future.

US-Burmese relations have recentlysharplyesult of developments involving the Chinese Nationalist Irregulars in northeast Burma. Actingecret agreement providing for joint action tothe teams engaged in demarcating the Sino-Burmese border, the Chineselaunched an attack into Burma against the Nationalist units inhe Burmese Army later joined in. Byhe forces of the two countries hadin capturing the major Nationalist bases and driving most of the irregulars across the Mekong into Laos and Thailand, although this was apparently done at the cost of severe casualties to the Burmese Army.quantities of Nationalist arms andmuch of it US made, were captured by the Burmese. As news of the fighting and the capture of US-manufactured arms In the hands of the Nationalist irregulars became known, an army-Inspired press campaign began to grow, aimed In part at the Taiwan regime but chiefly at the US as the country primarily responsible. The fact that Chinese Communist troops helped the Burmese Army In the attack on the irregulars has been kept from the Burmese publicu hasand emphatically denied the presence of any Chinese Communist troops on Burmese sou.

In February, the Burmese Government brought to the attention of the UN the matter of the Nationalist irregulars and theirsupport from Taiwan. Whipped up by the press campaign, student and labor groups have led anti-US riots in Rangoon andumber of the US advisers to the Burmese Army have been requested to leave prior to the expiration of their tours In

April. US relations with the Burmesewhich once were quite close, haveharp decline.uwishes to avoid serious damage to US-Burmese relations, he probably will seek to exploit public and army feeling over theUS role In supporting the Chineseirregulars in order to force theof the problem posed by the irregulars. To tills end the Burmese Government will probablyenerally anti-US line over the next several months.

E. Cambodia

Cambodia is dominated by PrinceSihanouk,year old ruler who has been variously King, Prime Minister, and Chief of State of his country. Whatever hisat any given time, Sihanouk is in fact the center of power within Cambodia.he fully controls Cambodian foreign policy. As his views of the world scene have changed, Cambodia's relations with the East and West have changed. His dominance has been responsible foi' the many sharp swings, right and left, of Cambodia's foreign policy in the past. The one constant throughout Sihanouk's rule has been his conviction that the key to Cambodia's domestic stability and inlernalional security lies inolicy of neutrality.

Although Sihanouk professes neutrality, several factors have combined at times to make him Incline toward the Soviet Bloc. These factors Include Cambodia's proximity to Communist China, Sihanouk's apparent feeling that communism and Communist China represent the "wave of the future,"In Asia; his fear of Communist strength and rulhlessness, particularly that of China; and Cambodia's traditional enmity with Thailand and Vietnam, accentuated in modern days by their differing foreign policies. At the same time, Sihanouk takes great care to assure the Soviet Bloc that his acceptance of US or French military assistance does not modify his basic policy of neutrality.

In domestic policy, Sihanouk attempts to keep left-wing and Communist influences in check. From lime to lime he has suppressed domestic Communist activity and Communist-oriented newspapers. Sihanouk's fear ofsubversion, both Communist andcauses him toigh state of internal vigilance. This fear, and that of losing Western economic and military aid, have probably been the main reasons for bis continued refusal to accept military aid from the Soviet Bloc.

Although Sihanouk has been careful to watch out for subversion In its militant forms, he has been lenient in other fields where the danger is less immediate. Thus Communist propaganda, despite occasional suppression. Is widespread and iserious impact on the Increasing number of literate andCambodians. Bloc economic aid is well publicized and contributes to an effective pro-Communist impact. Sihanouk himself, by his public tirades against the West at times of tension with Thailand and South Vietnam, has also contributed to this impact, His desire to enlist the support of leftist-orientedyouth leads htm to overlook thedanger they pose to his neutralist policy abroad and nationalist policy at home. While Sihanouk may be justifiably confident at this time of his ability to control or direct public opinion, he or his successor may in time have to be responsiveublic opinion increasingly favorable to the Communist Bloc, an opinion which he helped to create and permitted to develop.

Sihanouk will continue to dominate the political scene in Cambodia for the foreseeable future. Economic considerations are not likely to provoke significant internal political pressures. Sihanouk will continue to steer Cambodiaiddle course, committed to neither major power group and seeking aid and assistance from both. Within the limits of his neutralist policy, Sihanouk will turn his smiles or tirades toward the West or the Bloc and back again, according to his feeling for the situation. The balance between East and West In Southeast Asiaost important determinant for Sihanouk, and this could be affected greatly by developments in thecrisis.

Sihanouk would probablyreadily to almost any resolution ofcrisis, the solution he wouldprefer wouldeutral beltof Laos and Cambodia, guaranteedgreat powers. He would not like tounder Communist domination, butclearly lie with theSouvanna Phouma has advocatedSihanouk probably places BounPhoumi in the same general categoryand Sarit, his major antagonists inAsia area. Sihanouksation conference to negotiate athe Laotian crisiserious effortpart to seek an endituationregardserious one for Cambodia.

F. Malaya

Malaya is one of the most prosperousin Asia andtable and conservative government. Under Prime Minister Tunku Abdul Rahman, the ruling Alliance Partytrong majority In Parliament. Rahman has shown considerable ability since Malaya gained Independence7 in managing the governmentompetent and efficient manner.ember of the BritishMalaya has generallyro-Western foreign policy and has shown little sympathy for Communist causes. It is rurther tied to the West by theDefense Agreement, concluded at the time of Independence, which specified that the UK will provide assistance for Malaya's armed forces and for Its external defense. Although Prime Minister Rahman has recentlythe admission of Communist China to the UN along with an Independent Formosa, Malaya has refused lo establish diplomatic relations with members of the Communist Bloc.

year long state of emergencyfrom the armed Communistwas officially ended by the government onhe rebel force has now been reducedew hundred individuals confined largely to the Malaya-Thailand border region, and Communist tactics have shifted from armed insurrection to clandestine political organization and the penetration of labor and student groups. The Communists hope thereby toase for political and national front activities.

Political Implications of CommunalThe racial composition of Malaya Is its most important political determinant. Onlyercent of the Federation'sIs Malay;ercent Is Chinese, andercent Indian and Pakistani. Although the Chinese and Malays have lived in relative harmony since independence, racialare nonetheless deep-seated. TheChinese, who control much of theeconomic life, tend to look down on the Malays as Indolent, inefficient, and culturally Inferior. Many still regard mainland China as their motherland, an attitude which has been enhanced by China's growingImportance. The predominantlyMalays in turn regard the Chinese as pork-eating foreigners, atheists, and economic exploiters.

The economic and cultural differences are further complicated by the fact that, bymandate, the Malays are assured of control over the civil and security services and are given special consideration in land development as well. The constitution estab-lishes Malay as the national language but provides for the use of English as an official language forears. It requires for citizenship that non-Malaysnowledge of Malay and meet certainrequirements. These conditions tend to discriminate against the Chinese. Therelear tendency among the younger elements of both racial groups towardMalays attracted to extremist nationalistic movements and the Chinese youth attracted to left-wing causes and groups. The older, more moderate Chinese and Malay leaders, who now dominaje the government and the major political parties, appear to be unable to halt the trend toward political polarization. Any serious Infringement of Chinese economic status would sharply increase Chineseof Malay domination and thus accelerate this trend. Although friction between the Malays and the Chinese will continue and will

probably spark occasional outbursts ofa major communal showdown is not likely for several years Over the next year. Malaya's prosperity will probably continue to submerge the nation's racial differences.

Relations with Singapore. Singapore, whichemlautonomous state within the British Commonwealthants to merge with Malaya, but Its advances are not welcomed by the Federation's Malays who fear Chinese domination. The Chinese, who are in an overwhelming majority in Singapore, would constituteercent of the populationombined unit while the Malays would be reduced toercent of the total. Initial Malay suspicion of the left-wing People's Action Party government formed in Singapore9 has added to the difficulties between the two areas.esult, thehas sought to eliminate its historicupon Singapore's financial and port facilities by setting up Its own. Singapore's economic and political prospects, withoutto the Malayanould be extremely poor over the long run.

At present, thererend among top officials of the Federationore sympathetic approach to Singapore'slargelyesult of their growing realization of the threat which Instability in Singapore would pose for the Federation. Representatives of the two governments have been meeting from time to time to explore the prospectsimited common market There are, in addition, some indications tbat the Prime Minister and Deputy Primeof the Federation have been exploring the possibilityimited merger, but one which would preserve Malay hegemony.no striking developments are likely during the coming year, there will probably be closer cooperation between the two areas than in the recent past. Over the long run there mayignificant moveonfederation of Malaya and Singapore that would also include Brunei, Sarawak, and British Borneo.

Economic Vulnerabilities. Although the Federation of Malaya Is the most prosperous nation In Southeast Asia, the economy is heavily dependent on rubber and tin, which account forercent of the nation's exports and finance the import of essential foodstuffs. Aboutoercent of the total population is dependent on rubberivelihood. The prices which Malaya receives for its rubber arc largely determined by non-Malayans. Since rubber trees take at least six years to mature, production cannot be shitted quickly in the eventrice collapse. Malaya Is stillbut hard times for the rubber industry,onsequence of competition fromrubber, for example, could resultenerally depressed economic situation. This In turn could bring to the surface many of the Federation's now dormant political and social problems. However, the demand for natural rubber is expected to remain high during the coming year. Consequently, no seriousin the Federation's economy is envisaged during this period.

IV. PROBABLE EFFECTS IN SOUTHEAST ASIA OF MAJOR COMMUNIST GAINS IN LAOS OR SOUTH VIETNAM

here is deep awareness among theof Southeast Asia that developments in the Laotian crisis, and Its outcome, willrofound impact on their future. Theof the area tend to regard thecrisisymbolic test of intentions, wills, and strengths between the major powers of the West and the Communist Bloc. They fear the possibility that the hostilities, byor design, may spread to their own territory. In one way or another they all regard the US as responsible in large degree for the present state of affairs in Laos. The governments of South Vietnam and Thailand, for example, are convinced that If the US had given the anti-Communist elements bold and prompt support, the Laotian crisis would not have reached serious proportions and would long ago have been resolved. However. Diem and Sarit both reserve their most severefor the attitudes of France and the UK. They believe that the two European powers have restrained the US and made decisiveby SEATO unlikely if not impossible. The governments of Cambodia. Burma, and

Malayaolitical settlementeutralist Laos.

In short, the general attitudes of theof mainland Southeast Asia are split along the lines of their general foreign policy orientation: those in close alignment with the US favor stronger measures lo assure aton-Communist and preferably an anti-Communist, western-orientated regime in Laos; and the neutralist governments, as well as Malaya,eutralist but notgovernment. Thegovernments, recognizing that the course of events In Laos will be determined by the major powers instead of the opposing Laotian factions, favor some form ofpolitical agreement to end the crisis, such as UNew conference among the powers which negotiated the Oeneva agreements,roader International conference such as that proposed by Sihanouk. Thailand and South Vietnam would welcome some form of UN representation in Laos, butimitedo stop Bloc aid to the Pathet Lao-Kong Le forces.

Cambodia and Burma would view with satisfaction an International politicalof the Laotian crisis which providedeutral Laos and reduced the possibilities that the armed conflict would spread.both countries realizeontinuing strong US posture and influence in the area is necessary to keep in check Chineseexpansionist aspirations and to enable Cambodia and Burma to maintain flexibility in their neutralist policies. Consequently, they would be alarmed If Laos were to be lost to the Communists under conditions which would seem to indicate that the US position in the area had been seriously weakened.

The loss of Laos to the Communists oreven the division of the country, would almost certainly incline the Thai towardto Communist power inAsia. Depending upon where the line might beivided Laos would pose almost as many difficulties for the Thai asompletely Communist Laos,if Thailandommon border with the Communist-controlled portion of

redominantlyLaos would vitally threaten Southindependence; it would greatly extend the Communist frontiers with South Vietnam; it would bring significantly greatermilitary power to bear on the crucialdefense complex; and it would greatly facilitate Communist Infiltration andThe close proximityommunist state would make more difficult Western efforts to starch up local resistance. In short,ivided LaosredominantlyLaos would severely damage the US position and Its influence in Thailand and South Vietnam.

The future course of all of the countries of Southeast Asia would be strongly influenced by the actual circumstances in which the loss or division of Laos had occurred as well as the local appraisal of the attitude and actions of the US in response to the situation. Theto which these countries would go InBloc pressures or in withstanding local Communist threats would depend In greaton whether they still assessed that the US could stem further Communist expansion In the area. They would feel more keenly thantrong temptation to take aposition between the two power blocs, even though they recognized that the US is the only country with sufficient power to oppose the Communist Bloc in the area.they probably would be deeplyregarding US resolution after the loss or division of Laos, they would nonetheless welcome demonstrations of US firmness and might in response modify their appraisal of their own future In due course.

Although the Communist threat to South Vietnam has reached serious proportions, the chancesommunist takeover in the next year or so are considerably less than they are in Laos. Nevertheless, Peiping and Hanoi almost certainly attach greater importance to their efforts In South Vietnam than they do to their efforts in Laos, US prestige and policy are particularly deeply engaged in SouthDiem's policy of close alignment with the US Is on trial in the current crisis. All

countries ol the area would attachailure of the South Vietnam Government to cope successfully with the rising tempo of Communist subversion and armed insurrection. If South Vietnam were to fall to the Communists or be forced to swing toward neutralism, the impact upon theof Southeast Asia would be similar in bind but considerably more severe than that resulting from the loss or division of Laos.

Original document.

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