Foreign Relations of the United States, 1961–1963, Volume XXIII, Southeast Asia

247. National Intelligence Estimate⁰

NIE 55–62

Washington, March 7, 1962.

THE PROSPECTS FOR INDONESIA

The Problem

To analyze the major trends in Indonesia and to estimate probable developments over the next year or so with special reference to Indonesia’s international orientation and to the West New Guinea dispute.

Conclusions

1. Until a settlement satisfactory to Sukarno is reached with The Netherlands, the West New Guinea dispute will continue to overshadow and strongly influence all other foreign and domestic issues in Indonesia. Sukarno will probably draw even closer to the Bloc position on major international issues as Indonesia continues to rely heavily on Soviet military aid and political support for the prosecution of the West New Guinea campaign. The Indonesian Communist Party (PKI) will continue to exploit the issue and to obstruct a negotiated settlement. The diversion of army energies into the West New Guinea campaign will continue to hamper its efforts to reduce PKI strength and influence. President Sukarno will probably continue to be successful in balancing the army and the Communist Party off against each other while retaining for himself the controlling power position. In the event of Sukarno’s death, it is likely that the successor administration would be headed by top ministers in the present cabinet with Nasution and the army assuming the predominant role in their support. (Paras. 5–8, 12, 16–22)

2. A West New Guinea settlement, although it might initially enhance the prestige of Sukarno and the PKI, would cost both an issue that has proven politically profitable for over a decade. The PKI, especially, would be forced to seek new issues and would probably turn to further “anticolonial” campaigns against such targets as Portuguese Timor or Western economic interests in Indonesia. It is unlikely that any efforts of this nature would be carried very far during the period of this estimate. In the event of a settlement, the army would probably give greater attention to countering PKI influence in the country. (Paras. 19–20)

3. Sukarno almost certainly believes that Indonesia cannot rely solely upon diplomatic pressures for a prompt settlement of the West New Guinea dispute. In any case, he will continue the buildup of Indonesian forces in eastern Indonesia and the frequent use of threats of action. We believe that chances for a negotiated settlement of the dispute are slightly better than even.¹ However, as Indonesian military capabilities improve, Sukarno will become increasingly prone to employ military measures short of an all-out invasion in an effort to weaken the Dutch bargaining position and thereby pressure them into meeting his terms for negotiation. We consider an all-out invasion of West New Guinea to be an unlikely course of action for the Indonesians during the period of this estimate. (Paras. 31–36)

4. The economic outlook for Indonesia over the next year or so is definitely unfavorable. The most serious problems will probably be the intensification of inflation and the continued decline of foreign exchange reserves. Sukarno is unlikely, however, to concern himself with remedial measures. On the contrary, continued economic frustrations will probably provide him an additional incentive to raise the pitch of the West New Guinea crisis. (Paras. 23–27)

[Here follow a 7-page Discussion section and a map of the area.]

0. Source: Department of State, INR/EAP Files: Lot 90 D 165, NIE 55–62. Secret. Prepared by the CIA and the intelligence organizations of the Departments of State, Defense, the Army, the Navy, the Air Force; the Joint Staff; and NSA. All members of the U.S. Intelligence Board concurred with it on March 7 except the Atomic Energy Representative and the Assistant Director, Federal Bureau of Investigation, who abstained on the grounds the subject was outside his jurisdiction.
1. The Assistant Chief of Naval Operations (Intelligence), Department of the Navy, and the Assistant Chief of Staff, Intelligence, USAF, believe that available evidence does not yet warrant the assessment that chances for a negotiated settlement are slightly better than even. They note, however, that changes in the general atmosphere surrounding the parties to the dispute have improved the chances for negotiating a settlement. [Footnote in the source text.]