Foreign Relations of the United States, 1950, East Asia and the Pacific, Volume VI

PSA Files: Lot 54D190

Memorandum by the Officer in Charge of Economic Affairs, Office of Philippine and Southeast Asian Affairs (Shohan), to the Associate Chief, Economic Resources and Security Staff (Armstrong)

secret

[Washington,] August 14, 1950.

Procurement of Strategic Materials From Southeast Asia

For strategic stockpile commodities obtainable largely in Southeast Asia, the properly cautious assumption should be made that beginning sometime in the next twelve months or for, say, a year or more thereafter, their receipt will be significantly curtailed or made much more difficult. Expressed in a schematic formula, the assumption might run as follows; not only for purposes of analysis but to arrive at sound recommendations for action.

1. There will be no interruption of access before December 31, 1950; present “normal” assumptions as to the world supply and demand situation will prevail.

2. After December 31, 1950, total supplies from Southeast Asia to NATO countries and the rest of the Western Hemisphere will be one-third less than would “normally” be available.

Such assumptions are arbitrary. Access may very well be more difficult before January 1951 or in considerably different degree from that suggested; access might even possibly improve slightly after December 1950. But the assumptions proposed are sounder from the point of view of national security than the Munitions Board’s assumption that we have two years to gain our stockpile objectives without any allowance for interruptions to supply.

Reasons for proposing the less conservative assumptions follow:

1. The immediate threat is real and ominous that Chinese Communist strength will be increasingly diverted through a major effort to the support of Ho Chi Minh. The position of the West in Indochina is only uneasily maintained by commitment of considerable French forces operating in a generally hostile environment. This balance can be turned against the West more quickly than we can correct it, not only by enemy action directed against the French forces in Indochina, but by action requiring diversion of French forces to Europe (or Africa). To be sure, we do not now depend significantly on Indochina as a source of strategic materials. The “loss” of Indochina during the year, however, is a real threat not only because the West may be deprived of an uneasy base but because the Communists may gain for themselves a firm base for operations against other SEA areas.

2. In Malaya, Communist-led guerrillas are conducting a slowly broadening and accelerated campaign of terror and armed attack on the more developed portions of the country. The guerrillas command the support, in form of food supplies, intelligence and cover of some 500,000 additional Chinese who live as “squatters” on the margins of the developed areas. At present, these guerrillas get little or no direct support from outside Malaya. It would be extremely easy for such increased support to be delivered [by?] the Communists, extremely difficult to counter it.

In addition, there is a Chinese “minority” of 40 percent of the population which for the most part does not now sympathize with the guerrilla movement and desires the return of law and order. But if Communist aggression were to spread in Southeast Asia, and the present guerrillas given aid from the outside, the pressures on and temptations to the Chinese population of Malaya to fall in with such aggression would be tremendous. The resultant challenge to the interests of the Western powers in Malaya would be one that British armed strength would be extremely hard put to meet. Judged on the basis of what is now being invested unsuccessfully to stem present hostilities, British suppression would have to be on an extremely large scale. The nearby spectacle of approximately one-third of the Army of the French Republic fighting an expensive and precarious holding action in limited areas of Indochina, leaves nothing for the Westerner to be smug about in Malaya.

3. While there is no serious internal disorder in Thailand today, and the present government appears at the moment to be internally secure as well as firmly committed to a foreign policy favoring the Western powers, the prospect in Thailand, as in all Southeast Asian areas today, is clouded by the likelihood of slowly mounting Communist internal and external aggression in the region.

If Communist China were to succeed with aggression (overt or subversive) in any part of Indochina, to aim any military forces in Thailand itself, to cause a further deterioration of conditions in Malaya, and to agitate the large and economically dominant Chinese minority in Thailand, the Thai governing classes would be under an almost desperate pressure to accommodate themselves to this menace. The present government under such circumstances would be a particular liability in view of the forthright stand it has taken in favor of cooperating with the West. The political adjustment of Thailand to a serious Communist threat against it would probably take the form of one or more of the contending political factions seizing power on the understood basis of changing the national policy over to accommodation to and cooperation with Communism. A probable early consequence of such developments would be the cessation of exports of strategic materials to the United States.

4. The present non-Communist political forces in Indonesia have apparently successfully accommodated their mutual rivalries in creating the new unitary state. On the other hand, Communist penetration is increasing rapidly at an alarming rate, with consequent increases in Communist potential not merely in the direct political sphere but in the form of ability to engage in sabotage and ability to foment strikes. Even aside from Communist influences, the instability of Indonesian labor unions and their leaders results in a continuing threat of widespread labor stoppages. In addition to these dangers of an essentially internal nature, increasing Communist power in other parts of Southeast Asia would affect significantly the internal strength of the Communist movement in Indonesia and even the attitude of the non-Communist government forces. Furthermore, in the event of open warfare in the area, a more remote possibility but one not to be neglected, interruptions to shipping would result in a virtual cessation of exports from Indonesia.

5. As mentioned throughout, these ominous possibilities in Southeast Asia are not to be considered as separate factors—adverse developments in one country, depending on their nature and origin, would have specific and extremely rapid adverse consequences in each of the other countries. Nor are the only forces to be taken into consideration those arising inside Southeast Asia. An increased tempo of activity in other parts of the Far East—either in Korea or as a result of a Formosan action, will not only tie up increasing quantities of shipping, but unless extremely quickly and successfully handled by the West would adversely influence our position in Southeast Asia itself.