Foreign Relations of the United States, 1951, Asia and the Pacific, Volume VI, Part 1

790.5 MAP/1–3151

Memorandum by the Assistant Secretary of State for Far Eastern Affairs (Rusk) to the Deputy Under Secretary of State (Matthews)¹

top secret

[Washington,] January 31, 1951.

Subject: United States Military Assistance Program in Southeast Asia.

Problem:

To determine the extent of the United States military assistance program in Southeast Asia, and the priority to be assigned to it, in view of current favorable political developments in the area and, at the same time, the imminence of a communist invasion of that area. The area comprises the following countries: Burma, Thailand, Indochina, Malaya, Indonesia, and The Philippines.

Discussion:

It has become increasingly apparent during the last several months that, in spite of their unwillingness to accept United States view of the proper solution of the Korean problem, the countries comprising the area known as Southeast Asia are disposed to move in the direction of the United States and of the political and economic systems of which it is the principal protagonist. This tendency is due in some part to the effectiveness of American diplomacy, in some part to Southeast Asian fears of Chinese imperialism and, in any case, the belief that the United States can and will defend the Southeast Asian neutrals against Chinese and Russian aggression. Although certain Southeast Asian states (Indonesia and Burma) have adopted an attitude of neutrality in the present Sino-U.S.-USSR conflict in the hope of avoiding general conflict in the Far East, it seems likely to the Bureau of Far Eastern Affairs that, if the Communists succeed in Korea, Southeast Asian fears of Chinese imperialism will increase and that these fears alone will probably serve to accelerate the tendency of Southeast Asia to align itself with the United States through the adoption of benevolent neutrality or in some cases, outright alliance.

While this development in Southeast Asia may be regarded as a source of gratification to the United States, it also confronts the United States Government with a problem of the most serious character: If our diplomacy succeeds in Southeast Asia the United States must decide how much it is prepared to pay in the way of military assistance to validate that success. If, upon careful consideration of all the factors involved, the United States Government decides that it can afford to supply to the countries of Southeast Asia military assistance requisite to their making a stand on their own and our behalf, well and good. If, on the other hand, it is our carefully considered conclusion that, due to the demands for military assistance from other areas of strategic importance to the United States we can not follow through on the military program which our political program foreshadows, then we must trim our sails accordingly. In a word, the United States has in Southeast Asia reached the point where we must decide whether we shall put up or shut up.

Meanwhile, the threat of Chinese Communist invasion of Southeast Asia (Indochina and Burma in particular) increases. While intelligence estimates do not indicate an increase in the intention of the Chinese to invade the area, all intelligence reports testify to an increase in their ability to do so. Indirect Chinese Communist involvement in Ho Chi Minh’s military operations is at the same time increasing daily.

The strategic, political and economic importance of the region known as Southeast Asia has long been recognized by both the military and the political authorities of this Government (see NSC 64, Tab (A); Joint Chiefs estimates, Tabs (B) and (C); letter from General Marshall, Tab (D)).²

In full recognition of the strategic importance of the area, the United States Government has embarked upon programs for the extension of military and economic assistance to the several countries comprising the area described below. It should be borne in mind at all times that the Governments of the area as well as the Governments of France, the United Kingdom and the Netherlands are predicating their policy on the supposition that those programs will be executed by this Government.

The United States Government has pursued its policy in Southeast Asia with the expenditure of relatively little in the way of money and matériel. The following lists (in thousands of U.S. dollars) the amount the United States is spending for military assistance, economic and technical assistance programs in the countries of Southeast Asia during 1950–51:

Country	Mutual defense assistance	Economic and technical assistance programs
Burma	$3,500	$4,350
Thailand	10,001	4,190
Indochina	164,000	7,650
Malaya*
Indonesia	3,000	6,273
The Philippines	11,247	130
Total:	$191,748	$22,593

Burma

The Union of Burma is a country of considerable strategic importance because of its geographic location between India and China and because of its ability to produce, even under present unsettled conditions, an export surplus of more than 1,000,000 tons of rice per annum. During the early period of its independence (1948–1949) the country was on the ideological borderline, and the question of possible military assistance was held in abeyance pending a clarification of the attitude of Burma toward international Communism. Its potential value to us was lessened by the widespread disorder that prevailed in the country during that period.

During the past year, however, our efforts to win over Burma to the side of the democratic nations have met with remarkable success, partly as a result of the measures that we have taken and partly as a result of the growing threat of Communist China. During this period, we have greatly expanded our information and cultural relations program in Burma and have entered into an agreement with the Burmese Government for the establishment of a technical and economic mission and the granting of aid for the rehabilitation of the Burmese economy, which was completely disorganized by the war and internal disorder. Our program in this field will cost between $8,000,000 and $10,000,000 during the present fiscal year. Military assistance has been limited to an agreement to supply the Burmese Government with ten reconditioned patrol boats for use in maintaining order along the waterways and in protecting shipments of rice and other goods on the rivers. This military aid supplements the assistance being granted by the British and is costing approximately $3,500,000.

In recent months, it has become increasingly clear that Burma would eventually join the free nations of the world in resisting Communist aggression. Within the past week, a definite decision has been reached by the Burmese Foreign Relations Advisory Board that Burma will resist any aggression from China and that the Burmese armed forces will be increased to the fullest extent possible to meet this threat in cooperation with India. The Board has also expressed its intention to incarcerate all Communists and “Left Wing Socialists”. The Board has indicated that it may request the United States and the United Kingdom each to train 300 Burmese officers in this connection, and it is apparent that the granting of substantial additional assistance may also be highly advantageous to us. It is too early now to determine the form or extent of this aid, but we should be negligent if we failed to make provision for substantial military help to Burma when conditions require it.

Thailand

Our policy toward Thailand since World War II has been successful in securing Thailand’s forthright support of the United Nations and the Western powers. This is illustrated by Thailand’s furnishing ground troops to the United Nations in Korea; by supporting in general United States objectives in the various subsidiary organizations of the United Nations; and, alone among Oriental nations, extending diplomatic recognition to the States of Vietnam, Laos and Cambodia. These were bold moves for a small nation which never before in its history had committed itself unequivocally on an international issue which might endanger its own sovereignty. Thailand’s declared opposition to Communism is important to the world because geographically it lies in the heart of the Indochinese peninsula and forms a hard core of opposition which serves to bolster the left and right wings in Burma and Indochina as well as Malaya to its rear. If Thailand were to go Communist it would simplify Viet Minh or Chinese Communist action in flanking any resistance in either Indochina or Burma. Thailand furthermore is voluntarily channeling its rubber and tin to the Western powers and is generally cooperating economically.

Such support from Thailand has cost the United States little except careful diplomatic handling. It has received no large loans nor any extensive aid programs. A $20,000,000 surplus property credit was granted after World War II of which Thailand used less than $7,000,000. A $10,000,000 military aid program for 1950 has been approved in order to equip the Thai Army against possible internal Communist efforts but of this amount only a fraction has actually been shipped. It is believed, however, that in view of Communist successes in Korea and in Tonkin that military aid for Thailand should be substantially increased in quantity and in priority in order that this nation might continue to stand against Communist aggression.

Indochina

It is generally acknowledged that if Indochina were to fall under control of the Communists, Burma and Thailand would follow suit almost immediately. Thereafter, it would be difficult if not impossible for Indonesia, India and the others to remain outside the Soviet-dominated Asian bloc. Therefore, the Department’s policy in Indochina takes on particular importance for, in a sense, it is the keystone of our policy in the rest of Southeast Asia.

Even before the Japanese Army of Occupation had been evacuated from Indochina it became evident that there was a nationalist movement brewing there which would have to be dealt with promptly in one way or another. A military solution was impossible and the French decided, either for that reason or in acknowledgment of the fact that some sort of alteration in the prewar type of colonial administration of overseas territories would eventually be required, chose the only practical course open to them at that time—to negotiate with Ho Chi Minh. The Fontainebleau Pact which followed proved to be a miserable failure. Its principal purpose in the end, ironically enough, was to serve as a precedent for the series of agreements which the French were later to conclude with Ho Chi Minh’s greatest rival, Bao Dai, and which were to result in a degree of independence for the Associated States which Ho Chi Minh had never been able to obtain, either by political or military means.

By the time Ho had gone underground in December 1946 certain essential facts were becoming evident to us as they were to the French. They included the realization that Ho was not the benevolent nationalist patriot he claimed to be but rather a clever and devoted disciple of the Kremlin. A solution to the Indochina problem could not be achieved through him if Western interests were to be served. Until an alternate could be found there was no course but to oppose Ho by force of arms. The alternate was and is, Bao Dai, the only man in Indochina capable of commanding a following comparable to that of Ho and serviceable as a framework within which a non-Communist government could be formed.

The Department’s policy at this time, late 1948–early 1949, had gelled. It was, in simplest terms, to prevent Ho and his Kremlin allies from gaining control of Indochina by every means possible and to bring a friendly influence to bear on the French to make whatever concessions to the Indochinese were required to bring about the restoration of internal security and the establishment of a stable non-Communist nationalist government capable of maintaining it. The course we have and are pursuing is an outgrowth of these two basic objectives.

In the short period of time since the present mold was set by the Baie d’Along Agreement of June 1948, remarkable progress has been made in “Operation Eggshell”. There is no need to dwell on the series of developments culminating recently in the decision of the French Government to grant the Associated States a full measure of independence within the French Union as exemplified by the agreements reached at the Pau Conference.

However satisfactory progress may have been, we are now in a crucial period. Aside from the ever present threat of Chinese intervention, which would of course change everything, we are now in a stage where our participation in the over-all operation must be greater than ever before. French cooperation in the form of political concessions and assurances of continued military and financial aid has been received. We can expect little, if anything, more from the French side.

It is, moreover, doubtful if the French concessions would ever have been made if our assurances of financial and military aid to them and to the Associated States had not been forthcoming at the same time. It is certain that without our military and financial aid the attainment of the ultimate goals we have been aiming at during the long difficult operation of the last five years will be impossible. Unless we carry out our present program, it is questionable whether the French can be counted on to carry out their program. At best it will be a period of years before the Associated States are able to fully assume the responsibility they have so recently acquired. They will need constant aid. They must turn to us for it if they are not to turn elsewhere.

Above all, we cannot afford to jeopardize the considerable measure of success our policy has already had in Indochina by neglecting to provide the proper maintenance for our investment. French cooperation will be required at all times and can only be assured if we, ourselves, continue to give constant evidence of our determination to see the matter through. In sum, to neglect to pursue our present course to the utmost of our ability would be disastrous to our interests in Indochina and, consequently, in the rest of Southeast Asia.

Malaya

Malaya which forms the tail of the Indochinese peninsula, although being a small nation of only 6,000,000 is of vital importance to the Western powers because it is the world’s largest tin producer, exporting almost 60,000 tons in 1949; and is the world’s largest rubber producer, supplying in 1949 almost half of the world’s natural rubber. Furthermore, it is the largest dollar income area in the British Empire and is exceedingly important fiscally to the stability of that Empire. At this time the British are asking for about $8,000,000 worth of equipment to assist them in suppressing Chinese Communist guerrillas. A carefully devised plan is being put in operation which uses about 20,000 British troops and 100,000 police and special police and which aims to extend substantial civil administration to the disturbed areas. It is believed that high enough priority should be given to British requirements for those materials which they are not able to produce themselves within a reasonable period of time in order to support their anti-Communist program.

Indonesia

Indonesia, supporting a population of 75-million (second largest Moslem country in the world) is completing its first difficult year as an independent nation. It has been beset by a series of economic and political troubles. These include in the political field, the Westerling Affair, the Makassar revolt, the Ambon rebellion, which came to the attention of the Security Council, and the establishment of a unitary state. Economically, disturbances to law and order have reduced plantation production. Labor, generally restive, has been exploited by Communists.

The Indonesian Government obtained a vote of confidence and resolved the Ambon affair early in November. Since that time the Government of Indonesia has proceeded in a satisfactory manner. Its troops are being withdrawn from the Ambon area to Java, where a series of measures designed to improve law and order are scheduled to take place. The Government has slowly come to appreciate the dangers of Communist infiltration and, according to private statements of responsible Ministers, is preparing appropriate moves. The Indonesian Government now has a surplus foreign exchange amounting to approximately $65-million, all earned since the transfer of sovereignty; has in addition, $185-million in gold reserves; and has produced some useful projects to be financed by the $100-million Export-Import Bank’s loan. The Finance Minister, in discussing this loan with Parliament last month, pointed out that while the United States was charging only 3½ percent interest, the Russians on their loan to the Chinese were charging actually 487.5 percent interest because of the devaluation of the ruble. The Minister pointed out that Russia wanted payment in gold or United States dollars.

We have quietly assisted the Indonesians with $3-million worth of arms for the Constabulary, which is now going to be put to good use in the forthcoming measures directed against Communist and other disruptive elements. Several groups of Indonesian police have discreetly received training in this country. We have five Indonesians in the Foreign Service Institute. Our constant concern has been to bring subtly, without overt American influence which might damage the susceptibilities of the very touchy Indonesian nationalists, the Indonesians to face the reality of the dangers inherent in Russian and Chinese colonialism and imperialism.

Ambassador Cochran has constantly advised us, and his advice has in large measure been followed, of the too noticeable influx of American officials into Indonesia.

The only real check we have encountered occurred in the failure of the Indonesian Government to make requests for much-needed military equipment from the Melby–Erskine Mission. While this check was in part occasioned by internal domestic factors identified above, the major explanation lies in the size of the Mission, some 25 people arriving in a special Air Force plane. We have reason to believe that the Indonesians, who are inclining more noticeably toward the West, will in the near future request further armed assistance from us. At the present time they wish only reimbursable assistance, or assistance in making purchases on the open market in the United States which, of course, is almost non-existent, due to the exigencies of the international situation. We feel that every possible assistance consistent with the broadest interpretation of the law of applicable United States legislation should be afforded the Indonesians in this matter.

The Joint Chiefs of Staff, on November 7, in a letter from the Secretary of Defense,³ stated that a hostile Indonesia would present a serious problem not only because of its loss as a source of petroleum (for Indonesia supplies the only important available petroleum production, save in the Middle East, outside the Western Hemisphere) but also because of the important quantities of tin and rubber which Indonesia produces. The Joint Chiefs point out further that should Indonesia be hostile in the event of war between the United States and the USSR, the security of our lines of communication and the South Pacific-Indian Ocean area will become exceedingly tenuous and that our anti-submarine problem in that area will be increased because of the availability to the enemy of safe anchorages and refueling and re-supply points through an extremely large area. They recommend that political, economic, and psychological actions which encourage the benevolent neutrality of Indonesia in the event of a United States and USSR war be continued by the appropriate Government Agencies.

Part of our ability to provide benevolent neutrality, if not active support of the West, will depend upon our ability to accommodate the Indonesians with regard to their requests for assistance in the form of military equipment, be it by purchase, grant, or on a reimbursable basis.

The Philippines

The Philippines presents a unique and special case for the United States because (1) it is a vital link in the chain of American security in the Pacific; and (2) it is probable that the defection of the Philippines from the American orbit would more than any other single factor discredit the United States throughout the length and breadth of Asia. The Philippines is generally regarded by Asia as evidence of American sincerity and capability, and if we fail there the rest of Asia will surely consider we have nothing to offer elsewhere. For these reasons it is vital that we hold the Philippines whatever the cost—unless we are prepared to write off Asia.

Even taking into full account the state of complete prostration in which the Philippines found itself at the end of the war against Japan, it must be admitted that the record of the first five years of Philippine independence is a disappointment. A tremendous amount remains to be done to restore Philippine economy to a self-supporting basis, and to establish and maintain internal law and order. The measures taken during the last few months to secure these objectives have been most encouraging.

Through the persuasive efforts of our representatives in Manila, the Philippine Government and people now give every evidence of being fully aware of the dangers of their position and are seemingly determined to take the necessary remedial measures. The Bell Mission report on economic rehabilitation and development has been accepted and the Congress has been called into special session to enact legislation required as a precedent to American aid. A new Secretary of National Defense has been appointed who has already taken significant steps to clean up the corruption and inefficiency in the Philippine armed forces which has been so largely responsible for the failure to cope with the Huk problem. The Philippine Government by such measures as despatching Philippine troops to Korea has placed itself unequivocally on the side of the United States. These efforts of the Philippine Government to make itself stable and to cope with the Communist problem can, however, succeed only with American assistance. The alternative to this assistance is the loss of the Philippines.

Strategic Economic Importance of Southeast Asia

Control over the economic resources of Southeast Asia would be a key prize in a world conflict, Japan regarded such control as a sine qua non in the last war. The stakes would be equally high in the next war.

The foundations of an all-out Chinese Communist war effort could be seriously undermined by famine. With Southeast Asia under Chinese control this constant threat would be removed (over three-fourths of the world’s, and all of Asia’s, exportable surplus of rice comes from Southeast Asia). But the threat of famine could also imperil the defense of Japan and India. Southeast Asia’s rice is therefore a double-edged sword. Under our control it would materially help the defense of other parts of the free world, and at the same time deny the enemy an essential requirement. The summary facts are that China’s annual deficit of rice is around 400,000 tons; that of Japan, around 800,000 tons. India’s annual requirements are around 400,000 tons. Southeast Asia’s annual surplus is about 2,500,000 tons.

Over 90% of the world’s natural rubber supply is produced in Southeast Asia. Without access to this rubber our own war potential may be seriously crippled. Our stockpile objective is 1,200,000 tons. Yet at present, our holdings amount to little more than half of this. Recent calculations based upon maximum procurement, accelerated synthetic production, and curtailed civilian consumption indicate that our stockpile objective cannot be reached until at least early 1952. Unless we continue to have access to Southeast Asia for at least another year and one-half our stockpile objective will almost certainly fail. The implications of such a failure upon our own war potential do not need elaboration.

Our vital dependence upon Southeast Asia for tin is almost as great as for rubber. Over 60% of the world’s, and our own, supply of tin is produced in Southeast Asia. Of a stockpile objective of around 285,000 tons, we now have only 100,000 tons. Present plans are to purchase for stockpile an additional 50,000 tons a year for the next three years (this amounts to about of the total world’s annual production). If Southeast Asia were to fall within the next year or so, the stockpile objective would be seriously imperiled.

These three commodities, rice, rubber, and tin constitute the consummate prize of Southeast Asia. At present, we must value each additional month that the area remains free as a net addition to the strength of our military potential. Each additional month that we have access to the area’s rubber and tin means two additional months of supply of these commodities for a war-time U.S. economy. Each additional month’s access to the supply of the area’s rice can hasten the day of food shortage in Communist China, and delay the day of an acute food crisis in Japan and India.

Recommendation:

It is recommended that the Deputy Under Secretary seek the views of SP on this problem with particular reference to Mr. Ohly’s memorandum (Tab E)⁴ on which this memorandum is the commentary. It is further recommended that the Deputy Under Secretary decide, upon the advice of SP, as to the manner in which the Secretary should be asked to make a final decision as to the solution of the problem identified in the foregoing.

1. Drafted by William S. B. Lacy, Director of the Office of Philippine and Southeast Asian Affairs.
2. The tabs do not accompany the source text, NSC 64, “The Position of the United States With Respect to Indochina,” a report to the National Security Council by the Department of State, February 27, 1950, printed in Foreign Relations, 1950, vol. vi, p. 744.
3. Policy decision as to nature of aid for Malaya has not been settled. [Footnote in the source text.]
3. For the letter under reference, see Foreign Relations, 1950, vol. vi, p. 1092.
4. The tabs do not accompany the source text. Reference is presumably to a memorandum titled “Urgent Questions with respect to Military Assistance to Indochina,” transmitted to the Secretary of State and others by John H. Ohly, Acting Deputy Director, International Security Affairs, on January 29, not printed. In this detailed and technical account of the situation created by unprogrammed French requests for additional military assistance for Indochina, Ohly noted that a positive U.S. response could be made only at the expense of military assistance programs in other areas. (751G.5 MAP/1–2951) For documentation on military aid to Indochina, see pp. 332 ff. For another expression of Ohly’s views, see memorandum titled “Reappraisal of U.S. Policy with respect to Indochina,” November 20, 1950, Foreign Relations, 1950, vol. vi, p. 925.