Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 2

INR–NIE files¹

No. 246
National Intelligence Estimate²

secret

[Washington,] June 11, 1953.

NIE–77

Probable Developments In Indonesia³

the problem

To estimate the current situation and probable developments in Indonesia.

conclusions

1. In Indonesia, the replacement of the provisional regime by a duly elected government is an essential step toward the development of a stable and effective administration. We believe that the government will probably meet its commitment to hold Indonesia’s first national elections for a Parliament and for a constituent assembly sometime in 1954. Elections in themselves, however, will not solve the many problems facing the country nor will they necessarily assure a stable government.

2. Even after elections, much will depend on the actions of a few political leaders, whose personal goals and motives are not readily discernible. At present, President Sukarno is the principal national leader. His prestige is based on his early leadership in the struggle for independence, his popularity with the Indonesian people, and his claimed independence of political party. Hence, he provides a focus of loyalty for a variety of political and military factions.

3. The internal security problem is a major obstacle to the development of stable government in Indonesia. Suppression of dissident elements has been hampered by political considerations and by the limited effectiveness of the army. However, we believe that no dissident group has the capability of overthrowing the government. If a stable government develops, action against dissident groups will probably become increasingly effective.

4. The strength of the Communists in Indonesia derives from: (a) their position as a major bloc in Parliament; (b) their control of the dominant labor federation; and (c) the presence of some Communists and Communist sympathizers in the armed services, the police, and the bureaucracy. The Communists consequently have the capability to cause serious disruption, though not to overthrow the government by direct military action. The extent of Communist capabilities after the elections will depend, for the most part, on the attitude of the government toward international Communism and, in particular, toward the indigenous Indonesian Communists; the effectiveness with which the government acts to improve economic conditions; and the ability of the government to suppress armed groups and to effectively maintain law and order.

5. The Indonesian economy, which depends heavily upon raw material exports, is presently depressed because of the fall in world commodity prices. The economic situation will continue to be precarious through 1953. Despite the immediate prospect for a continued deficit balance of payments and a continued low level of internal economic activity, a serious economic crisis does not appear likely in 1953.

6. Indonesian foreign policy is chiefly motivated by a desire to maintain an independent position in the world, and by an attitude of neutrality in the East-West struggle. However, so long as Indonesia’s major trade relations remain with the West, Indonesia will probably continue to be closer to the West than to the Soviet Bloc.

7. At best Indonesia will have only begun to solve her basic economic, political, and internal security problems by the end of 1954. In time, the government may increase its effectiveness, eliminate the remaining dissident groups largely by attrition, and improve its economic situation. However, serious difficulties must be overcome, many of which, if not effectively dealt with, might result in a crisis which would seriously weaken, or even result in the collapse of, the central government.

[Here follows the “Discussion” section of the paper, comprising paragraphs 8–59.]

1. Files of National Intelligence Estimates, Special Estimates, and Special National Intelligence Estimates, retained by the Directorate for Regional Research, Bureau of Intelligence and Research.
2. National Intelligence Estimates (NIE’s) were high-level interdepartmental reports presenting authoritative appraisals of vital foreign policy problems. NIE’s were drafted by officers from those agencies represented on the Intelligence Advisory Committee (IAC), discussed and revised by interdepartmental working groups coordinated by the Office of National Estimates of the Central Intelligence Agency (CIA), approved by the IAC, and circulated under the aegis of the CIA to the President, appropriate officers of Cabinet level and the National Security Council. The Department of State provided all political and some economic sections of NIE’s.
3. A note on the cover sheet reads: “The Intelligence Advisory Committee concurred in this estimate on 2 June 1953. The FBI abstained, the subject being outside of its jurisdiction. The following member organizations of the Intelligence Advisory Committee participated with the Central Intelligence Agency in the preparation of this estimate: The intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, and the Joint Staff.”