S/SNSC files, lot 63 D 351, NSC 171/1

No. 255
Memorandum by the Executive Secretary (Lay) to the National Security Council

top secret
NSC 171/1

United States Objectives And Courses Of Action With Respect To Indonesia

References:

  • A. NSC 1711
  • B. NSC Action Nos. 872–b,2 9033 and 9624
  • C. Memos for NSC from Executive Secretary on same subject, dated November 13 and 18, 19535
  • D. NSC 124/26
  • E. Memo for NSC from Executive Secretary, same subject, dated September 3, 1953, enclosing Progress Report by the Secretary of State and the Acting Secretary of Defense on the subject, dated August 27, 19537
  • F. SE–518

The National Security Council, the Secretary of the Treasury and the Acting Director, Bureau of the Budget, at the 171st Council meeting on November 19, 1953, adopted the statement of policy contained in NSC 171, as amended by the enclosures to the reference memorandum of November 13, subject to the changes which are set forth in NSC No. 962–a.

In connection with this action the Council also requested the Department of Defense to make, before January 1, 1954, for Council consideration, a reappraisal of the military effect of a relaxation of controls on trade with the Soviet bloc in strategic raw materials where such trade might result in a net advantage to the free world through increased political and economic stability (NSC Action No. 962–b).

[Page 396]

The President has this date approved the statement of policy contained in NSC 171, as amended and adopted by the Council and enclosed herewith; directs its implementation by all appropriate executive departments and agencies of the U.S. Government; and designates the Operations Coordinating Board as the coordinating agency. Also enclosed for Council information are a financial appendix and an NSC staff study.

Accordingly, paragraph 17 of NSC 124/2 is hereby superseded.

James S. Lay, Jr.

[Enclosure]

Statement of Policy by the National Security Council

United States Objectives And Courses Of Action With Respect To Indonesia

general considerations

1. Indonesia is strategically important to the United States and the rest of the free world as a vast archipelago which commands the approaches between the Pacific and Indian Oceans and between Asia and Australia, is inhabited by 80,000,000 people, and is a producer of rubber, tin and petroleum. The loss of Indonesia to Communist control would have serious security implications for the United States and the rest of the free world.

2. Immediately effective power in Indonesia is concentrated in the hands of a relatively few thousand leaders. Most powerful among these is President Sukarno, who enjoys a position of unique prestige and popular strength.

3. Some of the Indonesia leaders are undoubtedly Communist. At the opposite extreme are some leaders who are unalterably anti-Communist. Between these extremes are the majority of leaders, who are non-Communist but suspicious of, and uncertain that their interest lies with, the West. These by their numbers hold the balance of power between Communists and anti-Communists and must be effectively influenced if United States objectives are to be attained in Indonesia. In all groups there is a very strong legacy of anti-colonial feeling; and sensitivity to any appearance of foreign intervention in Indonesian affairs is greater than in almost any country in the world.

4. Indonesia’s internal political life now revolves around two interrelated struggles for power: (a) between the PNI (Nationalist Party) and the Masjumi (Moslem Party), and (b) between the Communists and those subject to their control, on the one hand, and [Page 397]the non-Communists and anti-Communists, on the other. The first of these struggles has been going on for several years; the intensity of the second has been renewed recently, particularly since the advent of the present PNI government in August 1953. Although Premier Ali and the leaders of the PNI are non-Communist, they have accepted Communist political support, and eight important ministries out of a total of twenty are held by individuals who will probably respond on many issues to Communist influence. The pro-Communist inclination of these men, the aggressive tactics of the Communist Party in calling for military action against Moslem groups, and recent adjustments in key positions in the armed forces have tended to solidify the opposition to Communism of the Masjumi and the Socialists.

5. The Communists are numerically weak, but control about ten percent of the votes in Parliament, draw strength from a small but active group among Indonesia’s Chinese minority, and have gained organizational control of the majority of labor and peasant organizations, although the membership of these is predominantly non-Communist. The Communists do not now appear strong enough to take over the Government by force or by political means, but the make-up of the Ali Cabinet presents them with an opportunity for infiltration of key military and civilian positions.

6. The Masjumi is numerically strong and has a broad village-level organization, backed by strong Moslem religious feeling. The anti-Communist Socialists have considerable influence in the bureaucracy and the armed forces. These anti-Communists can probably count on the support of important parts of the armed forces. If general elections were held in the near future to replace the present Sukarno-appointed Parliament, it is probable that the Masjumi and Socialists would have the greatest strength and that the Communists would suffer a relative loss of position.

7. The capacity of the United States to influence Indonesian leaders for the attainment of its objectives has been limited by lack of effective U.S. response on issues which the Indonesians consider most important in their relations with the United States. The world prices of rubber and tin, vital to Indonesia’s economy, have fallen, and the United States has not supported Indonesia’s desire for international stabilization of these commodities. With regard to New Guinea, the United States has remained neutral and has offered no support for Indonesia’s claim. Feasible U.S. courses of action thus form only a small portion of the many significant factors to which Indonesian leaders respond. These include the forces of nationalism, anti-colonialism, and Islam. The United States must understand, and, when possible, utilize these forces.

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objectives

8. To prevent Indonesia from passing into the Communist orbit; to persuade Indonesia that its best interests lie in greater cooperation and stronger affiliations with the rest of the free world; and to assist Indonesia to develop toward a stable, free government with the will and ability to resist Communism from within and without and to contribute to the strengthening of the free world.

. . . . . . .

courses of action

10. In carrying out the following courses of action, avoid the appearance of interfering in Indonesian internal affairs.

11. Seek the elimination of Communist influence from the Indonesian Government.

12. Use U.S. influence to encourage the holding of general elections in Indonesia at the earliest possible date.

13. Constantly distinguish between the Communists, anti-Communists and the non-Communists in order to isolate, discredit and weaken the Communists, strengthen the anti-Communists, favorably influence and avoid alienating the non-Communists.

14. Develop friendly relations with all anti-Communist and non-Communist groups and leaders in order to preserve U.S. ability to work with whatever elements, other than the Communists, may come into power.

15. Exert influence wherever possible to bring about a common recognition by key individuals of the gravity of the Communist menace.

16. Utilize the forces of nationalism and of Islam in opposing Communism, and avoid antagonizing the force of anti-colonialism.

. . . . . . .

18. Place special emphasis on the use of the personal influence of American officials and private citizens on Indonesian leaders, especially President Sukarno.

19. Show the Ali Cabinet no special favors which would tend to strengthen its tenure of office; but, on the other hand, attempt to avoid those actions which might alienate not only the Ali Cabinet but Indonesia as a whole.

20. Explore urgently the practicable means of assisting Indonesia in regard to its important economic problems, with particular attention to the net advantage of helping Indonesia find markets for rubber and tin, and explore the possibility of assisting the Indonesian [Page 399]Government in improving the quality of the rubber produced by the small holders.9

21. In the event that Communist influence is eliminated from the Government of Indonesia, be prepared to take rapid appropriate action that would tend to strengthen the position of such an Indonesian Government, particularly with respect to helping Indonesia find markets for tin and rubber.

22. In cooperation with the Indonesian Government, continue U.S. economic and technical assistance, both loan and grant, as appropriate, with special emphasis on the diversification of production to decrease excessive dependence on rubber.

23. In cooperation with the Indonesian Government, assist in creating an adequate climate for foreign investment in Indonesia.

24. Encourage, to the extent feasible, increased trade between Indonesia and Japan.

25. While for the present maintaining neutrality in the New Guinea dispute in our relations with other governments, explore within the U.S. Government solutions to this problem compatible with overall U.S. objectives, for possible discussion with other interested governments.

26. As requested by the Indonesian Government, and as appropriate, make available U.S. military training, military equipment and supplies for the maintenance of internal security. The United States should respond as sympathetically as possible, subject to conditions then prevailing, to any Indonesian request for a U.S. Military mission.

27. Strengthen the U.S. information program, and the exchange of persons, including potential leaders in labor, industry and other fields.

28. Expand intelligence collection capabilities in order to provide adequate coverage of significant developments in Indonesia.

29. In the event of a seizure, or attempted seizure, of power by internal Communist action in Indonesia:

a.
Seek maximum international response to a request by the legal government for friendly nations to come to its assistance against the insurgents.
b.
Consistent with world-wide U.S. commitments, take appropriate action, in collaboration with other friendly nations, to prevent permanent Communist control of the area.

30. In the event of Chinese Communist aggression against Indonesia, in addition to appropriate military action against Communist China, as contemplated in our over-all Southeast Asia policy, take appropriate military action to assist in the defense of Indonesia [Page 400]as part of a UN collective action or in conjunction with other friendly governments.

Financial Appendix

Economic Program in Indonesia (Technical Assistance)

(millions of dollars)

Expenditures

1952 5.9
1953 3.3
1954 (estimated) 7.0
1955 (tentative estimate) 6.0

The above figures do not include the following: (a) In February 1950 the Export-Import Bank extended a line of credit of $100 million to Indonesia. Of this total the Bank has allocated $83 million for approved projects and disbursed $38 million; (b) There has been only one military program in Indonesia, $4 million of grant assistance under the Military Assistance Agreement of August 15, 1950. Indonesia purchased as reimbursable aid $12,500 worth of constabulary equipment requisitioned but not delivered by January 12, 1953, the date of the new agreement.

Balance of Payments

(millions of dollars)

Payments 1952 1953 Est. 1954 Est.
Current Trade 984 710 570
Current Invisibles 217 205 215
Capital 24 15 50
1225 930 835
Receipts
Current Trade 893 765 700
Current Invisibles 42 30 30
Capital 138 43 72
1073 838 802
Changes in Reserves –190 –92 –33
Reserves in hand end of period 254 163 130

[Here follows an NSC Staff Study.]

  1. See footnote 3, supra .
  2. See footnote 3, Document 251.
  3. See footnote 7, Document 252.
  4. See footnote 7, supra .
  5. See footnote 4, supra .
  6. See Part 1, p. 125.
  7. The Sept. 3 memo is not printed. For text of the progress report, see Document 251.
  8. Document 253.
  9. Regarding subsequent changes in the text of paragraph 20, see Document 257.