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).
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.
[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
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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
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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
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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.]
