Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

257. National Intelligence Estimate¹

NIE 65–57

Washington, August 27, 1957.

THE POLITICAL OUTLOOK FOR INDONESIA²

[Here follow a notice concerning distribution and a table of contents.]

The Problem

To estimate Indonesia’s political situation and prospects over the next year or so.

Conclusions

1. Indonesia continues to suffer from lethargic administration, corruption, and economic stagnation, and to blame its woes on the Dutch and on the capitalist world.

2. President Sukarno has stated his determination to rekindle the spirit of the 1945 revolution and to supplant political division with unity and discipline. He proposes to replace the Western parliamentary system by what he calls “guided democracy,” a fuzzy concept which, however, clearly involves less democracy and more guidance. The immediate and pressing danger in the situation lies in Sukarno’s increasing reliance on Communist support and the growing Communist influence on Sukarno.

3. The Communist Party (PKI) is the only political group which proposes a clear cut solution to Indonesia’s problems and possesses an industrious and effective political organization. In the central and most populous island of Java it polled 20.8 percent of the vote in the 1955 parliamentary elections. It has shown large gains in local elections since that time. Though the PKI has as yet had no official representation in any Indonesian government, there are 4 Communist sympathizers in the present cabinet, as well as 18 extreme leftists in the 45-man National Council, a key element in Sukarno’s “guided democracy” concept.

4. These developments have encouraged increasing regionalism in the outer islands. Provinces in Sumatra, Celebes, and elsewhere have defied the central government and demanded a greater voice in administering their own affairs and a greater share of governmental revenues. Though the army has in the past been regarded as a potential force for national unity, it is now seriously divided, and the provincial movements have been led by local area commanders.

5. Over the next 12 months, the prospect is for a continued increase in Communist influence over the central government. Although we doubt that the PKI will achieve effective control of the government during the next year, this possibility cannot be excluded. The provincial regimes on the outer islands are not likely to revert to central control during the period, and, though they are unlikely to declare their independence, their autonomy will probably become more firmly established.

6. Paralleling these developments in the political field, the central government’s economic position is expected to deteriorate during the next year. As the provinces continue to withhold foreign exchange earnings from exports, the central government’s ability to import will be seriously curtailed. Government revenues, which are based primarily on imports, will decline still further. However, the political consequences of the deteriorating economic situation will probably not reach a critical stage during the next year. The worsening economic situation, however, will limit the ability of the central government to provide more generous subsidies to the provincial governments:one of the primary objectives of the regionalist regimes.

7. Indonesia has nearly exhausted its period of grace. Over the next two or three years the political situation may, at best, stabilize temporarily on the basis of a group of autonomous but inherently weak provinces and a central government in which the effectiveness of the parliament and cabinet is reduced still further. At the worst, relations between the provinces and the central government and the general economic situation may deteriorate to a point where sudden political collapse would occur, possibly accompanied by outbreaks of violence. In this situation, the Communists as the best organized group would have a good opportunity to seize control of Java.

[Here follows the “Discussion” section of NIE 65–57.]

1. Source: Department of State, INR–NIE Files. Secret.

2. A note on the cover sheet reads as follows:

   “Submitted by the Director of Central Intelligence. The following intelligence organizations participated in the preparation of this estimate: The Central Intelligence Agency and the intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, and The Joint Staff.

   “Concurred in by the Intelligence Advisory Committee on 27 August 1957. Concurring were the Special Assistant, Intelligence, Department of State; the Assistant Chief of Staff, Intelligence, Department of the Army; the Director of Naval Intelligence; the Assistant Chief of Staff, Intelligence, USAF; and the Deputy Director for Intelligence, The Joint Staff. The Atomic Energy Commission Representative to the IAC and the Assistant Director, Federal Bureau of Investigation, abstained, the subject being outside of their jurisdiction.”