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

88. National Intelligence Estimate¹

NIE 65–55

Washington , March 1, 1955 .

PROBABLE DEVELOPMENTS IN INDONESIA THROUGH 1955²

The Problem

To assess the current situation and to estimate probable developments in Indonesia through 1955, with particular reference to Communist strength and influence.

Conclusions

1. Independent for only five years, Indonesia has made little progress toward establishing a base for long-term strength and stability. The country’s basic problems of economic development, internal security, and administrative reform remain unsolved, while the government centers its activities around efforts to remain in power. (Paras. 13, 34, 41, 45)

2. We believe the chances are somewhat better than even that elections will be held during the latter half of 1955. The present coalition government, led by the Nationalist Party (PNI) under Premier Ali Sastroamidjojo, is likely to continue in office during 1955 or until elections are held. It is unlikely to make any significant changes in foreign or domestic policies before the elections. (Paras. 46, 47, 51)

3. We believe that a government dominated by the Masjumi (Moslem Party) will probably emerge following the elections. It is possible, however, that despite the Masjumi’s broad popular following, the Nationalists and the Indonesian Communist Party (PKI) will gain sufficient seats to form the new government in coalition. (Paras. 52, 53)

4. The use of force to overthrow the government appears unlikely during the period of this estimate. However, such action might take place if the PNI made a determined effort to postpone the elections or if it became obvious that the PNI was rigging the elections. Abrupt government efforts to remove the territorial commanders who oppose the policies of Defense Minister Iwa, unlikely at the present, might also result in forceful counteraction. In either case, if the present government’s political opposition and the anti-Iwa elements in the army acted in concert, the government would probably be defeated. Even if successful, however, the resort to armed action probably would result in continued unrest and disunity throughout Indonesia. (Para. 55)

5. Through its tactic of supporting the present government, and of espousing popular national and local issues, the Communist Party has been able to increase significantly its prestige and appeal and has increased its membership and extended its organization. It has been able to win public support for international Communist causes, and to some degree has influenced Indonesian government policy toward labor and the armed forces. Nevertheless the party continues to face opposition from among principal army leaders, members of the bureaucracy, and opposition political parties. (Paras. 15–20, 22, 26)

6. A Communist attempt to take over the government by force is unlikely in 1955. Should the Masjumi come to power, either through elections or by force, it is possible that the Communists would attempt to harass the government by causing economic disruption through their control of SOBSI (a federation representing some 70 percent of organized Indonesian labor). They could also adopt terroristic tactics and seriously disrupt economic and administrative activities in several important areas. But they do not yet have, and are unlikely to develop in 1955, a paramilitary force strong enough either to take over the government or to seize and maintain effective control of large and important areas in Indonesia. (Paras. 28, 56)

7. Indonesia’s short-term economic prospects are poor. Nevertheless, in view of the fact that adequate supplies of food and imported textiles will be available, economic unrest probably will not reach a level affecting the political situation in 1955. Indonesia probably has the resources to attain a stable and expanding economy in the long run, but the exploitation of these resources will probably be further delayed so long as political instability and insecurity exist and foreign capital or grant aid is discouraged. In these circumstances, the Indonesian economy is likely to remain in a precarious position for some time. (Paras. 38–47)

[Here follow paragraphs 8–56, the Discussion section of the Estimate; an appendix entitled “Land and People”; and two maps of Indonesia.]

1. Source: Department of State, INR–NIE Files. Secret. National Intelligence Estimates (NIEs) were high-level interdepartmental reports presenting authoritative appraisals of vital foreign policy problems. NIEs 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 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 NIEs.

2. A note on the cover sheet reads:

   “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 1 March 1955. Concurring were the Special Assistant, Intelligence, Department of State; the Assistant Chief of Staff, G–2, Department of the Army; the Director of Naval Intelligence; the Director of Intelligence, USAF; and the Deputy Director for Intelligence, The Joint Staff. The Atomic Energy Commission Representative to the IAC, and the Assistant to the Director, Federal Bureau of Investigation, abstained, the subject being outside of their jurisdiction.”