Foreign Relations of the United States, 1958–1960, Indonesia, Volume XVII

49. Memorandum of Information⁰

Washington, March 28, 1958.

SUBJECT

• Sino-Soviet Bloc Assistance to Indonesia

1. Increasing Sino-Soviet economic and military assistance to Indonesia, in conjunction with rapidly deteriorating economic and political conditions in the archipelago, might well lead to Indonesia’s early domination by the Bloc.

2. Soviet Bloc economic assistance to Indonesia now totals $129 million. This aid first assumed importance in late 1956 with the initialing of a Soviet $100 million economic development loan by Indonesia. The first purchase under this loan was 10 small merchant ships. A $9 million credit from the European Satellites is being used for the construction of a sugar refinery, an agricultural tool factory and several smaller installations. Communist China recently offered a $20 million credit for the purchase of rice and textiles and development of the Indonesian textile industry.

3. A contract for the purchase of 4,000 jeeps was signed by Indonesia early in 1957; 3,600 have been delivered. A military purchasing mission departed Djakarta in December 1957 for Yugoslavia and the European Satellites seeking various type weapons and equipment. It had at its disposal $250 million, reportedly stemming from hard currency credit extended by Communist China. Reports of air aid to Indonesia include the sale by Czechoslovakia of 30 MiG–17 jet fighters and the probable provision of technical assistance and pilot training. The delivery of 14 aircraft of unknown type in the “very near future” has also been reported. Naval assistance thus far is limited to the probable ordering of several small ships from Yugoslavia. However, the mission is known to have been interested in a destroyer, submarines, minesweepers and other naval items. Ammunition, small arms and artillery probably have been contracted for but quantities and exact types are not known.

4. The receipt of Bloc aid will serve to heighten differences within Indonesia, strengthening those leaders favoring closer ties with the Bloc while antagonizing moderate elements as well as the dissidents. The arrival of assistance is being handled skillfully, However, and the likelihood of significant anti-Sukarno reactions appears slight. The Soviet short-term objective re Indonesia appears to be to support Sukarno in the hope that he will eventually reassert his authority over the entire archipelago, and that in this process the indigenous Communists will gain a dominant position in the central government. In the event Sukarno cannot reassert his authority over the outlying areas, an alternate Soviet objective probably is to ensure Communist control of Java, and then to extend this control. In any event, the ultimate Soviet objective seems clear: by controlling Indonesia it hopes to gain control of the vital sea lanes between the Indian and Pacific Oceans together with access to the country’s rich natural resources and its maritime facilities, thus facilitating the projection of its sea power into East and Southeast Asia.

0. Source: National Archives and Records Administration, RG 218, JCS Records, 092 Asia (6–25–48). Secret. Prepared by Director of Naval Intelligence Frost. Attached to JCS 1992/650. On April 3, the Chief of Naval Operations, Arleigh Burke, forwarded this memorandum to the Joint Chiefs of Staff for their information.