139. Current Intelligence Memorandum0

OCI No. 3519/63


  • Sihanouk’s Intentions
Prince Sihanouk probably is more than a little uncomfortable over the position he finds himself in as a result of his abrupt renunciation of US aid. Aside from the economic consequences of his actions (see attachment), Sihanouk must realize that he is perilously close to destroying Cambodia’s neutrality mechanism. In the past, Cambodia’s neutrality policy has operated in pendulum-like fashion, veering left and right as the occasion or Sihanouk’s whims dictated. However, Sihanouk has never before cut his Western contacts so drastically or so strongly proclaimed Cambodia’s dependence on Communist China and the bloc.
There are indications that Sihanouk is a victim of his own emotions in the present situation and that he probably did not want relations with the US to deteriorate as far and as fast as they have. Following formal renunciation on 20 November, Cambodian negotiators made it clear that they wanted US aid to continue virtually intact for a 6-month period, after which Cambodia would be happy to negotiate a new agreement on more favorable terms. These feelers ended when Sihanouk recalled Cambodian Embassy personnel from Washington in response to US protests over a Cambodian broadcast slurring President Kennedy.
The potential gravity of Sihanouk’s recent moves are mirrored in the widespread dismay evident among the essentially conservative elements making up Cambodia’s power structure. The military, the bureaucracy, businessmen, and the royal family are deeply disturbed over the prospects of increased Chinese Communist influence in Cambodia and the resultant threat to their vested interests.
Despite criticism among conservative circles, there are no immediate prospects of organized open or covert opposition developing. Sihanouk’s power position is strong. Even the military, which stands to be one of the principal victims of the economic dislocations brought on by Sihanouk, is staunchly loyal. Significant opposition from the military [Page 293] and other quarters probably would emerge only after a considerable lapse of time, even under the worst of circumstances that Sihanouk might generate.
The Queen Mother and other conservative elements close to Sihanouk are attempting discreetly to bring moderating influences to bear on him. So long as Sihanouk remains in an agitated state of mind, however, these efforts will probably have little effect. No firm predictions of Sihanouk’s day-to-day moves are possible, given his highly volatile condition at present, and the fact that day-to-day US or UK policy actions could cause new Sihanouk twistings. We have some confidence, however, that Sihanouk does not desire an irreparable break with the US. Thus, assuming a restrained US–UK posture, we would expect Sihanouk to back off a bit in the near future from his present extreme demands.
We would stress the importance, however, of Sihanouk’s irrational suspicions of the US. He has long believed that the US has sought to overthrow him. These suspicions have been fed at various times by Communist agents and by certain French advisers of Sihanouk. These suspicions lie back of the probable immediate causes of the present crisis: Sihanouk’s belief that the US instigated the overthrow of Diem, and his great unease concerning the cordial relationship existing between US officials and the Cambodian military.
Sihanouk’s next moves probably will be influenced by several factors, including his own assessment of his standing at home and abroad; developments in Cambodia’s relations with the US and other Western nations, notably France; the success or failure of South Vietnam’s current conciliatory approaches to Cambodia; and domestic economic and political problems. If by the interreaction of these mutable factors Sihanouk feels himself threatened, there is real danger that he will resort to further demagogic extremes to rally strong popular support behind him. Under such circumstances, American lives and property might be threatened as a consequence of Sihanouk’s use of the US as a whipping boy.
The greatest danger would appear to be that some incident, real or imagined, may occur to heighten his sense of isolation and danger. If his mania persists, he might take some action such as a formal request to Moscow or Peiping for a security guarantee backed by emergency military assistance.
Such dangers aside, Sihanouk is not in such serious economic straits that he would feel compelled to ask either Communist China or the USSR for a large-scale crash economic assistance program. He has time, if he desires, to work around gradually to an improvement in relations with the US.
On balance, the West may yet ride out the latest storm in Cambodia. While Sihanouk’s basic outlook is one of accommodation with Communist [Page 294] China, he is by no means anxious to fall into the bloc’s economic or political toils. Similarly, while he has long been interested in adapting Communist China’s economic state control methods to increase the productivity of Cambodia’s economy, he is not insensitive to the conservative mores of his country which strongly resist drastic change. Sihanouk probably would be best pleased if he could reconstitute, more or less on his terms, economic and political contacts with the West while at the same time feeling free to accept military as well as economic help from the bloc.


OCI No. 3520/63

Current Intelligence Memorandum


  • Cambodia—Economic Effects of US Aid Withdrawal
Prince Sihanouk’s renunciation of US aid poses serious, though not insurmountable, problems for Cambodia. US aid, some $365 million since 1956, has been Cambodia’s chief source of external assistance.
Besides supporting various economic and welfare projects, US aid has provided a large part of the pay for the 30,000-man Cambodian armed forces, as well as their military equipment. Sihanouk realizes that he must make other arrangements to support the armed forces or risk alienating a heretofore loyal and essentially nonpolitical force.
Sihanouk’s decision to terminate US aid and to nationalize segments of the Cambodian economy has had immediate and deleterious effects on the economy. The market value of the riel is down, there is hoarding of imported commodities, and the uneasiness of the business community is reflected in the flight of capital. Financing the forthcoming rice harvest is an example of the type of economic problem Sihanouk must now solve. This function has been traditionally performed by banking and export interests which face imminent nationalization.
While economic dislocation is likely to be severe, it will not be ruinous. By Southeast Asian standards, Cambodia is basically a prosperous [Page 295] country producing more food than it consumes. It has ample foreign exchange to see it through a short-term crisis. Austerity steps already are being taken to reduce the budget deficit.
Additional aid from other sources probably will be forthcoming, although not in amounts to take up all the slack. The French have indicated a willingness to increase somewhat their modest assistance program, and French Defense Minister Messmer will go to Phnom Penh in early January to work out details. Communist China and the Soviet Union have been exceedingly cautious in their reactions to the fluid situation. Thus far, they have made no offers of additional assistance.
  1. Source: Johnson Library, National Security File, Country File, Cambodia, Vol. I. Secret; No Foreign Dissem. Prepared in the Directorate of Intelligence, Central Intelligence Agency. At the request of the Acting Director of Central Intelligence, Deputy Director (Intelligence) Ray S. Cline sent this memorandum to McGeorge Bundy for his personal attention. Much of the information in this memorandum and its attachment was incorporated into the Office of Current Intelligence’s Special Report on “The Situation in Cambodia,” SC No. 00623/63B, December 20. (Ibid.)
  2. Secret. Prepared in the Directorate of Intelligence, Central Intelligence Agency.