346. National Intelligence Estimate0

NIE 54/55–63



President Sukarno appears to be set upon eliminating Western influence from the Malaysia area and replacing it over the long run with Indonesian dominance. To these ends he has set out to suffocate at its birth the new state of Malaysia, which he apparently regards as an unacceptable scheme to perpetuate Western influence and rob Indonesia of territories which it believed would fall under its hegemony with the end of British colonial rule. Sukarno probably counts upon a US willingness to play a mediating role and upon Soviet political and material support. (Paras. 1–2, 10, 20–21)
The policy of “confrontation” appears designed to undermine Malaysia and to upset constituted authority in Sarawak, and, later, Sabah (North Borneo), to a point where a settlement favorable to Indonesia can be subsequently worked out. Sukarno will continue harassment of the northern Borneo territories plus subversion and economic activities against Malaya and Singapore, expecting to make the continuance of Malaysia unworkable and the British position there untenable. (Paras. 5–8)
We anticipate no significant domestic threat to Sukarno’s continued authority. Inflationary pressures are certain to be generated by the military expense of the “confrontation” campaign, and the heavy, though possibly temporary, costs of the break in trade relations with Malaysia. The Indonesian Communist Party (PKI) will exploit economic discontent but will be limited in this by its strong support of the anti-Malaysia campaign. On the whole, we believe that domestic pressures are not likely to impose restraints on the “confrontation” policy. (Paras. 14–18)
Basically, the Malaysian position in the conflict is to stand firm against Indonesian demands under the cover of Commonwealth protection, waiting for Indonesia to weaken and retreat because of political and economic strains at home. As long as Indonesia’s stance remains unchanged, Prime Minister Tunku Abdul Rahman will be under strong pressure from his people and party to maintain an uncompromising position. Indonesian “confrontation” has for the moment rallied potentially conflicting forces behind the regime. (Paras. 25–28)
The Philippines will probably continue to play a secondary role in the conflict, seeking to establish itself as a genuine force in Asian politics, but careful not to alienate Indonesia on any major question concerning Malaysia so long as the US does not take stronger measures to dissuade Sukarno from his anti-Malaysia actions. Other than the Philippines, Indonesia has almost no non-Communist support for its campaign among the Afro-Asian states. The USSR will probably encourage the Indonesians to continue the campaign against Malaysia, hoping to increase Indonesia’s dependence on the USSR and to profit generally in the Afro-Asian world from having once more aided the struggle against “imperialism.” However, the Soviets will probably not encourage the Indonesians to enter upon open hostilities with Western forces; if such a development occurs, the Soviets would almost certainly not assume serious risks of their own involvement. (Paras. 19–21, 23)
The outlook is probably for a rising Indonesian level of efforts to subvert Malaysia. The British are confident that they can contain Indonesian paramilitary activity. While Sukarno will seek to avoid open hostilities, there is danger that, in pursuing his present course, he will miscalculate in responding to British countermeasures and that a direct military confrontation with UK and Commonwealth forces will occur. (Paras. 9, 31–32)

[Here follows the Discussion section.]

  1. Source: Department of State, INR/EAP Files: Lot 90 D 165, NIE 54/55–63. Secret. A note on the cover sheet states that this estimate was prepared by the Central Intelligence Agency; the intelligence organizations of the Departments of State, Defense, the Army, the Navy, and the Air Force; and the National Security Agency. All members of the U.S. Intelligence Board concurred with the estimate with the exception of the representatives of the Federal Bureau of Investigation and the Atomic Energy Commission, who abstained because the topic was outside their jurisdiction.

    Forrestal sent an advance copy of this NIE to McGeorge Bundy for President Kennedy. He also noted that the full NIE would be available for the President’s weekend reading. (Memorandum from Forrestal to Bundy, October 31; Kennedy Library, National Security Files, Countries Series, Malaysia, 10/63)

    A Special Article prepared by the CIA’s Office of Current Intelligence, “Britain’s Malaysia Policy,” SC No. 00615/63B, October 25, was also included in the President’s weekend reading for October 27. The article concluded that the British Government considered itself obligated and able to protect Malaysia from Indonesia. Because of its long-term policy of reducing military expenditures in Southeast Asia, the British Government would explore every avenue for a peaceful settlement before resorting to force. (Ibid.)

  2. Previous papers covering problems in this area include: NIE 54/59–62, “Prospects for the Proposed Federation of Malaysia,” dated 11 July 1962; SNIE 54/59–63, “Indonesia’s International Orientation,” dated 10 April 1963. [Footnote in the source text. NIE 54/59–63 is printed as Document 327; SNIE 54/59–63 is printed as Document 330. NIE 55–63 is in the Johnson Library, National Security Files, National Intelligence Estimates, 55, Indonesia.]