126. National Intelligence Memorandum1

NIE 54/55–65


The Problem

To examine the domestic political situation and foreign policy trends in Indonesia and Malaysia, and to estimate the prospects of both countries and the probable course of their conflict with one another over the next year or so.


The principal development in Indonesia over the past year has been the sharply accelerated growth of the Communist Party (PKI) role [Page 271]in government. This trend is likely to continue as long as Sukarno is in control. Opponents of this trend are discouraged and intimidated; even the military has all but lost the will to resist. The longer Sukarno lives, the better will be the PKI chances of maintaining or improving its position following his death. (Paras. 2–11)
Sukarno’s campaign to destroy Malaysia, now in its third year, will almost certainly continue at varying levels of intensity. There is little prospect of an Indonesian military victory and Sukarno knows it. This realization has led him to denounce and harass the entire Western presence in Southeast Asia, and indeed in the Afro-Asian world. (Paras. 14–16, 21)
We look for a continuation of Indonesia’s hostile attitude toward the US, though chances are less than even that Sukarno will go so far as to break diplomatic relations. Ties with Communist China are likely to become closer, since Sukarno sees no immediate Chinese threat to Indonesian ambitions. The desire of the Indonesian military to continue receiving Soviet arms aid will probably induce Sukarno to maintain relatively friendly relations with the USSR. (Paras. 17–23)
If Sukarno dies or becomes incapacitated in the next year or so, the immediate successor government would probably be an ostensibly non-Communist coalition. The military would almost certainly exercise greater authority than at present, but would be unlikely to risk civil war to initiate a roll back of the Communists. Indeed, the Communists are already so entrenched that they could probably not be denied an important share in any successor government. (Paras. 12–13)
In Malaysia, existing political and racial frictions will intensify, but even if no settlement is achieved, we do not believe that this will lead to a breakup of the federation during the period of this estimate. The subversive threat to Malaysia is unlikely to bring down the present regime unless it is significantly weakened by Indonesian actions on a scale which we consider improbable. (Paras 24–33)
Malaysia is totally dependent on British military support and its foreign policy is closely allied to that of the UK and its Commonwealth partners. The UK, and to a lesser extent Australia and New Zealand, have committed a considerable military force to the defense of Malaysia. It will probably prove adequate to cope with likely Indonesian actions and to deter Sukarno from substantially bolder aggression. Nevertheless, Malaysia will continue to seek an even stronger US commitment to its defense. (Paras. 34–36)

[Here follows the Discussion section of the estimate.]

  1. Source: Department of State, INR/EAP Files: Lot 90 D 165, NIE 54/55–65. Secret; Controlled Dissem. The Central Intelligence Agency and the intelligence organizations of the Departments of State, Defense, and the NSA prepared this estimate, which was concurred in by the members of the U.S. Intelligence Board on July 1, except the representatives of the AEC and FBI who abstained on the grounds that the topic was outside their jurisdiction.