206. Memorandum From Donald W. Ropa of the National Security Council Staff to the President’s Special Assistant (Rostow)1

SUBJECT

  • The Current Indonesian Situation

The agreement to sell 50,000 tons of PL–480 Title IV rice to the Indonesian Government was signed yesterday and publicly announced today. This limited resumption of aid marks a turning point on the road back to cooperative relations now that Sukarno’s power has been circumscribed. The change in the Djakarta atmosphere and the break with many of Sukarno’s discredited policies continue to be reflected in the economic realism, a lessening of tension over Malaysia and the unabated drive to root out Communist influence from the ministries that have so far characterized General Suharto’s new administration.

The Sultan of Djogjakarta has frankly outlined the chaotic state of the Indonesian economy and mapped goals for encouraging private enterprise and rehabilitating agriculture, textile and agricultural implement factories, and transportation. He has promised no easy solutions and called on the private sector as well as the government to practice simplicity in daily living.2 There are other indications that the government may be preparing to return seized U.S. rubber estates to their owners.

Indonesia has moved to restore diplomatic relations with Singapore, which may portend a long range series of measures to ease the Malaysia confrontation, even while publicly reiterating that the policy of confrontation is continuing. The Singapore Government has welcomed the Indonesian decision to normalize relations and has moved to reassure the Government of Malaysia by declaring that it would [Page 428]consult on all matters where Malaysia’s defense interests were affected. While the Tunku’s initial reaction was relatively calm, he has subsequently attacked the move to normalize relations as a measure designed to further Indonesia’s policy of confrontation. Lee Quan Yew is taking additional private steps to assure the Tunku that the normalization will not be directed against Malaysia. The Tunku remains suspicious over Sukarno’s continuing influence on the confrontation policy, and this has tempered moves on his part that might contribute to a reduction in tensions. Meanwhile, Foreign Minister Malik is proceeding with plans to return Indonesia to the United Nations and rejoin other international bodies despite Sukarno’s public denial that this would take place.

Internally, the unabated drive against remaining Communist sympathizers in government ministries has been augmented by the initiation of a concerted campaign against the Chinese residents in Indonesia. The sacking and burning of the Chinese Communist Embassy and related pressures against the Chinese without official Indonesian restraints indicate to our Embassy that the new leaders in Indonesia may be attempting to force Peking to break relations with Indonesia.3

These events are indicative of the gradual movement now taking place on a broad front to reverse Sukarno’s policies. Sukarno continues to be isolated and insulated from the policy decisions that are being taken by the Suharto administration, and the evidence continues to accumulate that this latest in the successive military efforts to circumscribe Sukarno’s power is finally succeeding.

Our policy continues to be one of restraint in projecting more expansive aid, while we continue to monitor the measures being undertaken by Indonesia to rationalize economic policies. We continue to believe that too rapid an acceleration in restoring our aid program would work against the economic reforms that are considered essential.

D. W. Ropa4
  1. Source: Johnson Library, National Security File, Country File, Indonesia, Vol. VI, 11/65–5/66. Secret.
  2. In an April 22 memorandum to Rostow entitled “Forward Planning in the Far East,” Ropa stated that the “short and long term prospects for Indonesia are not encouraging, and the new administration’s version of economic realism may not produce results satisfying to younger elements seeking more rapid and radical solutions.” Ropa saw “seeds of serious internal trouble” such as “undertones of Moslem theocracy” which could adversely affect development. Ropa suggested more attention to the “stirrings beneath the surface of the anti-Communist political momentum now at work.” (Ibid., Files of Bromley K. Smith, Planning Talks)
  3. The Office of Current Intelligence of the CIA prepared an intelligence memorandum, SC No. 00763/66A, April 1, entitled “Peking’s Setback in Indonesia,” which suggested that the elimination of pro-Communist elements from power in Djakarta and the reversal of Sukarno’s pro-Chinese polices represented the most serious recent setback for China. In OCI No. 1352/666, April 29, the Office of Current Intelligence suggested that the PKI would probably survive as an underground organization, but its effectiveness as a national political force would be virtually nil. (Johnson Library, National Security File, Country File, Indonesia, Vol. VI, 11/65–5/66)
  4. Printed from a copy that bears this typed signature.