251. Airgram From the Embassy in Indonesia to the Department of State 1

A–358

SUBJECT

  • Indonesia: Trends During 1967 and Problem Areas for 1968

Country Team Message.

Summary and Conclusions

It is not the purpose of this report to summarize in detail the many important developments in and affecting Indonesia during 1967 but rather to attempt to highlight broad trends which will determine the [Page 540]future course of this nation and of our dealings with it. A companion report will analyze the implications of these developments for U.S. policy and operations.2

In mid-March 1967, President Sukarno was removed once and for all from the Indonesian political scene, thus ending an 18-month power struggle which had preoccupied Indonesia’s leadership and prevented concentration on the nation’s economic and political rehabilitation. The Suharto administration should thus in fairness be evaluated only on the basis of its performance during the last three quarters of that year. Although not constituting an adequate base for precisely charting the future course of the New Order regime (which justifiably considers itself to be still in the first stages of formulation), the events of the past nine months do provide some valuable insights into the character of the new leadership and into the nature of the post-Sukarno Indonesia which it is to govern.

The year 1967 was clearly Suharto’s year in Indonesia. While his performance during this period pointed up flaws in his leadership abilities (his slowness to act in some fields and his unwillingness to act at all in others), it also showed his ability to grow with the job and the fact that, despite grumbling about his government, he is still in tune with majority sentiment within Indonesia.

Moreover, there is no one on the horizon who realistically aspires or has the ability to replace Suharto. No other military man and probably no civilian at all could hold Indonesia together as well as he has done. As Indonesia recovers further from the Sukarno era and gains greater confidence, Suharto may one day become superfluous—as happened to his predecessor. But this has not occurred yet and it is not likely during 1968. In fact, there is a distinct possibility that Suharto might be elected to a full five-year term as President in the Spring MPRS session, with elections being postponed until the early 1970’s.

The year 1967 also highlighted the thinness of the layer of Indonesians with managerial ability. By year’s end, most of them were becoming tired and a few discouraged at the magnitude of the problems confronting them. The year 1967 also revealed that not all members of the “New Order” are modernizers; some are clearly far more interested in their own profit and power than in nation-building. As a result, corruption and the prevalence of military influence in the top levels of the government continue to cause political problems.

The performance of the Suharto government in laying a base for economic stabilization has generally been adequate, despite such glaring shortcomings as permitting a serious rice shortage to develop in [Page 541]the fall of the year (resulting partially from maladministration and partially from inadequate rainfall) and a doubling of the rate of inflation to which the economists in early 1967 hoped to hold the nation. While the IMF was nonetheless generally satisfied with the progress made in economic terms, the average Indonesian had no more rice in the pot at the end of 1967 than at the beginning, and what he did have cost him considerably more.

In the political field, progress was even less striking. The Cabinet reshuffle in October was a halfway measure which, while it brought some technocrats to power, also retained far too many of the old familiar faces. Despite much talk and a good deal of maneuvering, no real progress had been made by year’s end to provide a pro-government but essentially nonmilitary base for the government.

Moreover, while Sukarno’s final eclipse relieved the Suharto government of a heavy political burden, it also deprived it of the valuable psychological asset which only a good enemy can provide. Traditional animosities and fears quickly re-emerged as Indonesians discovered that many of their most keenly felt problems were rooted not in the Sukarno regime but in their own basic social and physical environment.

The New Order discovered during 1967, in short, that it must come to grips with itself as well as with a host of external problems. This difficult period of adjustment, which was still in full play at the end of the year, highlighted weaknesses both in the New Order’s leadership and in its rank and file. These, among others, are the problems which will crowd in on Indonesia’s thin layer of effective managers during 1968.

Against this array of shortcomings, why the general optimism for Indonesia’s future? Partly because things could easily have been far worse. Suharto successfully avoided during the year a number of pitfalls, both political and economic, which could have set the nation back much further than it now is. He has stuck tenaciously to the economic program recommended by his Western-trained economic advisers. Moreover, by year’s end he was showing greater confidence in his job, making an obvious effort to “civilianize” his own image and travelling about the country to enlist national support. All of these are encouraging signs that he will face up to some, although certainly not all, of Indonesia’s problems in 1968.

Furthermore, Suharto must be evaluated against the incredible mess he inherited. Things had to get worse before they improved. The turnaround has not necessarily occurred (Indonesians are seriously concerned over the possibility of a real economic pinch in the first quarter of the new year); but with adequate outside assistance we believe they can get through this difficult period and show a record of unspectacular but definite progress in 1968. The timing of outside [Page 542]assistance and the Indonesian capacity for sustained reform effort will, however, be crucial.

On balance, we believe Indonesia’s overall performance during 1967 was adequate to justify continued optimism that the nation has set out on the long and probably tortuous road to modernization.

[Here follows the rest of the airgram.]

MG
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 1 INDON. Confidential. Drafted by Masters and Officers in the Embassy political and economic sections and approved by Green. Repeated to Bangkok, Canberra, Hong Kong, Kuala Lumpur, London, Manila, Medan, Singapore, The Hague, Surabaya, Tokyo, and CINCPAC.
  2. See Document 253.