257. Intelligence Note From the Director of Intelligence and Research (Hughes) to Secretary of State Rusk 1

No. 447

SUBJECT

  • Suharto’s New Development Cabinet2 Strengthens Economic Program and Placates Parties

Indonesian President Suharto’s announcement of a new cabinet on June 6 implemented the March 27 decree of the country’s highest legislative body, the MPRS, which had instructed him to replace the present cabinet with one devoted to economic development.3 The cabinet is composed of 18 portfolio ministers and five state ministers who will have general supervisory functions. The government’s commitment to modernization is evidenced by the inclusion of two of Indonesia’s leading economists; its determination to avoid a junta-type government is demonstrated by the increase in the number of civilians (from fourteen to seventeen) as compared to military officers (from nine to six). The two economists are particularly distinguished; Dr. Sumitro Djojohadikusumo, who helped lead the rebellion against Sukarno in 1958 and lived in exile until last year, is Minister of Trade, while Ali Wardhana, a key adviser to Suharto, has been made Minister of Finance.

At the same time, Indonesia’s leading political parties have been given prominent representation at the level of state minister in the new cabinet; relatively pro-regime leaders of the three largest Muslim parties and of the secular Nationalist Party hold these positions. In addition, among the technocrats holding portfolios are leaders of other political parties or, in some cases, spokesmen for particular points of view; Dr. Sumitro was a founder of the banned Indonesian Socialist Party, former Murba Party official Adam Malik remains as Foreign Minister, and [Page 557]Professor Seno Adjie of the Army-initiated IPKI Party is Minister of Justice, a holdover from the previous cabinet.

A further earnest of the government’s interest in economic development and its willingness to seek popular support is the curtailment of some of the powers of President Suharto’s much-criticized private staff, SPRI (Staf Pribadi Republik Indonesia), composed of generals of varying ability and honesty, led by [less than 1 line of source text not declassified] Major General Alamsjah. SPRI has now been deprived of its coordinating function over the cabinet and there are reports that Alamsjah will soon go abroad as an ambassador. The number of military officers in the cabinet has been reduced, dropping from nine to six, while the number of university professors has risen from four to seven. Old Order or Sukarnoist military officers, however, were placed in charge of the ministries of manpower and information.

Suharto’s appointments to the new cabinet should help to quiet criticism from the students, who have again been demonstrating against the country’s slow economic progress, and from the political parties, who object to the “green wall” of military uniforms between the presidency and the public. However, unless this new momentum can be sustained by performance, dissatisfaction can be expected to grow strong again.

  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 15–1 INDON. Confidential.
  2. Telegram 7289 from Djakarta, June 6, contains a list of the new Indonesian cabinet. (Ibid.)
  3. The CIA’s Directorate of Intelligence prepared an Intelligence memorandum, ER–IM 68–81, July 1968, which assessed Indonesia’s prospects for economic stability. The memorandum suggested that because of Sukarno’s “more than a decade of mismanagement” a quick economic recovery was not assured. Foreign aid to Indonesia basically went to stabilize inflation and there was little earmarked for long-term rehabilitation. Indonesia suffered from faster population growth than growth of food production, declining exports, and a poor transportation system. Although economic progress under Suharto would be slow, most of Indonesia’s 112 million people lived in a “non-monetary, subsistence environment and do not expect radical improvements in their living standards.” Economic deterioration was more likely to cause political unrest in Indonesia’s cities. (Johnson Library, National Security File, Country File, Indonesia, Vol. VIII, 6/67–6/68)