INDONESIA-CHINA: WARMING TREND EMERGES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00367R000302100001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: June 22, 2012
• Sequence Number: 1
• Publication Date: October 9, 1984
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2012/06/22 : CIA-RDP04T00367R000302100001-7
Central Intelligence Agency
Washington, D. C. 20505
DIRECTORATE OF INTELLIGENCE
9 October 1984
Indonesia-China: Warming Trend Emerges
Summary
The Indonesian Foreign Department--after
rebuffing repeated Chinese attempts to restore
relations "frozen" following Indonesia's abortive
Communist coup in 1965--is making clear efforts to
promote direct trade with Beijing. Jakarta's need
to earn foreign exchange is the primary factor
motivating President Soeharto toward a change in
policy. Soeharto must contend, however, with
powerful resistance within the military, which
blames Beiji-ng for the bloody 1965 coup attempt. In
addition, resistance is likely to be maintained by
longstanding animosity in Indonesia toward its own
Chinese population. Politically influential
businessmen with ties to Taiwan also could retard or
halt Jakarta's recent moves. As a result, both
capitals are moving gingerly to protect the still
fragile initiative. We believe the Indonesian
military's negative attitude will limit current
developments to no more than consideration of an
exchange of trade offices.
This memorandum was prepared by China Division,
Office of East Asian Analysis with a contribution by L
Southeast Asia Division, Office of East
Asian Analysis. Comments and questions are welcome and should be
addressed to Chief, OEA/China/Foreign Affairs Branch,
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booming construction industry. Jakarta's plywood industry is
expanding rapidly and one-third of its exports now go to Hong
Kona and Singapore--much of it transshipped to China.
The View from Beijing
Beijing has signalled its willingness to accept a.gradual
approach to restoring ties. On 5 September, a Chinese Foreign
Ministry spokesman said in response to a question that "our
consistent policy is to develop good relations with Indonesia.
China and Indonesia hold common or similar views on major
international issues. China is ready to develop exchanges and
relations in various forms in order to Dromote mutual friendships
and understanding between people."
The reference in the Chinese spokesman's response to "common
or similar views on major international issues" may also
represent an effort to exploit Indonesia's diplomatic
frustrations with Vietnam over Kampuchea. Jakarta's tentative
effort to use Armed Forces Commander Murdani last winter to
cultivate a special relationship with Hanoi was derailed in March
by Vietnamese Foreign Minister Nguyen Co Thach's insulting
dismissal of President Soeharto's proposals to resolve the
Kampuchean problem.
The Chinese may also see an opportunity in Murdani's failed
mission to enhance cooperation with Indonesia and the other
member states of the Association of Southeast Asian nations to
oppose the Vietnamese occupation of Kampuchea.
China and Indonesia's Communists
In a conversation with US Embassy officers in Beijing,
Chinese Foreign Ministry officials responsible'for dealings with
Indonesia noted the improved climate, but were cautious about how
far Indonesia may go. They pointed in particular to President
Soeharto's still standing demand for a public Chinese commitment
to terminate support for the Communist. Party of Indonesia (PKI)--
something the Chinese insist they will not do. Beijing maintains
it has the right to give "moral and political support" to the PKI
or any other Communist party, although the Chinese also say they
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Signs of a Thaw
Until recently Indonesian authorities have implacably
refused to have any contacts with Beijing that implied relations
were improving. Since last spring, however, several signs have
emerged that President Soeharto has authorized exploring the
establishment of a direct trading relationship with the Chinese:
-- President Soeharto's failure this year to rule out
normalization of relations with China as he did when
he addressed the opening of Parliament last year.
-- Foreign Department's attempt, although unsuccessful,
to fund a new mission in Beijing in this year's
stringent national budget.
-- A senior Indonesian official's meeting with China's
President during ceremonies in Bucharest in August.
Foreign Minister Mochtar later disclosed that he had
authorized Indonesian diplomats to exchange calls
with their Chinese counterparts overseas.
-- Disclosure that the head of a politically well-
connected semiofficial think tank will lecture in
China next year.
Jakarta's Perspective
The Foreign Department has long desired to normalize
diplomatic relations with China. Foreign Minister Mochtar has
been frustrated at not having direct relations with Indonesia's
largest neighbor and has lobbied for better ties to enhance
Jakarta's more active foreign policy and nonaligned image.
Mochtar probably considers upgrading ties with Beijing as a
useful parallel to Jakarta's increased receptivity to closer 25X1
trade relations with Moscow.
Jakarta's primary motive for closer ties is economic.
President
Soeharto is preoccupied wu increasing - exports to offset
the prospect of flat oil revenues. For example, Jakarta hopes 25X1
plywood will find a ready market in the Chinese mainland's
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place severe limitations on any dea ~ngs w
a brake on relations with China. The Indonesian regime
propensity to move only with extreme caution and to insist on
tight government control may also reinforce its inclination to
ith China
will not materially aid the PKI. Chinese officials have said
that although Indonesian Communists exiled in China retain links
to the Chinese party's International Liaison Department, they
have lost access to the media.
One official accused the Indonesians of using the PKI issue
as an "excuse" to avoid improving relations. Pervasive
Indonesian fear of the economic power and foreign connections of
the ethnic Chinese community in their country continue to act as
Prospects
_According to.the US Embassy,in Jakarta, President Soeharto
is still reserving judgment on whether to go ahead with direct
trade. Although the military's foremost spokesman, General
Murdani, lost some prestige during his venture into foreign
policymaking last winter, he can be expected to express the
military's view of the relationship, if only to protect the
military's vested. commercial interests. Soeharto himself will
watch for negative reactions of the Indonesian populace.
Taiwan's many friends in the Indonesian military and business
.community may also seek to limit and perhaps even prevent the 25X1
opening of the relationship.
The military and security hierarchy mi ht concede to limited
trade contacts with the Chinese 777: = 25X1
Soeharto's consensus-seeking style
and need to maintain good relations with his senior military
colleagues, however, suggest he will not make any radical shift 25X1
in policy.
Even if.a direct trade relationship materializes in the next
few months, the outlook will be for no more than very measured
and hesitant steps forward without fanfare. According to the US
Embassy, key military figures see no reason to hurry. We believe
it is highly unlikely that Jakarta will be prepared under even
the most favorable circumstances to reestablish diplomatic 25X1
relations. soon. At best, the current developments in Sino-
ade office
t
f
r
a
Indonesian relations might lead to the opening o
re
Sin
.
gapo
"ing similar to one maintained there by
f the
i
ousness o
Meanwhile, the strong security consc
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Indonesian. leadership, their aversion to Communism, and their
deep mistrust of Chinese motives will incline Jakarta to continue
pressing Washington to go 'slow on transfers of goods and
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technology that might. strengthen the Chinese armed forces.
Jakarta's desire to appear independent and a leader in Southeast
ation,wih
ublic coo
i
n p
Asia also will continue to restra
t Union
i
.
e
Beijing against Vietnam and the Sov
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SUBJECT: Indonesia-China: Warning Trend Emerges
Distribution:
National Security Council.
1 - Gaston Sigur, OEOB, Room 302
1 - David Laux, OEOB, Room 302
1 - Richard Childress, OEOB, Room 302
Department of State
1 - Honorable Paul Wolfowitz, Assistant Secretary
1 - William A. Brown, Principal Deputy Assistant Secretary -
Bureau of East Asian and Pacific Affairs, Room 6206
1 - Donald Anderson, Director, Office of Chinese Affairs - Bureau
of East Asian and Pacific Affairs, Room 4318
1 - Paul Gardner, Director, Office of Regional Affairs - Bureau
of East Asian and Pacific Affairs, Room 4310
1 - John J. Taylor, Director, Office of Analysis for East Asia
and the Pacific, Bureau of Intelligence and Research,
Room 8840
1 - Joseph A. B. Winder, Director, EAP/MBS, Room 5206
Department of Defense
1 - James A. Kelley, Deputy Assistant Secretary for East Asian
and Pacific Affairs, Room 4E817, Pentagon
1 - John Sloan, DIO for East Asia, Room 2C.238 Pentagon
1 - Ronald Montap.erto - JSI-3A, Room 1C 945 Pentagon
Department of the Treasury
1 - Douglas Mulholland, Deputy Assistant to Secretary for
National Security, Room 4324
Department of Commerce
1 - Byron Jackson, Office of Intelligence Liaison, Room 6854
1 - Robert Perito, Chief, China Office, East Asian and Pacific,
Room 2317
Office of the U.S. Trade Representative
1 - John Ray, Assistant U.S. Trade Representative, Widner
Building, Room 301, 600 17th Street 20506
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Central Intelligence Agency
Original - CH/FOR Chron
1 - Executive Director (7E12)
1 - DDI (7E44)
1 - NIO/EA (7E62)
1 - C/EA/RR (5D10)
1 - C/PES (7F24)
CPAS IL
CPAS/IMC/CB (7G07)
D/OEA (4F18)
Research Director (4G48)
OEA/China Division
OEA/SEA
OEA/China/Foreign Affairs Branch
OEA/China/Domestic Policy Branch
OEA/China/Development Issues Branch
OEA/China/Defense Issues Branch
OEA/SEA/Islands Branch
OCR/ISG (1H19)
OCR/EA/CH (11118)
OCR/EA/SEA (11118)
NIC/Analytical Group (7E47)
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