PERSPECTIVE ON ASIA: THE NEW U.S. DOCTRINE AND SOUTHEAST ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP71B00364R000200020068-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 20
• Document Creation Date: December 12, 2016
• Document Release Date: January 7, 2002
• Sequence Number: 68
• Publication Date: September 13, 1969
• Content Type: REPORT

Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
91st Congress 1
1st Session J
PERSPECTIVE ON ASIA:
THE NEW U.S. DOCTRINE
AND SOUTHEAST ASIA
REPORT OF
Senator MIKE MANSFIELD
TO THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
U.S. GOVERNMENT PRINTING OFFICE
34-0370 WASHINGTON : 1969
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
COMMITTEE ON FOREIGN RELATIONS
J. W. FULBRIGHT, Arkansas, Chairman
JOHN SPARKMAN, Alabama
MIKE MANSFIELD, Montana
ALBERT GORE, Tennessee
FRANK CHURCH, Idaho
STUART SYMINGTON, Missouri
THOMAS J. DODD, Connecticut
CLAIBORNE PELL, Rhode Island
GALE W. McGEE, Wyoming
GEORGE D. AIKEN, Vermont
KARL E. MUNDT, South Dakota
CLIFFORD P. CASE, New Jersey
JOHN SHERMAN COOPER, Kentucky
JOHN J. WILLIAMS, Delaware
JACOB K. JAVITS, New York
CARL MARCY, Chief of Staff
ARTHUR M. KUHL, Clerk
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
Hon. J. W. FULBRIGHT,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, D.C.
SEPTEMBER 13, 1969.
DEAR MR. CHAIRMAN: Several months ago, President Nixon pro-
posed that I consider traveling to Cambodia in connection with the
resumption of relations with that country after a 4-year interruption.
Upon his return from Asia and Rumania, the President repeated the
proposal and discussed visits to other countries to study reactions to
his new Asian doctrine. I advised him that I would go both as his
representative and as a member of the committee. Letters to this
effect were subsequently exchanged between the President and myself.
The President notified the heads of states of the countries to be
visited of my impending journey.
I left Washington for Southeast Asia on August 13. Returning to
the United States on August 27, I went to the western White House in
San Clemente to discuss my findings with the President and to give
him a confidential written report. Additional reports on special
situations which came to my attention have since been sent to him.
Transmitted herewith is a public report to the committee along the
lines of the report given the President on my return. The latter report
contains a number of specific recommendations for carrying into effect
the new doctrine on Asia which it seemed appropriate to me to give
to the President in confidence.
This mission for the President, and as a member of the committee,
took me to the Philippines, Indonesia, Burma, Cambodia, and Laos
with brief stops in Okinawa and Japan. In the Philippines,
I spent many hours in private conversation with President Ferdinand
E. Marcos and with Gen. Carlos P. Romulo, the Secretary of Foreign
Affairs. I had a long conversation with Indonesian President Suharto
in Djakarta and met with Prof. Seno Adjie, Minister of Justice and
Acting Foreign Minister at the time of my visit, Ismael Thajeb,
Director General for Foreign Economic Relations in the Foreign
Ministry, and Speaker Sjaichu and Vice Chairman Maj. Gen. Dr.
Sjarif Thajeb, of the Parliament. In Burma, General Ne Win received
me most cordially for a private talk, and I also called on Col. Maung
Lwin, Burma's new Foreign Minister.
Prince Norodom Sihanouk, designated as a state visit my stay in the
Cambodian capital of Phnom Penh. The Chief of State extended to me,
as the President's representative, what was a very warm personal
welcome and a striking initiative of cordiality toward the United
States. While in Cambodia, I also met with Gen. Lon Nol, the new
Prime Minister, and Foreign Minister Prince Norodom Phurissara as
well as an old acquaintance, the distinguished retired statesman, Mr.
Penn Nouth.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
My brief visit to Laos provided me with an opportunity to have a
private talk in Vientiane with Prince Souvanna Phouma, Prime Min-
ister 'of the Government of National Union. In the royal capital of
Luang Prabang, I met with King Sri Savang Vatthana. In addition to
these meetings and conversations, members of my party and I met
with other officials, journalists, and observers in each of the visited
countries.
I was accompanied to Asia by Mr. Francis R. Valeo, the Secretary
of the Senate, and Mr. James G. Lowenstein of the Committee on
Foreign Relations. Mr. Kenneth R. Calloway, a consultant to the
Department of State, and Mr. Paul Kelly of the U.S. Embassy in
Manila (who traveled with my party while in Asia), handled adminis-
trative arrangements. To all of them I am most grateful for their
diligence in the carrying out of my requests in connection with the
mission. I also wish to thank the Air Force for permitting Col. Frank
A. Goss, U.S. Air Force (MC), to accompany the party and for making
available special transportation for the greater part of the journey.
Our embassies and other offices abroad were most helpful and
cooperative. I would like to record, in particular, my gratitude to
Mr. James M. Wilson, Jr., the charg6 d'affaires in the Philippines,
Ambassador Francis J. Galbraith in Indonesia, Ambassador Arthur
W. Hummel, Jr., in Burma, Mr. Lloyd M. Rives, the new charge
d'affaires in Cambodia, and Ambassador G. McMurtrie Godley in
Laos. Their assistance, and that of their staffs, was of great value to
me. In addition, I would note the courtesy, the information, and the
excellent administrative support provided by Minister Edwin W.
Martin and the staff of the consulate general in Hong Kong where
the major portions of my confidential report to the President and
this report were prepared. Finally, I wish to thank Lt. Gen. James B.
Lampert in Okinawa and Ambassador Armin H. Meyer in Japan for
the valuable briefings which they provided to me.
Sincerely yours,
MIKE MANSFIELD.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
CONTENTS
Page
I. Introduction--------------------------------------------------
1
II. The President's new Asian doctrine------------------------------
3
III. Reactions to the new Asian doctrine-----------------------------
4
IV. The new doctrine and Southeast Asian countries------------------
5
A. The Philippines----------------------------------------
5
B. Indonesia---------------------------------------------
7
C. Burma------------------------------------------------
9
D. Cambodia---------------------------------------------
11
E. Laos-------------------------------------------------
13
V. Concluding comments---------------------------------------
14
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
PERSPECTIVE ON ASIA: THE NEW U.S. DOCTRINE,
AND SOUTHEAST ASIA
1. INTRODUCTION
The end of World War II saw the military forces of the United
States heavily engaged in the Western Pacific but massive strength
had not been committed to the Asian mainland. To be sure, there
were U.S. contingents in South Korea and in China. These troops,
however, were being withdrawn as rapidly as possible, consistent with
the orderly taking of the surrender and the U.S. share of responsibility
for the allied military occupation of Japan and Korea.
On mainland Southeast Asia and in the surrounding seas the forces
of the prewar European colonial powers were found again. The French
returned to Indochina which then encompassed protectorates in
Cambodia, Laos, and Vietnam; British forces reentered Singapore,
Malaya, and Burma; and Dutch forces landed in the East Indies, the
former colony of islands which is now the Republic of Indonesia. The
U.S. military involvement in Southeast Asia was confined almost
entirely to those forces which had been engaged in the liberation of
the Philippines.
The postwar period saw vast political upheavals in the Western
Pacific. Independence came to great number f
s o people. In some cases,
it was gained easily; in others, only after bitt ruggl
er ste. A Communist
Chinese regime took control of the most populous nation in the world
at a time when the Soviet Union was extending domination over
Eastern Europe. During 1948 and 1949, the Communist coup d'etat
in Czechoslovakia, and the Soviet blockade of West Berlin, coincided
with the completion of the conquest of the Chinese mainland by the
People's Liberation Army. In June of the following year, North
Korean forces crossed the 38th parallel in an invasion of the south
and were engaged by South Koreans and, then, by U.S.-U.N. forces.
In November, Chinese Communist troops entered that conflict.
. The agglomeration of these events, all occurring within a short span
of time, stimulated the United States to a heavy involvement on the
mainland of Asia. Over the years, this involvement has taken the form
of enormous expenditures for economic and military assistance, U.S.
treaties and other pledges of support and, finally, commitments of
U.S. combat forces to the determination of the course of developments
in that region.
Today, there are treaties and executive agreements and an accumu-
lation of decisions of the executive branch which enmesh this Nation
deeply in the affairs of Southeast Asia. In consequence, there are
over 500,000 U.S. troops in South Vietnam and 50,000 in Thailand.
In the general area and at least partially connected with our involve-
ment in Southeast Asia are 40,000 men in Japan; 45,000 in Okinawa;
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
10,000 in Taiwan; 60,000 in the 7th Fleet; 30,000 in the Philippines
and additional thousands on Guam-in all, a figure approaching
800,000.
Whatever the initial validity of these immense commitments, there
is growing doubt as to whether it is wise or beneficial for this Nation
and the countries concerned to perpetuate the present state of affairs.
In the first place, the independence of Asian countries would be
hollow indeed if it involved merely an exchange of a past colonial
status for the indefinite prop of U.S. support. From our own point of
view, moreover, the United States is feeling the adverse effects of the
prolonged expenditure of lives and enormous resources and energy
abroad, most of it in Vietnam and Southeast Asia.
In the interim, needs at home have been neglected-needs which are
too obvious and omnipresent to require cataloging. They are all
around us whether we live in cities or on farms, whether our homes are
in New York, Washington, California, the Midwest, or Montana. The
solution of these problems-whether they involve equality of treatment
or pollution of air and water, or education, or public safety, or trans-
portation and roads, or whatever-will require great and sustained
inputs of initiative and attention at a time when these assets are
heavily diverted abroad. They will also require substantial public funds
in a period of inflation and of heavy tax burdens which result in large
measure from military expenditures overseas and, notably, from the
war in Vietnam.
While urgent needs at home are neglected, there is deep concern over
the war in Vietnam which is still without an end in sight. The conflict
continues to result in additional American dead and wounded every
week and in expenditures at the rate of about $3 million an hour.
Moreover, elsewhere in Southeast Asia there are shadow wars and the
pockmarks of violent internal dissension. That these situations, under
our present course, might evolve in the pattern of Vietnam gives rise
to further concern.
Doubts as to our past Asian approach are also fed by the visible
consequences of the mass entry of American soldiers, money, and
official establishments into Southeast Asia. To be sure, this entry has
brought a great inflow of wealth and modern technology. In some
places, however, little that is constructive is visible as a result. The
very magnitude of the American involvement, emerging as it has in a
short span of time, has imposed an almost indigestible alien presence
and precipitated severe cultural convulsions.
To date, we have acted on the scale that we have in Southeast Asia
largely to support small nations against what has been calculated as
the threat of Communist aggression-notably from China. In fact,
there was little expression of fear in any of the countries visited of
an attack or invasion from China. Considerable concern does exist,
however, that internal insurgent movements whose origins lie in local
grievances or conflicts will be used as spearheads of influence by China
or by North Vietnam. The principal threat to most existing govern-
ments in Southeast Asia, in short, seems to arise from within Southeast
Asia at this time.
It seems to me that our presumption of a primary danger to the
Southeast Asian countries, which they themselves do not perceive,
does not provide a sound basis for U.S. policy. Rather, it tends to
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
3
create for this Nation the role of self-appointed, great power protector
in an area in which a militant young nationalism speaks the common
language of resistance to foreign intrusion. It is sobering to recall, in
this connection, that this Nation has never been an Asian power and,
in my judgment, it is essential to avoid a further glissade into that ill-
fitting role. Our vital interests with respect to the Asian mainland have
always been peripheral. They are peripheral now. They are likely to
remain peripheral in the future.
On the other hand, we have been and will continue to be a Pacific
power. Vital national interests are, indeed, lodged in that ocean. Four
of our States border on the Pacific. In addition, one of them, Hawaii,
lies in the middle of that vast expanse of water. We have territories
and dependencies all over the Pacific. The Aleutian Islands are part of
the State of Alaska. American Samoa, Guam, Wake, Johnston,
Midway and the Howland, Baker, and Jarvis Islands are dependencies
of the United States. The Trust Territory of the Pacific Islands, which
we have administered since the end of World War II, comprises over
2,000 islands and atolls with a land area of 678 square miles scattered
over 3 million square miles of the Pacific.
As a Pacific power, we have and will continue to have a profound
interest in what transpires in the western reaches of the ocean. In my
judgement, however, that interest can best be expressed not by our
immersion in the region's internal political affairs but by an orderly
shift to a restrained and judicious participation, as one Pacific nation
among several, in its peaceful development.
Indeed, it is difficult to discern any other reasonable course for this
Nation in present circumstances. It is a new day in Asia. The age in
which foreign military dominance of any Asian people was a practical
possibility has long since ended. Even the postwar period of one-sided
dependency-most of it on the United States-is drawing to a close.
Civilized survival, not to speak of peace and progress in the Western
Pacific, may well depend on the timely emergence of a new age of
cooperation based on equality and on a mutuality of responsibility,
respect, and tolerance between this Nation and all the states of Asia.
II. THE PRESIDENT'S NEW ASIAN DOCTRINE
In the course of his recent trip, President Nixon enunciated in the
Guam Declaration a new approach to Asia and the Western Pacific
which seems to me to take cognizance of the considerations that are
outlined in the introductory section of this report. The President's
Asian doctrine contains the following percepts, as I understand them
and as I interpreted them to various Asian leaders:
1. The United States will maintain its treaty commitments, but it
is anticipated that Asian nations will be able to handle their own
defense problems, perhaps with some outside material assistance but
without outside manpower. Nuclear threats are another matter, and
such threats will continue to be checked by counterpoised nuclear
capacity.
2. As a Pacific power, the United States will not turn its back on
nations of the Western Pacific and Asia; the countries of that region
will not be denied a concerned and understanding ear in this Nation.
3. The United States will avoid the creation of situations in which
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
there is such great dependence on us that, inevitably, we become
enmeshed in what are essentially Asian problems and conflicts.
4. To the extent that material assistance may be forthcoming from
the United States, more emphasis will be placed on economic help and
less on military assistance.
5. The future role of the United States will continue to be significant
in the affairs of Asia. It will be enacted, however, largely in the eco-
nomic realm and on the basis of multilateral cooperation.
6. The United States will look with favor on multilateral political,
economic, and security arrangements among the Asian nations and,
where appropriate, will assist in efforts which may be undertaken
thereunder.
III. REACTIONS TO THE NEW ASIAN DOCTRINE
Achievement of many of the objectives stated above involves a
reduction in the U.S. presence in Southeast Asia. While this report
does not deal with Vietnam, it is obvious that the war there is the
main cause of the massive dimensions which the U.S. presence has
attained. That the possibilities of diminution are bound up with the
end of that tragic conflict does not mean that application of the new
doctrine must await the war's termination. Quite apart from Vietnam,
there are other areas where contractions may be possible. Most im-
mediately, under the new approach there is the possibility of curbing
what seem to be built-in tendencies in the many-sided U.S. establish-
ments in Asia to expand the U.S. presence.
In general, the leaders of Asian countries agree that the role of the
United States in Asian affairs should shrink. Some uneasiness does
exist that the pendulum will swing too far, from overinvolvement to
noninvolvement. The fear is that the United States may leave the
smaller Asian states in isolation and under the shadow of one or an-
other more powerful neighbor.
There is also some uncertainty as to what the new doctrine will
mean in specific terms. This uncertainty is understandable since there
was not, at the time of my visit, any sign of a followthrough to the
new doctrine. Indeed, other than the transient stimulus of the Presi-
dent's recent personal appearance, little, if any, change was visible.
The concepts, practices, and programs by which U.S. missions in
Asia have operated for many years remain the same.
Notwithstanding the President's recent visit and Presidential
statements to the contrary, some U.S. missions still expect this
Nation to continue as a major military factor in Southeast Asia after
the conclusion of the war in Vietnam. Developments within Southeast
Asian countries are still referred to as "vital" to this Nation's interests,
"vital" implying more of a commitment than can be derived from a
reasonable reading of the President's new approach. Ironically, in
some U.S. embassies an inconsistency is not seen between budgetary
requests for greatly increased U.S. bilateral assistance and, hence,
greater U.S. participation in the indigenous situation, on the one hand,
and the administration's new doctrine on the other.
In short, there is no indication, as yet, of when or how the size of the
U.S. presence in Asia is to be reduced in any significant degree. It
is a fact that the only reductions contemplated at the time of my visit
were those which might result from a continuance of periodic blanket
_. App.rove.d__Ear_Ral ase 2002/01/22 - CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
5
percentage cuts in personnel. These cuts were begun more than a year
ago, not as a matter of policy so much as a measure of economy and as
a palliative for balance-of-payments concerns.
It would appear, therefore, that the first order of business under the
new doctrine is to see to it that the President's new concepts are
reiterated and thoroughly explained throughout the U.S. departments
and agencies concerned and that they are disseminated among all
U.S. officials in Southeast Asia. It would appear, too, that directives
which are both clear and firm will have to emanate from Washington
if these concepts are to be applied effectively and with necessary dis-
patch by U.S. missions in Southeast Asia.
IV. THE NEW DOCTRINE AND SOUTHEAST ASIAN COUNTRIES
A. The Philippines.
Since the establishment of the Republic of the Philippines in 1946,
the interaction of policy between, that nation and the United States
has been deeply influenced by a "special relationship," a phrase which
is subject to two interpretations. On the one hand, it connotes the
emotional interplay between the two countries which stretches back
over more than half a century. This "special relationship" began, in
fact, with a degree of hostility in the conflict over the annexation of
the Philippines by the United States. Gradually, however, the rela-
tionship developed mutual trust, and it was finally welded by the
shared dangers, horrors, and triumphs of World War II, and the U.S.
pledge of independence to the Philippines, into a strong and sym-
pathetic mutual attachment.
"Special relationship" also refers to a carryover of concessions in
trade and commerce and the preferential treatment of U.S. nationals
in the Philippines from the preindependence period. In the same vein,
the term also describes the vested military privileges which are enjoyed
by the Armed Forces of the United States in the Philippines. These
privileges were assumed during the period of U.S. rule of the Philip-
pines, and they have been extended, with some modifications, under
the lease arrangements by which the United States continues to occupy
a great military base complex in the Philippines.
It is perhaps not generally realized that there are about 30,000 U.S.
nilitary personnel in the Islands, and over 25,000 dependents. Over
100,000 Filipinos and U.S. civilian employees work on our military
bases in the Philippines, the U.S. Department of Defense being the
second largest employer in the Philippines, coming only after' the
Philippine Government itself. The Clark Field lease, which covers
over 132,000 acres, and the Subic Bay installation are among the
largest U.S. military holdings anywhere in the world. Last year,
U.S. Government spending in .the Philippines amounted to about
$270 million, over half of which was for outlays in connection with the
military bases.
With regard to special economic rights, U.S. investors are the only
foreigners in the Philippines presently permitted to own a controlling
share of companies engaged in the exploitation of natural resources
and in the operation of public utilities. In, addition, the Laurel-
Langley agreement of 1955 which amended the trade agreement of
1946 provides preferential tariff treatment on trade between the two
nations and, of special benefit to Philippine commerce, guaranteed
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
access within a quota to U.S. markets for sugar and cordage as well
as duty-free quotas on certain other products.
The close integration of the Philippine economy with that of the
United States now shows signs of diversification. Japanese and
Europeans, for example, have come to assume an increasingly impor-
tant role in Philippine trade. In fact, Japan has now become the chief
supplier of Philippine imports. There are also some initial explorations
being made with regard to the possibilities of trade with Communist
nations, although Philippine relations with these countries are still
far more circumscribed than our own.
Last year, the Philippine gross national product rose 6.3 percent
and the country, employing the new miracle strains, became self-
sufficient in rice for the first time in memory. At the same time, how-
ever, the Philippines had a $300 million deficit in international trade
incurred in considerable measure because of the import of capital
goods for the developing economy. The deficit figure underscores the
compensatory significance of both U.S. base expenditures and trade
preferences in the present economy of the Philippines.
The carryover of economic privileges has come under press attack
in the Philippines in connection with preliminary scrutiny of the
Laurel-Langley agreement which is due to expire in 1974. President
Nixon's new doctrine would seem to call for a readiness on the part
of this Nation to make adjustments in this agreement. There will be
difficulties in this connection, to be sure, but there ought not to be
insurmountable difficulties. As I tried to specify in my report to the
President, the shock of change can be minimized if there is restraint
and understanding on both sides.
The administration's new doctrine would also seem to imply a forth-
coming attitude with regard to the military base issues. As nations
whose futures are interwoven with the peace of the Pacific, the Philip-
pines and the United States have a common interest in cooperating
closely in the field of defense. In that sense, the U.S. bases in the
Philippines are of great significance to both nations. In the end, how-
ever, the value of the bases is dependent not only on our willingness to
support them but also on Philippine acceptance of the arrangements
which govern their usage. In that connection, it is important to bear
in mind that, with the Philippines no longer an island possession of the
United States, what transpires on and around the bases is bound to be
of direct and deep concern to any Philippine Government.
In my judgment, the continued effectiveness of the bases requires
an alertness to national sensitivities, a scrupulous respect for Philippine
sovereignty, and close collaboration between the two governments
on all matters pertaining to the usage of the bases. In that fashion,
the scope and design of our military presence in the Philippines can
be made to reflect not only our military needs but, equally, the wishes
of the Philippine people.
When President Nixon arrived in Manila, he said:
I hope that we can initiate a new era in Phili ppine-
American relations, not returning to the old special rela-
tionships, because the winds of change have swept away
those factors, but building a new relationship, a new rela-
tionship which will be based on mutual trust, on mutual
respect, on mutual confidence, on mutual cooperation.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
As he left Manila, he said:
We have a special relationship with the Philippines which
will always be in our hearts * * *.
The President's remarks underscore the dual significance of the
phrase "special relationship." To recast all that these two words have
come to imply into one mutually acceptable meaning will test the
sagacity of the policies and the diplomacy of both nations in the
period of transition which lies ahead.
B. Indonesia
Indonesia was caught for many years in the crossfire of overstimu-
lated and overstimulating politics, the demands of a large military
establishment, and the inevitable dislocations of transition from co-
lonialism to independence. The consequent economic deterioration
expressed itself in a runaway inflation, a neglect of agriculture, and a
decline in exchange earnings which in former times were derived
largely from the export of agricultural commodities and crude raw
materials.
The deterioration now appears to be checked in the aftermath of a
military seizure of power. At the same time, there has been a shift in
Indonesian foreign policy, from dependency on Communist nations
for assistance. In the past 2 years, non-Communist nations have
provided substantial amounts of aid and an increasing flow of private
investment.
The present government of military leaders, economists, and civilian
bureaucrats sees the principal problem of the nation to be its rapid
economic development. Under the leadership of General Suharto, a
patient, modest, and determined man, two 5-year plans have been
delineated. The first plan which emphasizes agriculture went into
effect as of April 1969. In the second 5-year plan, the emphasis will
shift to industrial development.
Significant economic results have already been achieved. The rate
of inflation was 635 percent 3 years ago. This year it is expected that
the figure can be held to about 25 percent. There has been, as noted,
an influx of private foreign capital, with a total of about $560 million
in investiments already approved by the Government. This total,
which excludes banking and oil, is expected to rise in the next few
years to $1 billion. Of the total approved, U.S. investors will provide
$193 million. Last year alone, U.S. investment was $50 million,
again with the exception of investments in banking and oil. The
foreign investment in oil was about $68 million.
The first 5-year development plan is dependent on an average of
$600 million a year in foreign loans and credits. This sum will be dis-
bursed through the Inter-Governmental Group for Indonesia, a con-
sortium which consists of the International Bank, the International
Monetary Fund, Japan, Western European and miscellaneous con-
tributors, and the United States. This Nation has been committed to
provide one-third or $200 million of the annual requirement in 1969.
Another third will come from the Japanese, and the remaining third
from the Western Europeans, Australians, and minor sources.
The loans will be used under the 5-year plan to rehabilitate existing
productive facilities and to initiate new projects. According to advice
I received, the loans will not be used to repay old foreign debts which,
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
with the new liabilities that are being assumed, will soon bring Indo-
nesia's total foreign indebtedness to $3.5 billion.
Over $1 billion of the above total is owed to the Soviet Union
and other Communist countries. The indications are that the present
terms of repayment cannot be met and some sort of new repayment
schedule will have to be devised. Since the coup d'etat, however,
relations with China and, until recently, with the Soviet Union have
been distant.
In addition to providing one-third of the loans through the con-
sortium, the United States has agreed to provide a "fair share" of
food aid to Indonesia. This Nation has already in operation a military
assistance program which runs to about $6 million a year. Presently,
no lethal military equipment is involved in the program, which is
administered not by a Military Assistance Advisory Group, but by
a 13-man U.S. defense liaison group. Nevertheless, the program does
have some characteristics of a MAAG operation in that it involves
training Indonesian officers and support of the Army's civic action
and economic rehabilitation activities.
The U.S. agreement to provide loans for the 5-year development
plan involves risks, of course, but the risks are shared -since the loans
are part of a multilateral fund to be channeled through the consortium.
In that sense, this particular agreement would appear to be in accord
with the President's new approach.
When that is said, however, it should also be pointed out that there
has been a tendency for our involvement in Indonesia to grow in a
mathematical progression. In fiscal year 1966, for example, all forms
of U.S. economic assistance to Indonesia totaled about $20 million;
in 1967, $59 million. By 1958 the figure was $103 million and in fiscal
year 1969, $255 million. The overall trend of U.S. participation in the
Indonesian situation, in short, has been upward, with the bilateral
element in our policies also on the increase.
Part of this increase is explicable in terms of Public Law 480 food
aid. It would seem to me that what has been described as our "fair
share" of this aid is somewhat out of proportion. In 1969, the United
States will provide $83.8 million of a total of $135 million. It should be
noted that, under present bilateral arrangements, even food aid tends
to edge us, bilaterally, into the internal affairs of other countries. More-
over, whatever the beneficial effect in one nation, this aid can have
adverse consequences in others. This assistance, to a greater or lesser
degree, does compete with the commercial exports of food-surplus
nations, notwithstanding efforts to avoid disturbing existing channels
of trade.
That is not to say that the use of food as aid should be frowned upon
in Indonesia or elsewhere. Rather, it suggests that in this form of
assistance as in others, a multilateral approach in which attention can
be paid to a wide range of considerations may help to minimize the
adverse consequences of this otherwise well intentioned program.
In a more general sense, it would seem that there is also a need for
other nations to assume a larger role in assisting Indonesia. In this
connection, it is inevitable that Japan be considered as a principal
source not only because it is in a period of great economic dynamism,
but also because of its regional proximity and the complementariness
of its economy with that of Indonesia.
Approved For Release 2002/01/22: CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
To be sure, Japan does play a major role in the loan consortium.
Moreover, Japanese reparations payments which are now being
completed have also been a positive factor in the Indonesian economic
situation in recent years. However, it must be stated in all frankness
that there is some inclination to regard as harsh Japanese terms of
trade and investment. Furthermore, the tendency of this investment
to concentrate in extractive industries is seen in some quarters as
making an insufficient contribution to the development of a diversified
industrial economy. Finally, there is encountered some uncertainty
over the implications of the enormous and growing gap which exists
between the highly sophisticated Japanese economy and the level of
economic development not only in Indonesia but elsewhere in
Southeast Asia.
Unless set to rest, these various concerns do not augur well for
plans for cooperative regional development. Such plans are invariably
predicated upon and, indeed, would appear to require a vigorous
Japanese participation if they are to be successful.
0. Burma
The Burmese Government continues to go its own way as it has
for many years. It is neither overawed by the proximity of powerful
neighbors nor overimpressed by the virtues of rapid development
through large infusions of foreign aid. Burma's primary concern is the
retention of its national and cultural identity and the development of
an economic system preponderently by its own efforts and along its
own lines.
This almost passionate emphasis on "Burmanization" and the
"Burmese way to socialism" can best be understood against the back-
ground from which contemporary Burma emerged. Under the previous
colonial status, control of the machinery of the economy was divided
largely among British, Chinese, and Indians. Free enterprise in Burma
meant, largely, foreign enterprise. For the most part, Burmese
nationals were, in effect, bystanders and subordinates in the devel-
opment of their own country.
With the exception of agriculture, the economy of Burma is pres-
ently closely managed by the state. All economic activity has been
nationalized, except farming and the operation of some buslines,
taxis, restaurants, and small industrial enterprises. But to reiterate,
where the state now exercises authority in the economy, it has re-
placed not so much Burmese private enterprise as a former alien
dominance.
While curbing foreign economic power, the Burmese Govern-
ment has also sought to insulate the country from the conflicts of the
great powers. This policy has involved maintaining a proper neutrality
and rather reserved diplomatic relations with all states. The approach
has been applied not only to the United States but also to China, the
Soviet Union, and other nations.
It would be erroneous, in my judgment, to view the Burmese
attitude in this respect as an indication of hostility to any nation.
Rather, it arises from a concern lest foreign influence overwhelm
Burmese culture or otherwise become a disrupting factor in the na-
tion's affairs. In view of what has transpired elsewhere in Southeast
Asia, it cannot be said that the concern is without foundation.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
10
Moreover, the Burmese internal situation is still vulnerable to
foreign power intrusion. In the first place, there are extreme political
and personal conflicts among Burmese nationalists which have been
throttled rather than modulated. Some armed insurgency continues
in border areas inhabited principally by ethnic non-Burmese. Small
armed Communist factions are active, as they have been for decades.
The Burmese Government does not appear overly disturbed by the
possibility of aggression from China.
The Burmese economy has had difficulties, notably with the export
of the rice surplus, the principal source of foreign exchange earnings.
As already indicated, these difficulties are not unrelated to U.S.
food-aid distributions to Indonesia and other nations in Asia. On the
other hand, there is still a residual flow of U.S. aid to Burma. It
involves, as it has for several years, the final utilization of U.S. funds
which were appropriated a long time ago for college buildings in
Rangoon, a water and sewerage system, and a large teak mill.
Burma has also received some military equipment from the United
States under a sales arrangement negotiated in 1958 at the request
of the Burmese Government and subsequently extended in 1961. The
agreement enables Burma to buy at greatly reduced prices, and it
also involves some training of Burmese military personnel by mobile
training teams from the United States. The program, which is super-
vised by a U.S. Military Equipment Delivery Team, has only 2 more
years to run. While no particular interest has been indicated in its
continuance beyond that date, the U.S. military mission in Rangoon
shows no sign of contraction. Almost half of all official U.S. personnel
in Burma (91 employees) are with the Military Equipment Delivery
Team or the office of the defense attache.
Under the President's new doctrine, it seems to me that the cloth
of our policy should be cut more precisely to fit the Burmese pattern.
Admittedly, the adjustment will not be easy. In one important sense,
for example, present Burmese attitudes do not dovetail with the new
doctrine. The Burmese Government is not generally disposed to favor
regional economic organizations, as they have so far evolved. The
Asian Development Bank, for example, is regarded essentially as a
non-Asian institution because of the heavy role of countries from
outside the region. The Bank is also seen not as a unifying factor but,
possibly, as a divisive element. From the Burmese point of view, the
Bank's resources are so limited that there is bound to be severe compe-
tition among the small Asian nations for a share of the Bank's favor.
In other respects, however, attitudes would appear to be very
much in harmony with the new doctrine. The wish to remain out-
side of great power conflicts, for example, should not only be respected,
but should be sustained by our practices. It would seem to me, there-
fore, that in the absence of indications to the contrary, the vestiges
of the economic aid program which have been an inordinate time
in liquidation, should be terminated without further delay and in a
manner which accords with the wishes of the Burmese Government.
The termination of the military sales program, too, should be antici-
pated and, in preparation therefore, a commensurate reduction in our
official military representation should begin to be made now.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
11
These changes would not preclude in any way an increase in direct
contact of reciprocal benefit between Burma and the United States
in other fields. It should be noted, in this connection, that some modest
steps have been taken by the Burmese Government to encourage
foreign tourism, a most welcome initiative.' Other exchanges of a
peaceful nature in many fields would be in order. We should, it seems
to me, be ready to give encouragement to all forms of mutually bene-
ficial cultural contacts with Burma. To the degree that it is desired we
should work with the Burmese Government to stimulate not only
tourism but trade, educational, professional, and technical collabora-
tion between the peoples of the two countries.
D. Cambodia
After a 4-year interruption, relations were reestablished between
Cambodia and the United States in July, following a U.S. declara-
tion recognizing and respecting Cambodia's frontiers .2 This declaration
was, in effect, a preliminary to dealing through diplomatic processes
with issues which have arisen from the war in Vietnam to distort and
disturb the Cambodian-United States relationship for many years.
There are, for example, on the one hand, the air forays from South
Vietnam into Cambodia which have resulted in the loss of the lives of
Cambodian men, women, and children as well as property damage.
On the other hand, there has been the concern of the U.S. command
in Saigon that Cambodian territory was serving as a haven for the
enemy and, hence, contributing to the losses and the difficulties of
U.S. forces in South Vietnam.
Regrettably, both charge and countercharge have had validity. It
is a fact that border areas which are difficult of access even from within
Cambodia have been used by enemy forces, certainly for the care of
sick and wounded and for the infiltration of men and supplies. This
usage has occurred notwithstanding Cambodia's intense desire to
close its territories for this or any related purpose to all alien elements.
Indeed, the recent surfacing of small so-called Red Khmer units which
are sustained by outside support and, far more serious, the increasing
appearance of armed North Vietnamese and Vietcong on Cambodian
soil is of great concern to the Cambodian Government. Nevertheless,
with one of the smallest armies in Southeast Asia and with extensive
borders there is little that Cambodia can do to prevent incursions.
While the war goes on, therefore, the danger is acute of an ever in-
creasing Vietnamese spillover, whether for asylum from the conflict or
for other purposes. Even removal of Vietnamese armed bands and
stragglers already in Cambodia will present serious difficulties at the
end of the war.
In the circumstances, the keystone of Cambodian policy is the
achievement of the firmest possible international guarantees of the
integrity and security of its frontiers by the time peace is restored. To
that end, the Cambodian Government has sought, and already ob-
tained, assurances of the recognition of its existing borders from the
Soviet Union, the United States, China, France, the United King-
dom, and many other nations. Phnom Penh has also received similar
acknowledgements of its borders from both North Vietnam and the
Provisional Revolutionary Government in South Vietnam and, in turn,
' Tourist visas are now authorized for 72 hours in lieu of the 24-hour limit which prevailed for many years.
s My visit to Cambodia came 1 week after the arrival of the new U.B. charge d affaires, Lloyd M. Rives.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
has established relations with them. However, it has never been able
to obtain such assurance; from any of the chain of governments in
Saigon beginning with that of Ngo Dinh Diem and continuing down
to the present.
Cambodia now enjoys an effective and close relationship with
France, the former colonial power. It also has good and active relations
with many European, Asian, and other countries. With the Soviet
Union, Cambodian relations are proper and, in the case of China, they
are again more friendly after a temporary lapse.3
With the United States, Cambodia now seeks to build, in my
judgment, a relationship of mutual respect and mutual tolerance.
Notwithstanding the war in Vietnam, it would seem that the pros-
pects of such a relationship are enhanced by the President's new ap-
proach and the understanding with which it has been received by
Prince Sihanouk.
It should be noted that the Prince's personal role in the direction
of the affairs of his nation has been enormous. The Prince not only
led Cambodia to independence, even before the 1954 Geneva agree-
ments, but his leadership has served ever since to preserve Cambodia's
unity and to mobilize its energy in the building of a progressive and
peaceful state. While there has been aid from many nations, Cam-
bodia's progress is largely self-generated. Notwithstanding severe
pressures, Cambodia has managed to avoid military involvement in
the surrounding turmoil. It has been able, too, to absorb ideas from
many nations which have enhanced rather than obliterated the
fundamental character and quality of the indigenous culture.
The United States and Cambodia are at a threshold that offers
an opportunity to make a clean beginning. For the past few years,
Cambodia's direct contact with U.S. nationals was limited almost
entirely to tourists intent upon visiting the extraordinary ruins of
ancient Khmer civilization at Angkor Wat. An occasional official
U.S. emissary traveled to Cambodia but there were no regular diplo-
matic relations, no economic aid program, and no military assistance
program.
At the time of my visit, the reopened official U.S. establishment in
Cambodia numbered only four persons, about the number present at
the time of my first visit to Phnom Penh in 1953. There will be addi-
tions to this staff, to be sure, but it would seem most desirable that
they be minimal. Certainly, there is no cause for the development
once again of an overweening official presence with the extensive
paraphenalia of programs that has become so characteristic of official
U.S. establishments in Asia during the past decade.
The President took a wise initiative, in my judgment, in moving to
restore friendly relation with Cambodia at the outset of his adminis-
tration. He has acted to curb the spread of the war's devastation and,
hence, to forestall an increase in the loss of American lives and the
multiplication of the costs of the war in Vietnam.
As I sought to detail in my report to the President, there are steps
which can be taken promptly to cement the relationship with Cam-
bodia at the outset of its resumption. In the longer range, however,
resumption provides a basis for development of what can be mutually
3 There has been in Cambodia, unlike other Southeast Asian countries, a general tolerance of the Chinese
community and an absence of hostility to Chinese commerce. This treatment was predicated, however, on a
complete Chinese abstinence from intrusion in Cambodian affairs, a condition which was violated during the
Chinese cultural revolution and which led to a prompt and firm reaction by the Cambodian Government.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
13
beneficial cultural, commercial, and other contacts between the
peoples of the two nations. The encouragement of Cambodia's revived
interest in the Asian Development Bank and other multilateral a*en-
cies might also prove helpful in strengthening the concept of region-
alism. It will take patience, sensitivity, and restraint but the policies
of this nation, in my judgment, can assist in maintaining this oasis
of peace in a wartorn Southeast Asia to our benefit as well as to the
benefit of the people of Cambodia.
E. Laos
From a decline in involvement after the Geneva accord of 1962, the
U.S. presence in that small nation has grown again to disturbing pro-
portions. The reinvolvement is largely in the form of assistance of one
kind or another, extended either directly by U.S. agencies or indirectly
through private contractors. The cost of reinvolvement is already in
the hundreds of millions and is rising. Most seriously several hundred
lives have also been lost. Present tendencies in Laos, in short, run
directly counter to what should be anticipated from the President's
new doctrine.
To be sure, the reinvolvement of the United States in Laos is asso-
ciated with the war in Vietnam as well as with the continued and
spreading military activity of the dissident Pathet Lao. The armed
forces of the latter group are now said to number between 15,000 and
20,000. In addition, it is estimated that some 50,000 North Vietnamese
are in the country at this time, moving back and forth between the
north and south or guarding infiltration routes and lines of supply.
The Chinese have recently added armed guards to a road which, by
agreement with a former Laotian government, they are building in
remote northern Laos but this development does not seem to have
stirred any deep alarm in Vientiane.
It is an understatement to note that the Geneva accord of 1962
which provided both for the neutrality of Laos and for an all-Lao
Government of the various factions is now in suspension. The prospects
for its resuscitation, moreover, are likely to remain grim, especially
if the war in Vietnam is not brought to a conclusion. in the near
future. In present circumstances, the government in Vientiane is
unable either to persuade the Pathet Lao to reenter a government of
national unity or to prevent a steady accretion in the strength of this
dissident movement.
The U.S. response to the worsening Laotian situation has been to
condemn the continued presence and addition of North Vietnamese
forces in the country and the involvement of Hanoi in support of
the Pathet Lao. At the same time, as noted, we have remvolved
ourselves on a bilateral basis to support the government in Vientiane
and as a supplement to the war in Vietnam. At best, this course is
already costing some American lives and hundreds of millions of
dollars, with all signs pointing to an accretion rather than a dimuni-
tion. At worst, it could lead to the full assumption of a U.S. military
role in the pattern of Vietnam-a course which was rejected by this
government in 1961-62.
As it is now, the depth of our reinvolvement has already, created a
dilemma. On the one hand, a collapse in Laos is possible, without the
continuance of aid, at least at its present level. On the other hand, the
greater our support of the government in Vientiane, the less its
creditability as a unifying neutral force for all of the Laotian factions.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
Indeed, in present circumstances, it would appear, that the King, Sri
Saving Vatthana, alone commands a general loyalty throughout the
factionalized land. Any political role which he might play in reunifi-
cation, however, has heretofore been circumscribed by the traditions
and practices of the kingdom.
It is difficult to see how the administration's new doctrine can be
sustained if there continues to be an increase in U.S. activities in the
old pattern in this uncertain and unstable situation. It seems to me
that, as a minimum, every effort must be made to avoid any further
magnification of the American presence in Laos. Most importantly,
any enlarging commitment of U.S. military forces in this remote
region must be restrained.
V. CONCLUDING COMMENTS
The President's new doctrine clearly calls for a contraction of the
official U.S. presence in Southeast Asia. In some instances, the nations
of the region have anticipated this contraction; in all the nations
which I visited, there is understanding of its inevitability. Most are
ready for the transition and, in general, welcome it, provided the
U.S. interest does not disappear suddenly under a tidal wave of
national retrenchment or indifference.
The President's doctrine, of course, does not carry in any sense the
latter implication. Indeed, only by an utter disregard of our own
national interests could we disengage completely our concern from the
affairs of the Western Pacific. Without any such abrupt withdrawal,
there is ample room for an orderly contraction of the prevailing U:S.
presence in Asia. Most pressing, there is an immediate need for
restraints on the built-in tendency of the presence to grow.
There is room, for example, for the following:
1. A contraction of bilateral U.S. aid efforts and a shift to expanding
U.S. participation in multilateral efforts in the economic development
of the region.
2. A rigid and immediate curb on military aid and no deepening
of our direct military involvement with any Asian government, to
be followed by a reexamination of longstanding treaty commitments
and their organizational substructures, notably SEATO.
3. Official encouragement and support of commercial, cultural,
technical, and all other forms of nonmilitary interchange on a mutual
basis, scaled to the level of the capacity and the clearly expressed
desires of the Asian nations.
In my judgment, an interpretation of the administration's doctrine
into policies and practices which follow the above lines would be
acceptable in most Southeast Asian nations. Nor is it a matter of
waiting for the end of the war in Vietnam. To be sure, when this costly
and tragic enmeshment is brought to a close, the way will be facilitated
for more rapid change. As I have already indicated above, however,
and, as I have detailed in specific recommendations to the President
in confidential reports, there is much that can be initiated now in
order to contract and adjust American activities in Southeast Asia to
bring them into line with his Guam Declaration.
It is necessary to reiterate, however, that as of the time of In sit
to the region, the President's pronouncements had brought no fy olvilow-
through in the U.S. missions abroad. Nor did they indicate to me the
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
 Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0
15
receipt of new guidance and instructions from the agencies of the
executive branch. It would seem to me, therefore, that if the resident's
initiative is to precipitate the changes which it promises, there is a
need for close collaboration between the responsible officials in the
elected administration and the Congress.
As a first step, it would be my suggestion that an immediate freeze
be placed on all official personnel increases, military or civilian, in
Southeast Asia whether by Presidential order, with strong Congres-
sional support, or, if necessary, by legislation, supported by the
President, pending full study of the wide range of functions which are
now pursued by U.S. Government agencies in Southeast Asia. Some
of these functions which began many years ago appear ill-fitted or
ill-scaled to present need. A full examination of this kind might well
involve a joint effort of the President and the Congress, or it might
involve parallel studies or multiple studies by one or the other.
However it proceeds, this study should go forward, in my judgment,
without delay. It is essential to the maintenance of a U.S. Position
in Southeast Asia which is relevant to our national interests, to the
interests of the people of Asia and to the peace of the Pacific.
Approved For Release 2002/01/22 : CIA-RDP71B00364R000200020068-0