THE NEW ORDER IN INDONESIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005900080002-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 16, 2016
• Document Release Date: January 25, 2005
• Sequence Number: 2
• Publication Date: August 11, 1967
• Content Type: SUMMARY

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Secret
R Ci
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DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
The New Order in Indonesia
Secret
45
11 August 1967
No. 0302/67A
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THE NEW ORDER IN INDONESIA
The regime of General Suharto has brought Indo-
nesia to a stage of imposed political stability and
the beginnings of economic revival. Although the army
holds predominant and ultimate political power, ci-
vilian participation in government is considerable
and effective.
The new order sees its basic tasks as the res-
toration of the economy, the continued suppression
of Communism, and the development of stable represen-
tative government which would include a substantial
political role for the army.
There are strains within the regime, particu-
larly between civilians and military and between ac-
tivists and those who prefer the Javanese process of
indirection. The government does appear, however,
to be making slow progress toward its various goals.
Despite criticism of General Suharto for his primary
reliance on army advisers and the slow pace of his
programs, there appears to be no effective challenge
to his leadership.
Indonesia Since October 1965
The abortive Communist coup
of 1 October 1965 provided the
opportunity which the army had
long awaited to move decisively
against the then large and influ-
ential Communist Party (PKI). It
also ushered in an 18-month period
of political maneuvering between
two political centers, early
dubbed the new order and the old--
army commander Suharto on the one
hand, supported by the army and
anti-Communist civilians, and on
the other, President Sukarno,
backed by leftist nationalists,
Communist remnants, and groups
and individuals who gambled on
his survival or were personally
dependent upon him.
General Suharto resisted
advice from both army and civilian
supporters to move directly against
Sukarno or to reorient Indonesian
policy by fiat. Instead he chose
to move slowly to avoid unduly
antagonizing Sukarno's followers,
who were concentrated in densely
populated East and Central Java.
With conscious concern for the
nation's history and future devel-
opment, he pursued national re-
orientation through legal forms.
The gradual process of nulli-
fying Sukarno's power officially
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ended on 11 March 1967 when the
Indonesian congress--the nation's
highest policy-making body--voted
to remove Sukarno from office. On
the same day it appointed Suharto
acting president.
In the interval between the
coup attempt and Suharto's assump-
tion of the presidency, the army
crushed the PKI and congress
banned it; the government was
purged of Communist and pro-Commu-
nist officials; and Suharto formed
a cabinet. With the assistance
of the International Monetary Fund,
the government in October 1966
formulated and embarked on a
stabilization program designed
to halt rampant inflation and re-
build the nation's economy. Indo-
nesia disengaged from Sukarno's
pro-Peking foreign policy and
returned to nonalignment, ended
the three-year confrontation with
Malaysia, resumed friendly rela-
tions with the West, and re-entered
the United Nations.
Jogja ka rt? 'y~~~i~`Ai~h Sinpera the t
"Guided Democracy"
In his insistence on legal
forms, Suharto has benefited from
the sweeping executive powers
provided by the Indonesian con-
stitution.
The constitution, hastily
written in 1945 to support an
emergency wartime regime, was
reinvoked by Sukarno seven years
ago to justify his imposition of
"guided democracy" and his assump-
tion of virtually unchallenged
power. Although the Suharto regime
is committed to a return to a rule
of law and has encouraged congress
and parliament to carry out their
constitutionally prescribed func-
tions (congress makes policy and
parliament legislates), it has
employed the far-reaching executive
authority to develop its own more
flexible version of "guided democ-
racy."
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Both the 350-member parlia-
ment and the 651-member congress
are currently provisional and
appointed. Originally appointed
by Sukarno in 1960, their member-
ship was purged last year and
about a third of the present totals
are Suharto appointees.
Congress has called for na-
tional elections sometime before
July 1968, but since parliament
has been unable to agree on an
election law, postponement is
virtually assured. The regime,
which had been concerned over the
possibly disruptive effect of an
election campaign, is not dis-
turbed at the prospect of postpone-
ment.
Suharto wears many hats. In
a role distinct from his position
as acting president, he is chair-
man of the five-member cabinet
presidium, a group which super-
vises the portfolio ministers and
is the government's major admin-
istrative body. He also is pre-
sidium minister for defense and
security--thereby controlling the
four armed services (army, navy,
air force, and police) and the
ministry for demobilization and
veterans affairs. In addition he
retains the post of army commander
and, although an acting commander
carries on the routine administra-
tion of army affairs, Suharto him-
self remains the ultimate leader
of the troops.
to understand the complexities of
Indonesian sociopolitical life to
a greater extent than most of his
critics. He was a nonpolitical
general prior to the 1965 coup, and
his caution--which his critics see
as endangering the new order or
protecting corrupt associates--
may be partly a matter of finding
his way. In most instances, how-
ever, his slow pace has been de-
liberate and calculated. Appar-
ently he rationalizes that, with
the exception of the continuing
anti-Communist campaign, the ad-
vantages of rapidly paced action
would be outweighed by the in-
creased political tensions and
possible economic disruptions it
would create.
Suharto has made no effort to
disguise the fact that the army is
the major political force in Indo-
nesia and his own chief support.
However, he has backed an army-
civilian partnership in the cabi-
net and has worked to develop a
united team of all four armed for-
ces. He has given cabinet posts
to members of the naval, air, and
police services, each of which is
much smaller than the army, and
has striven to avoid an exacerba-
tion of interservice rivalries.
Suharto has emerged as a Criticism of Suharto's per-
strong and resourceful, although ~formance centers chiefly on his
cautious, leader, and he appears cautious approach and his reliance
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on the army. Censure, however,
has never reached serious propor-
tions. Those who complain the
loudest support him and agree that
there is no feasible alternative.
The Army's Role
Essentially the army and the
new order are synonymous. With
an army general as president and
cabinet leader, the army today
has achieved greater breadth and
depth in government participation
than ever before in its 22-year
history of political involvement.
It holds eight of 30 cabinet
posts, 25 of 84 subministerial
positions, 15 of 25 provincial
governorships, about half of the
subprovincial offices, and half
of the ambassadorial posts. Army
officers are sprinkled liberally
throughout the government-con-
trolled agricultural and industrial
complex. In addition the 17 army
territorial commanders exert
considerable authority throughout
provincial administrative systems
regardless of whether the local
governor is military or civilian.
The army exerts further power
and influence through Suharto's
personal staff, a group of nine
generals and one colonel. The
staff has been criticized by both
civilian and military officials
for having assumed more authority
than it should and to be under-
cutting the cabinet.
Although the army is united
in its support for Suharto, there
are divergent groups within it.
The principal disagreement has
been over the pace of reorienta-
tion and reform within the govern-
ment. Leaders of the group ad-
vocating a faster pace are General
Dharsono, commander in West Java,
General Sarwo Edhie in North Su-
matra, and General Kemal Idris,
commander of the Army Strategic
Reserve. The army continues its
screening process to ferret out Com-
munists, pro-Communists, and active
Sukarnoists within its ranks. The
acting army commander is General
Panggabean, who has worked closely
and effectively with Suharto for
some years.
Civilian Role
Although the army is clearly
predominant and the civilian
complaint of "creeping militarism"
is indeed valid, responsible
civilian participation in govern-
ment remains substantial.
Civilians hold 16 of the 30
cabinet posts--four of the five
presidium ministries and 12 of the
regular portfolios. Congress and
parliament are both predominantly
civilian and have enjoyed greater
authority and freedom of expres-
sion since mid-1966 than at any
time in the last seven years.
Teams of civilian economic and
political advisers are attached
directly to Suharto's office. He
relies strongly on the former and
has accepted suggestions from the
latter.
The most able and influential
cabinet official next to Suharto
himself is Adam Malik, foreign
minister and concurrently presidium
minister for political affairs--a
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position which gives him super-
visory powers over home affairs,
justice, and information. Malik
has been a strong proponent of an
accelerated political pace and is
a major spokesman for a strength-
ened civilian role, although he
has no significant political base.
He appears to have good working
relations with Suharto, however,
and thus seems likely to remain
in a key position.
The Sultan of Jogjakarta,
presidium minister for economics
and finance, in mid-1966 was
linked with Suharto and Malik as
one of a triumvirate which gov-
erned the nation. Although the
Sultan retains great respect and
prestige, particularly in Java,
he lacks expertise and political
aggressiveness and is gradually
assuming the role of an important
and necessary background figure
rather than that of a leader. The
major decisions on economics and
finance have been consistently
made by the team of civilian econ-
omists attached to Suharto's of-
fice.
Civilians retain only ten of
25 gubernatorial posts, but at the
subprovincial level the average
civilian-army breakdown appears
to be about 50-50. It is inter-
esting that in East Java, where
the regime feels the new order has
yet to establish itself firmly,
76 percent of the local officials
are civilian. At least half of
these and possibly more can be
classed as "old order Sukarnoists,"
an indication of the regime's
early decision to tread softly
and move slowly.
Political Parties vs. Regime
Political parties have no
sharply determining role in gov-
ernment in view of the subordinate
position of the legislature, the
army's pervasive influence, and
the regime's preference for tech-
nicians rather than politicians.
They do exert leverage, however,
and Suharto--who is considerably
more liberal than many of the
military around him--takes civil-
ian political views into consid-
eration to the extent he deems
advisable in determining policy.
Suharto is also moving gradually
to enlarge the sphere of political
activity. Party activity, how-
ever, has been discouraged by the
partial political moratorium
which exists in the form of a gen-
eral "understanding" rather than
an officially imposed restriction.
The regime publicly rationalizes
that some political standdown is
necessary until further progress
has been made toward economic re-
covery, and that economic stabil-
ization, in turn, is a prerequi-
site for political stability.
Political organizations today
tend to assert themselves more at
local levels than in Djakarta and
often utilize their front groups--
particularly their youth--in
political action rather than the
main body of the party. They make
considerable use of the press to
express their views, and every
major organization or bloc has its
own daily. The non-Communist
press enjoys relative freedom
largely by virtue of Suharto and
reform-minded army officers.
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The army distrusts political
parties largely on the basis of
irresponsible party behavior during
the 1950-60 period of unstable
parliamentary government. It re-
gards party activity as disruptive
to national unity and sees the
parties as lacking a philosophy
and a sense of national purpose.
It is concerned over the long-term
problem of developing stable rep-
resentative government and sees
the necessity for continuing at
least a significant army role in
government for the indefinite
future.
The army reportedly hopes
to write into the election law a
provision entitling it--by appoint-
ment--to 25 percent of the member-
ship of congress and parliament,
with another eight and one third
percent of the seats allotted,
also by appointment, to functional
groups. The parties are willing
to give the army only twelve and
one half percent. Another prob-
lem which has prevented agreement
on the election law is the ques-
tion of proportional representa-
tion, which would benefit densely
populated Java. The army, sup-
ported by non-Javanese groups,
prefers a system of single-member
constituencies.
Major Political Organizations
Indonesia's two major parties
are the orthodox Muslim Nahdatul
Ulama (NU) and the Indonesian
National Party (PNI). Both are
Java based and factionalized and,
depending on factional ascendency,
have vacillated in their support
of the Suharto regime.
Although the NU has not moved
into the mainstream of the new
order, it is anti-Communist, and
its younger members and its large
and active youth front have fre-
quently aligned themselves with
and strongly supported the army.
Idham Chalid, a former Sukarno-
phile and a presidium cabinet
minister, was reinstated as party
chairman in early July, but two
anti-Sukarno activists also were
included in the five-member execu-
tive council.
The PNI, the largest party
in parliament, is under moderate
national leadership imposed last
year with army assistance. The
PNI's presidium minister, Sanusi,
is a moderate, as are most members
of the party's parliamentary bloc.
The party, however, is controlled
chiefly by its large left wing.
This left wing is not only the
principal vehicle of active Su-
karnoism but appears also to be
cooperating with remnants of the
Communist Party and to be accept-
ing former Communists as PNI mem-
bers. As a result of these ac-
tivities, army commanders in Java
revived the anti-Sukarnoist cam-
paign in early July and threatened
firm action against any individ-
uals or groups wishing to restore
Sukarno's leadership.
The most dynamic elements
among civilian organizations are
the "action fronts" which developed
during the postcoup period and
which sometimes call themselves
collectively the "Generation of
'66." The most active of these
groups have been the student
fronts--KAMI and KAPPI, composed
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respectively of university- and
high-school-age youth--and the
so-called "scholars' front," KASI,
made up largely of lawyers and
other professional groups. Su-
harto appointed about 30 action-
front leaders to parliament last
January. These leaders and their
organizations are both the strong-
est supporters and principal crit-
ics of the regime. They have been
the major opponents of "creeping
militarism," of corruption in gov-
ernment, and of Suharto's prefer-
ence for slow and indirect action.
In late July Suharto approved
the formation of a new Muslim
party which will be composed of
members of the Masjumi, a modernist
party banned by Sukarno in 1960,
and various organizations either
affiliated with it or ideolog-
ically sympathetic to it. In
terms of size and strength it
should easily rival the NU and
PNI and will probably give the
regime more consistent support
than those two parties have done.
Further it will provide geographic
balance to the political scene
since it draws its major strength
from West Java and Sumatra,
whereas the NU and PNI are largely
based in East and Central Java.
The Communist Party
The outlawed PKI is frag-
mented and under continuing mili-
t-ary pressure. The party is pre-
sumed to retain a significant fol-
lowing in East and Central Java,
but is not likely to attempt a
test of its strength in those
areas. Its dominant wing is pro-
Peking and is dedicated to ulti-
mate revolution. For the time
Page 7
being, however, its policy is to
remain relatively inconspicuous,
to focus on infiltration of other
organizations, to foment friction
wherever possible, and to prepare
for armed revolt. The peasantry
remains its primary target.
Despite the party's present
disorganization, the government
regards it as a continuing threat.
There is a long tradition of left-
ist nationalism and Communist
activity in East and Central Java.
The reported present collusion
between Communists and left-wing
nationalists is continuing evi-
dence of this. Serious economic
problems in these two provinces,
including growing landlessness
among the rural population, and
resentment over the mass killings
of Communists after the coup are
strong issues for Communist exploi-
tation.
Regime leaders feel that an
organization should be developed
to accommodate the millions of
Indonesians who once belonged to
Communist front organizations but
who were not indoctrinated Commu-
nists. Nothing, however, has yet
been done.
Economic Scene
Economic improvement is the
regime's priority policy. Suharto
and many of his civilian and mil-
itary colleagues believe that
their government will stand or
fall on economic issues and that
the latent appeal of the left can
be defeated only through an im-
proved living standard for the
average citizen. The effort is
presently still directed largely
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against acute inflation, but
plans are that it will. gradually
evolve into a development program.
An economic stabilization
program, formulated with the
assistance of the International
Monetary Fund in 1966 and progres-
sively implemented since then, is
showing slow but favorable results.
The rate of price increases was
35 percent during the first quarter
of 1967, compared with 141 percent
during the first three months of
the preceding year. A substantial
part of these continuing increases
reflects adjustments to the polit-
ically courageous step of partially
removing government subsidies.
Legal exports have increased and
may meet balance-of-payments tar-
gets for this calendar year. A
changed investment climate is be-
ginning to attract foreign busi-
ness back to Indonesia.
On the other hand, a balanced
budget has not been achieved this
year. A rice deficit and the
need to purchase foreign rice con-
tinue to require substantial out-
lays of foreign exchange; and the
still low production of export
products, despite recent improve-
ment, combined with a high rate
of smuggling, has kept legal im-
ports down, reduced revenue, and
retarded economic recovery. The
country's foreign-exchange re-
serves have long since been ex-
hausted. Transportation and dis-
tribution facilities, which should
have priority attention in a na-
tion with Indonesia's geographic
problems, have deteriorated badly,
contributing to the decline in
production and exports.
Indonesia's most fundamental
problem--a rapidly growing popu-
lation and the unavailability of
land---resists early solution. The
problem is particularly acute in
Java and Madura where 65 percent
of the population, now estimated
at 108 million, occupies seven
percent of the nation's land area.
In late July, Suharto tentatively
endorsed a program of family plan-
ning.
Under present circumstances,
Indonesia has been unable to meet
payments on its foreign debt of
some $2.7 billion. In 1966 Indo-
nesia's Western creditors agreed
to reschedule payments on debts
already in arrears and on certain
categories of loans and export
credits falling due through De-
cember 1967. Meetings in Paris
and Amsterdam this October and No-
vember will discuss debts falling
due during calendar years 1968
through 1970.
The IMF considers present debt
relief arrangements insufficient
and has urged direct foreign as-
sistance to Indonesia. Western
creditors have pledged or already
advanced a total of $200 million
for 1967, and the coming Amsterdam
meeting will discuss economic aid
commitments for 1968.
Separate bilateral meetings
with the Soviet Union, Indonesia's
largest creditor, have resulted
in a draft agreement on reschedul-
ing of debt payment but the USSR
has made no offers of economic
assistance. Rescheduling with
other Communist nations is still
in progress.
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Foreign Policy
Although Indonesia officially
espouses a policy of nonalignment,
foreign relations are in fact
oriented toward the non-Communist
world. This follows partly from
the government's domestic anti-
Communist position but chiefly
from Indonesia's need for foreign
economic assistance and the prob-
ability that such aid will come
chiefly from the West and from
Japan. Nevertheless, Indonesia
maintains correct relations with
the Soviet Union and other Euro-
pean bloc nations and will seek
assistance from those nations
also.
Relations with Communist
China remain unfriendly. The major
current issue between the two
countries is Indonesia's treatment
of Overseas Chinese. Peking
charges prejudicial and often il-
legal treatment of the Chinese
minority; Djakarta charges Peking
with interference in internal.
Indonesian affairs. Although re-
lations have been severely strained
from time to time, and Peking
propaganda is now calling on Com-
munist remnants to overthrow the
Suharto government, a break in
relations is not likely.
Indonesia continues to move
toward the regularization of re-
lations with Malaysia and Singa-
pore. It has formally recognized
Singapore but not Malaysia, ap-
parently because well-placed In-
donesian Army officers find pres-
ent informal relations to their
economic and political advantage.
Formal relations should certainly
develop, however, within the next
year. Trade has been resumed
with both Singapore and Malaysia,
but it is not expected to return
to the substantial level that
prevailed before Sukarno's "con-
frontation" policy.
Indonesia retains its inter-
est in expanded regional influence,
but the Suharto regime is pursuing
this policy within the context of
friendly relations rather than
within the former one of military
expansionism. Largely at the in-
itiative of Foreign Minister Ma-
lik, a new cultural and economic
organization--the Association of
Southeast Asian Nations--came
into being on 8 August composed.
of Indonesia, Malaysia, Singapore,
the Philippines, and Thailand.
Suharto and Malik are opposed to
a regional military pact in the
immediate future and both have
publicly corrected statements
from within the military estab-
lishment which have implied Indo-
nesian interest in a regional de-
fense arrangement.
Indonesia has reduced its
diplomatic representation in Af-
rica and for the time being has
abandoned its. pretensions to Afro-
Asian leadership.
Conclusion
Suharto's and the army's long-
range concern is the latent threat
from the left. This underlies
the priority status accorded eco-
nomic policy and continued army
operations against Communist rem-
nants. The regime is also worried
about the PNI's course of leftist
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nationalism--the continued iden-
tification of its left wing with
Sukarno and the left wing's will-
ingness to cooperate with the
Communists. A new effort to en-
courage, and if necessary coerce,
the party actively to support the
new order is now under way. Su-
harto hopes ultimately to develop
the PNI into a dependable secular
force to balance the Muslim par-
ties.
Suharto has demonstrated his
intention to observe constitu-
tional processes and to permit
the development of an increasing
civilian voice. At the same time,
the army's predominant political
role will be preserved certainly
until elections are held. A move
toward significantly increased
army controls would be regarded
now as a step backward and would
be taken only under considerable
provocation.
Progress in economic reform
has been greater than expected,
but much still remains to be done.
In the immediate future, further
steps must be taken to curtail
smuggling, rehabilitate the infra-
structure--especially transporta-
tion---and improve the revenue ef-
fort. The new order, however,
acknowledges the seriousness of
its problems and is moving to deal
with them.
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