THE PACIFIC POWERS AND THE STRAIT OF MALACCA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00967A000300010016-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 27
• Document Creation Date: December 19, 2016
• Document Release Date: August 31, 2006
• Sequence Number: 16
• Publication Date: October 22, 1970
• Content Type: MEMO

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MEMORANDUM
OFFICE OF
NATIONAL ESTIMATES
The Pacific Powers and the Strait of Malacca
Secret
96
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES
SUBJECT: The Pacific Powers and the Strait of Malacca Area
This paper takes a broad view of the essential elements in
a complicated and changing situation. The Board of National
Estimates, and the various components of the Agency who deal with
one or more of the countries discussed, are in general agreement
on the judgments made here, but there has been no attempt to
reach Agency-wide agreement on specific details.
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SECRET
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES
22 October 1970
1. With the fall of Sukarno and the end of Indonesian-
Malaysian hostilities in 1965, the Strait of Malacca became a
relative backwater in terms of immediate international interest.
But while first attention of the powers has gone to Indochina,
the Middle East, and other more dramatic problems, relations
among the states around and interested in the Strait have been
quietly changing in ways which could have important consequences
for the region's security situation, and for Western interests
there.
2. The major moves are well enough known. The British
are withdrawing from East of Suez, leaving little more than a
token contribution to a Commonwealth force for the defense of
Malaysia and Singapore -- a commitment for which the other
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prospective contributors, Australia and New Zealand, are less
than wholeheartedly enthusiastic. The US, through the Nixon
Doctrine, has served notice that it will be less visible at
least in a military sense in post-Vietnam Asia. At the same
time the Soviets are becoming more active in the area -- mili-
tarily on the Indian Ocean side of the Strait, but also through
economic and diplomatic approaches, and such floaters as the
Brezhnev Proposal on collective security, to the governments of
the region. The Chinese, while still the principal backers of
minority group insurgency, are also snowing some revived interest
in more conventional government-to-government relations. And the
Japanese, probably as distrusted throughout the area as any Com-
munist power, are asserting an interest in the Strait in par-
ticular as the passageway for their Middle East oil supplies;
and they are highly active in the region in general in pursuit
of their economic goals and of their burgeoning claim to great
power status.
These changes are not of course so simple and clear
as the slogans attached to them might imply. Indeed, it seems
likely that none of the outside powers has defined very pre-
cisely its aspirations in the area. And the role each one plays
will affect and be affected by the others. But just because the
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situation is so in flux, each of the countries along the Strait
-- Malaysia, Indonesia, and Singapore -- is reassessing its rela-
tions with the outside world and with its immediate neighbors.
How the Locals See It
4. On political and security grounds, each of these states
might like the international situation to freeze. This is not
true of their economic outlook. Indonesia needs massive infii.s.iOns,
of foreign money to recover
develop its rich natural resources. Malaysia depends on foreign
sales of its rubber, tin, and timber for the continued economic
progress which is the best hope of keeping its various races recon-
ciled to living in relative peace. And Singapore, which exists
mainly as a port and entrepreneur, needs new investment. But
each of these states is concerned about who might be eyeing that
"vacuum" which is developing as the British presence declines.
5. This is especially true of Indonesia, which sees itself
as the rightful Top Nation in the area -- as the natural leader of
the Malay race in its long term effort to fend off the Chinese.
Indonesia's present.;.-leaders have renounced Sukarno's military
adventurism. And they probably realize that they are in no posi-
tion to exert effective leadership until they have spent some years
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putting Indonesia to rights economically and developing a more
stable socio-political concensus. Their concern is that no other
power should achieve a dominant voice in the area before Indonesia
is in a position to assert its ancient claims.
6. Malaysia has no pretensions to regional leadership for
itself, but does worry that the ambitions of outsiders could
exacerbate its already difficult communal problems. Malay-Chinese
animosities, which flared into major rioting in the aftermath of
the May 1969 elections, have since calmed to a steady simmer. But
little progress has been made in attacking the causes of the prob-
lem, and the new government of Prime Minister Razak is just begin-
ning to experiment with a carefully limited resumption of parlia-
mentary politics. Against this tense background, the last thing
Malaysia needs is for Moscow to try to win friends among the Muslim
Malays by exploiting its hostility to Peking and its championship
of the Arab cause, while Peking plays upon the grievances of the
country's Chinese population.
7?
Singapore's leaders also feel some residual concern
about the attraction of Peking for their city's far-left. But
Prime Minister Lee Kuan Yew is (justifiably) confident of his
ability to control his opposition at home. Singapore is more
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worried about its Malay neighbors to the north and south than
about the meddling of outsiders. Growing closeness between
Malaysia and Indonesia conceivably could leave Singapore an
isolated Chinese enclave in a hostile Malay world. Some
Singaporeans liken their position to that of Israel: a more
dynamic and successful minority, threatened by the jealous
majority race of their region.
8. Thus it probably would have suited each of these
governments if the British had decided not to leave just yet.
Malaysia's present ruling generation, by training, sentiment,
and practical interest, was perfectly satisfied with Britain's
role in their affairs -- as a declared protector against possible
outside aggression but also as a tacit check on internal upheavals.
Singapore, too, found the British presence reassuring, not least
as a guarantee of Malaysian good behavior. Sukarno's successors
in Indonesia could never admit it, but even they might have found
their purposes served by a prolonged British presence in the region,
if only to hold at bay more serious foreign challengers for longer-
range influence.
9. But each of these governments has accepted the inevi-
tability of change in the area, and now seems to be making a
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virtue of necessity. They are moving to forge new links with as
many "outsiders" as possible, and hope thereby to maintain an
equilibrium among them. Thus, Singapore's Foreign Minister can
welcome Soviet interest in the Strait, for several reasons: to
discourage any possible Malaysian and Indonesian thoughts of
bringing the waters under their exclusive control; to "mitigate
fears of Japanese domination;" and also to encourage further
Commonwealth and US commitments to Singapore. Thus, also,
Malaysia's leaders engage in wishful thinking-aloud about a
"neutralization" of Southeast Asia, to be guaranteed jointly
by the US, USSR, and China. All three governments, moreover,
are polishing their non-aligned credentials and actively seeking
improved relations with radical Afro-Asian states and the East
Europeans, as well as with the great powers. All this opens up
interesting opportunities for the interplay of ambitions in the
Strait.
The Outside Powers
10. British influence in both Singapore and Malaysia is
certain to decline, due to the reduction in Britain's military
role and just to the passage of time. The next generation of
political and military leaders in Malaysia and Singapore will
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not be so completely British-trained, and may not inherit the
attachment now felt to traditions of parliamentary democracy
and of a strictly apolitical military. Some young Malays,
especially in the military, may already feel that a more de-
cisive (i.e., authoritarian) hand is needed to deal with the
country's problems.
11. In fact,, neither Singapore nor Malaysia would now be
willing to put all its chips on a Commonwealth military relation-
ship. Uncertainties about future British defense policy, or
about that use the British might be willing to make of the troops
which are remaining, make London seem an unreliable protector.
The same is true of the Australian and New Zealand contributions.
Australia's "forward defense" strategy by definition gives it
an interest in this area, but it has made few firm commitments
to date. None of these Commonwealth nations wants to get in-
volved in any possible internal di"sorders in Malaysia, and
Australia has indicated that its commitment to help Malaysia
against outside aggression does not i.clude possible clashes
with the Philippines, which claims title to portions of the
East Malaysian state of Sabah. Moreover, the prospect of losing
Commonwealth troops (and some revenue) has been adjusted to, and
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a return to "semi-colonial" status would damage the non-aligned
image both Singapore and Malaysia now are trying to acquire.
Malaysia especially thinks that a formal military pact with
Britain, even if it were possible, might complicate its own
growing closeness with Indonesia.
12. The smaller Commonwealth military presence which will
remain however, serves important needs of the locals. It can
be a psychological contribution to the area's security (and thus
a reassurance to prospective Western investors), and a check on
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Singaporean and Malaysian suspicions of each other. These benefits
also accrue to some extent to Indonesia, while Indonesia avoids
the taint of foreign forces on its own soil.
13. But probably the most important benefit of the Common-
wealth arrangement is the indirect tie it gives these governments
to the United States. None would want a formal defense tie with
Washington, and they would only be embarrassed by American attempts
to enlist them openly on "our" side, e.g., for the South Vietnamese
or against Peking. But Malaysia and Singapore like to hope that
any serious involvement of Australian or New Zealand troops on
their territory would, through the ANZUS treaty, draw in the United
States. And Indonesia, while still going through the formalities
of non-alignment, obviously wants American military power in South-
east Asia and may actually welcome America's Commonwealth allies
in a kind of proxy role in the Strait.
14. Indonesia's growing friendliness toward the United
States stems partly from the Suharto government's anti-Communist
roots; partly from Indonesia's need for US money and technical
expertise; and partly from a genuinely greater liking and respect
for the US than for China, the Soviet Union, or Japan. There also
is a feeling that the United States, if only because it is not an
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Asian nation, is not the same kind of competitor as the other
three major powers for the role Indonesia would one day like.
15. All three of these governments, therefore, will con-
tinue to seek American trade and investment; to be "constructively
non-aligned" in helping Washington find a graceful way out of
Vietnam; and earnestly to hope for a continued US presence in
post-Vietnam Asia. In sum, they hope the United States will
play the role on which Britain defaulted, of holding the balance
of power in the Strait until they are themselves more able to
cope with other foreign ambitions. The trouble is, they are not
entirely confident about continued US involvement. They are less
concerned about the specific settlement made in Vietnam than about
the steadiness of Washington's post-war Asian policy.
16. Asia's on "Westerners," the Japanese, are much less
welcome along the Strait but are recognized as a fact of life.
Japan is the chief purchaser of raw materials throughout South-
east Asia, and an avid investor in extractive industries and
other potentially lucrative enterprises. Moreover Japan is
providing massive foreign aid to Indonesia and tying the bulk
of it to purchases in Japan, which will enhance the already
strong competitive position of Japanese exports in the Indonesian
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market. Japan already is Singapore's largest supplier of re-
tained imports, and Singapore's recent industrial boom has relied
heavily on Japanese management and technical expertise. As
Malaysia's attachment to things British diminishes, and as the
Japanese investment there grows, its economy, too, is likely
to become more oriented toward Japan than the West. And the
importance to Japan's world trade of the Strait of Malacca, as
well as the neighboring Sudan and Lombok Straits, gives Japan a
legitimate interest in the affairs of the region. Ninety percent
of Japan's oil supplies pass through here en route from the Middle
East, and Indonesia could in time become a new source of supply
for Japan's growing oil requirements. As Japan begins to test
the waters for a larger international role, the Strait is the
obvious first area for naval cruises and for demands that the
Japanese have a voice in, for instance, arrangements to improve
navigational conditions.
17. All three of these states resent their dependence on
the new model "co-prosperity sphere", and are hypersensitive to
any hint of Japanese aspirations to political or especially
military leadership in Asia. They would resist any American
attempt to transfer some of Washington's Asian security burdens
to the Japanese. In fact, the Indonesians may see Japan less as
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a suitable partner or protector than as an interloper and their
chief long-range rival. I
18. China presents a different kind of problem to these
governments. It is in no position now to compete for regional
leadership or to jeopardize anybody's economic sovereignty. But
it is a center of attraction for ethnic Chinese and other dissi-
dents in Malaysia and Indonesia, and for Singapore's leftwing
opposition. None of these groups now presents a serious sub-
versive threat. Indeed the immediate danger may be that the
near-paranoia of the Malays about the Chinese, especially in
Indonesia, may lead them to lean too heavily on their own quite
loyal Chinese citizens. But Peking has a residual capacity for
insurgency in each of these countries and this eventually could
become important in case of serious economic dislocations, or
of new communal outbursts in Malaysia, or possibly even of a
lack of sufficiently visible progress on Indonesia's socio-
economic problems.
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19. At the same time, post-Cultural Revolution China is
beginning to make conventional diplomatic approaches to Asian
governments. No one is taken in by this; in fact Peking's open
championship of minority-race insurgency has brought its standing
with majority races throughout East Asia to an all-time low. But
the governments feel they must be cautiously responsive. They
are sensitive to the feelings of their Chinese populations. The
sheer bulk of China on the Asian scene has an intimidating effect.
And Peking, the argument goes, is a fact of Asian life, and better
to draw it in to normal relations than to keep it permanently iso-
lated. Thus, Malaysia probably will soon join Indonesia in support-
ing China's admittance to the United Nations. And if any other
state succeeds in working out a tacit "two Chinas" arrangement
for diplomatic relations, Malaysia and Singapore are likely to
follow suit. Both, however, would like to test China's good be-
havior in the UN and elsewhere before allowing permanent diplomatic
missions back home.
20. The Soviets are not especially trusted or liked in this
part of the world, but they are not seen as a security threat,
since local dissidents look to Peking. (Lee Kuan Yew has said
that "if the Russians win any converts among Singapore's Communists,
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they will be doing me a favor".) And they have important assets
with the Strait governments. The USSR vies with the US as the
largest single purchaser of Malaysia's rubber (and provides at
least in some Malaysian ayes a significant contrast with US
"dumping" of rubber and tin stockpiles) and is an important
potential market for Indonesian raw materials. Singapore sells
some (limited) processed' goods to the Soviets, and will be
especially eager to cement this trade as Malaysia and Indonesia
try to cut out the Singaporean middleman in processing and
exporting their rubber and other raw materials. Soviet merchant
ships call at Singapore's commercial dockyard. And most recently,
Lee Kuan Yew says he has talked with the Soviets about using
Singapore for repair and refueling of their warships -- although
the latest information is that this would be a limited commercial
arrangement and that no Soviet naval vessels would use the dock-
yard used by US and Commonwealth forces.
21. Most of all, the Soviet Union can be an important
element in the balance of power these states hope to maintain.
The Soviets' chief asset is their anti-Chinese posture, but they
also are seen as a valuable offset to the Japanese, and by Singa-
pore, to its Malay neighbors. And some of the locals regretfully
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suspect that Moscow may be an element in the Strait's power
balance for longer than the US is willing to remain there. This
balancing role is probably more important to Lee Kuan Yew than
the financial profit to be made from Soviet ships calling at
Singapore. He wants as many powers as possible interested in
the stability and prosperity of Singapore; and he also hopes to
get the US and the Commonwealth to bid against the Soviets for
Singapore's services.
22. In Malay eyes, Moscow's anti-Chinese credentials are
supplemented by its support of their Arab brothers in Islam.
For the moment this tends to exacerbate suspicions of the already
anti-Communist Indonesian government that the Soviets might lend
moral or material support to Muslims and others who harbor griev-
ances against the military government. But the Soviets neverthe-
less are developing potential assets, especially among those who
are most consciously "Malay," in both Malaysia and Indonesia.
23. The Soviets are now very much on their good behavior
throughout Southeast Asia, making determinedly non-ideological
approaches to governments (possibly because they have written
off the local Communists as incurably pro-Chinese). The Strait
governments still try to shield their people from exposure to
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the Soviets. But government-to-government relations are improving,
and the Soviets are making some progress with offers of economic
assistance and expanded trade, including barter arrangements and
low-interest loans. Their opportunities for political influence
are poorest with the Chinese government c ; Singapore, and not much
better with the present Indonesian government. Their main pitch
in the area, therefore, is likely to be to Malaysia -- to the
government itself and to astutely chosen tax;get groups, such as
Malay (rather than Chinese or Indian) politicians, trade unionists,
and intellectuals.
24. The "Broshnev Proposal" for some sort of collective
security arrangement in Asia was put forward in tentative and
ambiguous form and has evoked little more than curiosity. There
would be no interest in a new system of military alliances, even if
it should turn out to be what the Russians have in mind. None
of the locals wants to offend China or in any may lessen Western
interest in their security. But the proposal itself, vague as
it is, is likely to accomplish much of what the Soviets probably
intend. It suggests that the Soviets intend, in good part for
the sake of containing the Chinese, to play a larger role in the
area. Aside from worrying the Chinese about possible Soviet
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"encirclement," it provides a talking point with each of the South-
east Asian governments which could lead to exploration of improved
bilateral relations. In the Strait, for instance, it could be an
opener for Soviet requests for repair and refueling facilities on
the way between the Middle East and Vladivostok, and possibly for
air routes and landing facilities. Most of all, it helps to
establish the Soviet Union as one more power with legitimate
interests in the region, and this might indeed help convince the
locals that they do not have to choose between allying themselves
with the West or Peking.
Regional Cooperation
25. One way of frustrating outside ambitions, of course,
is to increase cooperation among the states themselves. And
indeed, Malaysian-Indonesian relations have never been closer.
The Malaysians do worry that some future Indonesian government
might revert to military expansionism, but see this as all the
more reason for doing whatever they can to strengthen Suharto's
position. Formal cooperation between the two ranges from pa-
trolling together the borders of the once-disputed Malaysian
territories of Borneo against the remnants of Communist insur-
gents there, to progress toward a customs union and toward
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joint-marketing of primary commodities to strengthen their
position vis-a-vis the industrialized countries, to such working-
level ties as a "hot line" between desk officers in their re-
spective foreign offices. There also are clandestine reports of
a plan to promote the emigration of some of Indonesia's unemployed
agricultural population to augment the Malay minority in Malaysian
Borneo, and of Malaysian intentions to covertly finance Suharto's
supporters in the forthcoming Indonesian election.
26. Unfortunately, the closer Malaysia grows to Indonesia,
the more worried Singapore becomes about Malay hegemony in the
Strait. Personal animosities, racial antagonisms, and competing
national interests will provide ample tinder for periodic head-
line-catching flareups, especially between Singapore and Malaysia.
But at the same time, the two know that their fates are linked.
Certainly Singapore realizes that the chief threat to its security
is a recurrence of racial violence in Malaysia which could dis-
turb its own currently harmonious race relations. Generally
good, if not always friendly, cooperation will therefore continue
on economic matters and on defense planning, as will extensive
consultations on a wide range of foreign policy issues.
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27. The cooperation of all three governments, among them-
selves and with other Southeast Asian neighbors, in limited
groups and for more or less specific purposes, is likely to
produce an interesting network of arrangements as time goes
by. Malaysia, for instance is developing separate defense-
related understandings with Indonesia, with Singapore and the
Commonwealth, and with Thailand. And it will hope to have a
tacit link to ANZUS through the Commonwealth and to SEATO
through Thailand. Such a network would give Malaysia the best
possible security re-insurance, while still allowing it to class
itself among the non-aligned.
28. This sort of cooperation is not, however, at all
likely to grow into a formal security alliance among the local
states. None of the states wants to give unnecessary offense
to Peking. Perhaps more important, the prospective partners of
an East Asian security arrangement often feel more threatened
by each other than by a common enemy. Singapore fears Malaysia
and/or Indonesia; Malaysia fears a renewed Philippine threat to
Sabah or possibly a different Indonesian government or even a
recrudescence of border disputes with Thailand; and all worry
about Japan, on general principles. Internal subversion, which
is the most likely threat to all, could not be met jointly by
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the three governments because of its inevitable Malay-Chinese
aspect. And an attack by a great power -- i.e., China -- could
not be met by them (with or without Commonwealth assistance) and
so must be left, rather fatalistically, to the United States.
Indeed, it is possible that a limited degree of defense coopera-
tion in the Strait is possible only with the Commonwealth partners
present to "referee" between Singapore and Malaysia, with Malaysia
in turn serving as a link to Indonesia. And attempts of either
Singapore or Malaysia to build up its own forces, even as a con-
tribution to the Commonwealth arrangement, is likely to be seen
as a potential threat to the other and could result in a wasteful
and disruptive arms race between them.
Outlook
29. In present circumstances, prospects in the Strait of
Malacca are for a good deal of muddling through, with little
dramatic change. None of these nations is likely to be involved
in a major war, to fall under Chinese or Soviet hegemony, to
adopt the emotional anti-Western stance of some non-aligned states,
to be a prime arena of great power conflict, or (with luck and
good management in Malaysia) to be gravely threatened by internal
insurgency. Nor are they likely to produce a regional alliance
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for self-help in security matters. But a more complex kind of
economic and political competition is shaping up in the Strait,
in which we are likely to see shifting combinations among "locals"
and "outsiders" for specific purposes. In the process, the rela-
tive influence of the West will diminish, while locals become
more sensitive to the opinions and interests of the non-aligned
world. Japan will become a still greater influence in their
economic lives, and will be all the more disliked because of it.
30. The Soviets have considerable potential for expansion
of their influence in the area, in part because that influence
is presently low. But they are for now mainly hedging against
the possibility of expanded Chinese influence and probably have
as yet only-limited perception of the kind of role they want
for the future. They also have other serious disadvantages to
overcome, including the suspicions of local governments, and
economic and political systems less attractive -- at least to
the present governments -- than those of the West. Their pros-
pects for achieving a major role depend on certain remote but
not totally unrealistic contingencies. Should Malaysian govern-
ment leadership pass to more radical, anti-Chinese Malays, the
Soviets would have a better chance of pushing their views,
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particularly since such a Malaysian leadership might be more open
to "socialist" state intervention in the economy to assist Malays
in competition with the Chinese. A more chauvinistically pan-
Malay government in Indonesia also might be more responsive to
Soviet advice and influence. If China should become more active
diplomatically or economically, or if the Japanese should begin
to throw their weight about, and appear to have slipped the
American rein, Moscow would be even more welcome as a balancing
factor in the region. And the worst case, of course, is renewed
communal violence in Malaysia which somehow drew in Indonesia on
the side of the Malays and Singapore in defense of the Malaysian
Chinese. This could give Moscow the option of supporting Malay
extremists (and possibly Peking the Chinese) while the West,
virtually immobilized in a conflict between its good friends,
could only urge restraint on both sides.
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