EAST ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A000200240001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 16, 2016
• Document Release Date: August 20, 2004
• Sequence Number: 1
• Publication Date: January 27, 1975
• Content Type: NOTES

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East Asia
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January 27, 1975
SOUTHEAST ASIA
The Arabs in Southeast Asia . . . . . . . .
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imajuana: in Search of a Foreign Policy .
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Malaysia-Singapore: Friends at Last . . . . 18
NORTH ASIA
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Japan and CIPEC . . . . . . . . . . . . . . 23
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Travel posters most often depict Southeast
Asia as a land of Buddhist temples and exotic
Hindu dancers, but it is equally the land of
Muhammad and the mosque. More than 123 million
Muslims live in the region, and 114.5 million of
these are in Indonesia, the most populous Muslim
nation in the world. Malaysia, with 4.7 million,
counts itself a Muslim state. Thailand, Singapore,
and the Philippines have significant Muslim minor-
ities., while .Burma has a small but vocal Muslim
community.
Despite historic religious ties with the Arabs,
Southeast Asian states have until recently had
few diplomatic contacts with them, most of which
have occurred in the context of 'international eco-
nomic and political issues affecting former colonies.
The new prestige and aggressive diplomacy of the
Arab world since the Middle East war of October
1973 and the oil embargo, however, are making waves
in Southeast Asia.
Southeast Asian governments have ambivalent
feelings about Arab interest in their area. On the
one hand, they get a vicarious pleasure from watching
the Arabs humble the former colonial powers, and they
see a chance for new sources of easy credit and eco-
nomic assistance. On the other, they worry about
the political and religious repercussions among
their own Muslim populations of increasing Arab
activities.
The Philippines was the first Southeast Asian
state to experience directly the political and
diplomatic effects of resurgent Arab Islam. In
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1972, Libya's Qadhafi publicly took up the cause
of Muslim insurgents in the southern Philippines.
Interest in the rebels' cause subsequently spread
to other Arab states as it became an important
topic of discussion at the periodic international
Islamic Conferences--a gathering of representatives
of world Muslim states. Saudi Arabian officials
have recently had bilateral talks with Manila about
its treatment of the Muslim minority in the Phil-
ippines.
Arab interest in the Muslims has economic as
well as political implications for Manila, which
relies on the Middle East for 90 percent of its
petroleum. Through some fancy diplomatic footwork,
President Marcos managed to get an exemption from
the oil embargo of 1973, but the experience brought
home to him the consequences of antagonizing the
Arabs. The nagging concern that Arab Muslim leaders
are watching him closely has been an important
factor in keeping Marcos on the path of moderation
in his dealings with Muslim insurgents.
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Hoping to turn Arab interest in the southern
Philippines to his own economic advantage, Marcos
is seeking Arab participation in various develop-
ment schemes planned for the Philippine Muslim
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area. Despite polite noises from various Arab
leaders, however, Marcos is finding it very
difficult to separate the Arabs from their money.
Indonesia, self-appointed leader in regional
affairs, views the Arab "invasion" of Southeast
Asia with a jaundiced eye. President Suharto
regards Philippine Muslim affairs as a local
problem and resents outside interference. He is
unhappy with the Arab's Johnny-come-lately diplo-
macy, which threatens to undercut his own efforts
at mediation. Moreover, Indonesia's military leader-
ship is uneasy with the precedent of Arab support
for a Muslim minority in revolt against an established
central government.
The army has bitter memories of the Muslim
revolt in Indonesia in the 1950s. Since acceding to
power in 1967, the generals have kept Indonesian
Muslims on a short political leash. None of the top
Indonesian leaders is a devout Muslim and, at the
last Islamic Conference, Jakarta took care to draw
a line between itself and the other participants
on the grounds that Indonesia does not consider it-
self an "Islamic state."
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While Suharto hopes to prevent Arab meddling
in Indonesian Muslim. politics, he--like Marcos--
is interested in opening up new sources of credit
and economic assistance from the wealthy Arab
states. Again like Marcos, Suharto has received
more promises than capital. Some of his advisers
attribute this to Arab uncertainity about his
Muslim credentials.
Of all the Southeast Asian states, Malaysia
probably has had the most contact with the Arabs.
Malaysia has been an active participant in the
Islamic Conference, and former Malaysian prime
minister Tunku Abdul Rahman served as its secre-
tary general until last year. Malaysian Islam,
moreover, is more conservative and less eclectic
than the Indonesian variety, and Malay Muslims
have kept in closer touch with developments in
Middle Eastern Islam, largely through students
studying in Cairo and. Mecca.
Malaysia has welcomed Arab interest in
Southeast Asian Muslim affairs--particularly in
the problem of Philippine Muslims, whose cause
it has championed for many years.
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Malaysian leaders show less concern than
their-Indonesian counterparts about the potential
domestic political consequences of increased
Arab activity; yet their government is probably
the most vulnerable in Southeast Asia to political
disruption from local Muslims. Although Malaysia
calls itself an Islamic state, government leaders
in Kuala Lumpur have little in common with the
experiences and aspirations of the rural Malays,
who form the majority of their Muslim constituency.
Prime Minister Razak has already had problems with
so-called Malay chauvinist politicians whose power
is based in these rural areas.
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The increased presence of Arab Muslims in
Southeast Asia could easily strike a resonant
chord among conservative Malays and strengthen
their hand against Razak. Unlike Indonesia,
Malaysia does not have a large population of
nominal Muslims to dissipate the effects of
activist Muslim political ambitions. Moreover,
the delicate communal balance between Malays and
Chinese means that Razak must avoid anything
that would politically divide the Malays.
Thailand has only a small Muslim minority,
but it is concentrated in the southern provinces
that border on Malaysia. Thai Muslims have long
felt neglected by the central government, and
Bangkok is suspicious of their close ethnic and
cultural ties to Malay Muslims. The Arabs have
already "discovered" the Thai Muslims, and the
secretary general of the Islamic Conference
recently toured the area. As with other South-
east: Asian states, the Thai have begun paying
more diplomatic attention to the Arabs, the
major source of their oil.
With the exception of the Philippines, the
new international prominence of the Arab states
has had more impact on the leaders of Southeast
Asian states than on their indigenous Muslim
populations. This could quickly change, however,
increasing problems for many governments in the
area. Many local Muslim communities are dis-
satisfied with their present economic and polit-
ical situation and increasing Arab interest
spawn antigovernment activities.
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Thailand--In Search of a Foreign Polii
Thailand's foreign policy, like its political
system, is in a state of transition. Although the,
outlook for parliamentary government taking perma-
nent root in Thailand remains questionable, it is
clear that Thai foreign policy is becoming more
nationalistic and independent. of the US than at any
time since the end of World War II.
The metamorphosis in Thai foreign policy,
which began during the latter years of the Thanom
military regime, results largely from a conviction
among senior Thai officials that the US is no
longer prepared to play a major role in Southeast
Asia. Many of these officials believe that their
country's close support of US policy in Indochina
has gained little more over the years than the en-
mity of Hanoi. and Peking. Judging the US now to
be a doubtful guarantor of Thailand's security,
Bangkok has begun to mend its fences with neigh-
bors long deemed hostile to its interests, notably
China and North Vietnam. It has also taken steps
to improve relations with Burma and Laos
Bangkok has made some progress in deal-
ing with the new coalition government in Vientiane
and with Ne Win's regime in Rangoon, but it has dis-
covered that rapprochement with Peking and Hanoi is
more easily said than done.
Thai officials generally agree that Peking is
amenable to improving relations, but they are not
of one mind on how best to proceed. Conservative
government, military, and business circles remain
wary of moving too fast to repair relations with
Peking, out of concern partly over Chinese support
to Communist insurgents in north Thailand and partly
over a possible resurgence of pro-Peking sentiment
January 27, 1975
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within Thailand's large Chinese population. The
Foreign Ministry, on the other hand, believes
that the sooner formal diplomatic relations are
established with China, the better it will be for
Thailand. Ministry officials seem to believe that
moving closer to China will help to balance Thai-
land's long-standing close relationship with the
US--a relationship that many Thai believe to be
out of balance and in need of adjustment. Such
thinking has also prompted the ministry to ac-
celerate the establishment of formal diplomatic
relations with East European countries.
The Thai have been less successful in trying
to establish a dialogue with the North Vietnamese
than, with the Chinese.
Although Thailand's new parliamentary govern-
ment is likely to be conservative, it will probably
also be responsive to the pressures for developing
closer ties with Peking and Hanoi.
even though little careful thought had been given
to what form better relations with Hanoi or Peking
should take, the newly elected government could well
January 27, 1975
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move to establish formal diplomatic ties with China
before the year is out. Mutual suspicions and the
US base.issue would seem, however, to rule out any
early progress in relations with North Vietnam.
The new Thai government will want to retain
a close association with the US. But it will prob-
ably seek to avoid becoming identified with US
policies that it believes would impair its efforts
to improve relations with its neighbors.
January 27, 1975
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Malaysia-Singapore: Friends at Last
Singapore Prime Minister Lee Kuan Yew's
three-day visit to Kuala Lumpur this month appears
to have largely removed the vestiges of the bitter
relations that followed Singapore's expulsion from
the Malaysian Federation almost a decade ago.
Lee's visit, at his initiative, took place
amidst a cordiality that clearly pleased both Ma-
laysian and Singaporean officials. Considering
the predominance of each leader in his country,
their obviously close rapport should have a bene-
ficial effect in removing the rough spots that
remain in the working level relationship.
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The improvement in Malaysian-Singaporean re-
lations is partly the consequence of a broadening
regional outlook in both countries. Their increased
contacts through the Association of Southeast Asian
Nations (ASEAN) have brought a greater awareness of
shared aspirations with their neighbors. Malaysia's
expanding international role has spawned greater
self-confidence in its dealings with the aggressive
Singaporean Chinese, and Razak seems less constrained
by Malay chauvinism than was his predecessor. For
his part, Lee--although he does not brook question-
ing of his leadership at home--shows a greater dis-
position to try to understand his Malay neighbors.
Ingrained racial suspicions will continue to
limit relations between Singapore and Malaysia.
Nevertheless, the current lack of rancor is in
sharp contrast to the feuding of the past, sug-
gesting a greater maturity in both states and a
growing determination not to let differin points
of view obscure their common interests.
January 27, 1975
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Japan and CIPEC
Japan is moving cautiously in its
dealings on the copper market, trying
to avoid action that might strengthen
the Intergovernmental Council of Copper
Exporting Countries (CIPEC). The CIPEC
countries, which supply 30 percent of
Japan's copper imports, have succeeded
at least temporarily in getting the
Japanese to stop exporting refined
copper, but the Japanese probably will
resume exports, even at a loss, if ore
shipments cannot be reduced from both
CIPEC and non-CIPEC countries. To
avoid giving any incentive for other
nations to join CIPEC, Japan is asking
for equal percentage cutbacks from all
its major ore suppliers.
Normally a large net importer of refined copper,
Japan upset the world market last year by becoming
a large net exporter. In fact, Japan accounted for
more than 100 percent of the increase in Free World
exports during January-September 1974 as sales of
many traditional large exporters declined. Despite
a sharp falloff in domestic demand, Japanese smelters
maintained metal production until late 1974 because
they were tied to long-term import contracts for
ores and concentrates. As inventories climbed and
interest rates rose, the industry sought relief
through exports. Refined copper exports totaled
203,000 metric tons during the first three quarters
of 1974 compared with only 21,000 tons during the
comparable 1973 period. Japan's exports jumped to
11 percent of the Free World total last year from
only 1 percent in 1972 and 1973.
January 27, 1975
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JAPAN: COPPER PRODUCTION AND STOCKS
(.1,000 metric tons)
1.973
1974
Production Stocks
Production
Stocks
January
73.3
18.8
79.0
53.9
February
70.0
15.1
75.8
59.6
March
76.0
12.7
85.2
48.9
April
77.7
14.5
79.8
50.9
May
74.1
14.3
84.7
63.2
June
82.4
16.2
82.5
68.9
July
84.8
22.4
89.9
80.7
August
85.3
33.5
89.1
81.2
September
80.1
42.4
81.7
67.7
October
83.3
46.0
n. a.
n. a.
November
83.7
47.1
n. a.
n. a.
December
80.1
53.1
n. a.
n. a.
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JAPAN: COPPER IMPORTS
(in metric tans)
ORES, CONCENTRATES, AND BLISTER
(Copper Content)
1971 1972
AUSTRALIA 41,200 47,675
CANADA 162,445 203,357
CHILE 74,634 52,977
PAPUA-NEW GUINEA ------? 43,820
PERU 37,735 34,485
PHILIPPINES 192,036 178,787
ZAIRE
ZAMBIA 43,603 51,516
OTHER 45,531_ 50,145
1973 1974 (9 mo.)
48,678 41,262
295,376 217,130
58,509 46,963
95,209 64,335
39,829 16,844
190,720 172,514
18,998 15,303
26,573 7,272
49,899 59,157
AUSTRALIA 7,475 6,058
CANADA 219 944
CHILE 29,514 24,902
PAPUA-NEW GUINEA -------
PERU
PHILIPPINES
ZAIRE
ZAMBIA
OTHER
14,971
90,986
8,022
9,923
99,671
31,894
6,589 4,477
10,193 2,528
24,251 26,578
10,396 10,321
160,520 100,008
101,953 18,500
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Japanese exports undoubtedly were a key factor
in the nearly 65-percent drop in the London Metal
Exchange price of copper between April and the end
of the year. In an effort to halt the decline,
the CIPEC countries (Chile, Peru, Zambia, and Zaire)
began probing Japanese intentions last summer and
in September requested that Tokyo suspend exports.
Japanese producers were reluctant to renegotiate
their ore-import contracts, and Tokyo neither wanted
to reduce export earnings nor help finance the
producers' inventories. CIPEC pressure mounted,
however, and Tokyo responded with a partial export
ban on October 1 and a total ban on November 6. By
this time, the Japanese had delivered their mes-
sage: suspension of exports would require a cutback
in production and a corresponding cut in imports of
ores and concentrates.
The CIPEC members reportedly agreed to cut
exports of unrefined copper to Japan by 10 percent
during December 1974 and January 1975, and Japan
agreed to approach other shippers for similar
reductions. Within a month, however, the situation
in Japan deteriorated; domestic demand fell further
and inventories mounted. The government and com-
mercial. banks arranged $48 million in loans to help
finance stocks, but the smelters claimed they needed
at least $300 million to survive. Producers had no
choice but to reduce output, in most cases by 15-25
percent. To prevent ore stocks from mounting, the
Japanese went back to CIPEC and requested a 30 per-
cent reduction in ore shipments through June 1975.
The two sides reportedly compromised on a 15-percent
cut for December and January deliveries, and agreed
to negotiate the level of subsequent deliveries.
The Japanese have approached copper companies
in non-CIPEC countries for similar percentage cut-
backs in ore shipments. The response from Papua-
New Guinea, Australia, Canada, and the Philippines,
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which together provide about 60 percent of Japan's
copper imports, has not been altogether favorable.
Bougainville Copper, Ltd., in Papua-New Guinea,
has agreed to reduce ore shipments by 15 percent
for two months as have several companies in Canada.
The Australians apparently are stalling, and
Philippine companies reportedly are refusing to
go along in the belief that the Japanese will
reduce imports from other suppliers in favor of
honoring contracts for lower price Philippine
concentrates. If the Japanese persist, however,
Philippine producers probably will have to accede
because they have no alternative markets.
Tokyo responded positively to CIPEC pressure
principally because it does not want to antagonize
important raw material suppliers. For the same
reason, the Japanese are trying to be impartial,
reducing ore shipments from all suppliers by an
equal percentage. By treating all suppliers
equally, Japan also hopes to avoid encouraging
other countries to join CIPEC. The Japanese pre-
fer to deal bilaterally with raw-material suppliers,
relying on the continued success of their network
of trading companies to get what they need. Inter-
national commodity agreements are viewed as a last
resort. Should CIPEC emerge from the current dis-
array with any real clout in the market, it will
be because the sharp falloff in world demand and
in prices for copper induced members to work more
closely together than at any time in the past.
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