EAST ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A000800110002-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 12, 2016
• Document Release Date: July 13, 2001
• Sequence Number: 2
• Publication Date: April 21, 1975
• Content Type: NOTES

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Secret
No Foreign Dissem
East Asia
Secret
z51
April 21, 1975
No. 0093/75
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Background Use Only/Controlled Dissem
Warning Notice
Sensitive Intelligence Sources and Methods Involved
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 005827
Exempt from general declassification schedule
of E. 0. 11652, exemption category:
? 5B (1), (2), and (3)
Automatically declassified
on: Date Impossible to Determine
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EAST ASIA
This publication is prepared for regional specialists in the Washington com-
munity by the East Asia - Pacific Division, Office of Current Intelligence,
with occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
CONTENTS
April 21, 1975
NORTH ASIA
Paying the Last Installment: Tokyo Says
Goodbye to Chiang Kai-shek. . . . . . . . . 1
Japan: Another Look at Local Elections . . . 3
North Korea: New
Political Committee Members . . . . . . . . 7
SOUTHEAST ASIA
Insurgency in Thailand--A Standoff. . . . . . 8
Burma: A More Visible President. . . . . . . 11
Burma: A Decade of
Economic Mismanagement. . . . . . . . . . . 13
Malaysia: A Red Rash . . . . . . . . . . . . 18
Philippines: A Visit from
a Romanian Head of State. . . . . . . . . . 20
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Paying the Last Installment:
Tokyo Says Goodbye to Chian Kai-shek
The passing of Chiang Kai-shek will have no
immediate impact on Japan's relations with the
Nationalist government on Taiwan. The Japanese
apparently foresee an essential continuity in the
relationship, based on their view that the Gener-
alissimo's son and successor, Chiang Ching-kuo,
is a pragmatist who recognizes Taiwan's interest
in maintaining profitable economic ties with Japan.
Chiang's death, nonetheless, is likely to have
subtle effects on Tokyo's attitude toward Taipei
and, in time, on a variety of issues.
Tokyo felt compelled to remain officially
silent on Chiang's death; there are no formal
diplomatic ties, and the Japanese had no wish to
offend Peking. But Japan's most senior leaders--
headed by Prime Minister Miki in his capacity as
president of the Liberal Democratic Party--
promptly expressed their personal regrets, and
Tokyo mustered a sizable delegation--including
former prime ministers Kishi and Sato--to attend
Chiang's funeral. For these and other conserva-
tive stalwarts of the World War II Japanese bu-
reaucracy, and for many of Japan's older generation,
Chiang's death marked the end of an era.
In Japan, even in politics, there is heavy
emphasis on "correct" behavior and unspoken
obligation. Chiang's sympathetic treatment of
postwar Japan, together with the massive Japanese
guilt complex over 30 years of war with China, com-
bined to win important friends for Chiang in Tokyo.
The Generalissimo had quickly repatriated Japan's
surrendered armies and, almost alone among Asian
leaders, agreed to forgo reparations.
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After the Nationalists were forced to move to
Taiwan in 1949, Tokyo's sense of obligation con-
tinued as an important component of its policy
toward the Chiang government. Through the 20-year
debate over China policy, Tokyo's "Taiwan lobby"--
composed of the ruling party's right wing and
businessmen with interests in Taiwan--won support
for Taipei's cause by appealing to the prevailing
respect for Chiang. Many apolitical older Japanese
supported Taipei's cause mainly because they viewed
Chiang as a symbol of China's ancient traditions
and virtues, a model for the Japanese social system
they remembered with nostalgia. Even after normal-
ization of relations with Peking in 1972, Tokyo's
leaders moved carefully--if not deferentially--to
avoid outright offense to Chiang.
In a sense, when Japan's senior conservatives
paid their last respects at Chiang's funeral, they
were providing the final installment of Japan's
postwar political debt to the Generalissimo, who,
in the words of a Tokyo newspaper, "requited wrongs
with kindness." Chiang's departure and the diminish-
ing influence of his senior advisers will inevitably
increase the distance between the Japanese establish-
ment and the government in Taipei. In Tokyo, from
now on, the value of the bilateral relationship will
be measured almost solely in terms of tangible po-
litical or economic benefits. (CONFIDENTIAL)
April 21, 1975
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Japan: Another Look at Local Elections
Although ruling conservatives held onto their
share of prefectural assembly seats in the local
elections of April 13, final returns reveal a
noteworthy drop in their popular vote total. Four
years ago, the Liberal Democratic Party received
46.8 percent of the vote; this time, they polled
42.2 percent. Even taking into account the 1.1-
percent increase in votes for independent conserva-
tives, the conservatives suffered a drop of about
3.5 percentage points overall. This worrisome
development has dampened talk within the party of
an early national election (i.e., June or July);
the consensus emerging now is that general elec-
tions will be called in November at the earliest
and perhaps not until next year.
Historically, the gradual decline in the con-
servatives' electoral base has been caused more
by the shift in population from rural to urban
areas than by any other cause. The greatest drop
in popular support for the conservatives occurred
during the mid-1960s, when the population shift to
urban areas was most pronounced. In later years,
the rate of decline in conservative support has
diminished, as has the shift in population.
The latest drop in conservative support cannot
be explained in terms of a population shift. The
most obvious explanation is the state of the econ-
omy; over the past year or so, industrial production
declined for the first time in the postwar period.
If dissatisfaction with the economy is the basic
reason, the conservatives may regain some support
once an economic recovery gets under way--a factor
the conservatives may well have taken into account
April 21, 1975
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in postponing the general election. If the recent
drop in support also registers in the next national
election, however, the conservatives will be hard
pressed to maintain a comfortable majority in the
Lower House. (CONFIDENTIAL)
April 21, 1975
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April 21, 1975
North Korea: New Political Committee Members
The leadership turnout at the fifth session of
the fifth Supreme Peoples Assembly--convened on April
8 for a routine presentation of the annual budget--
confirms the addition of three new members to the
powerful Political Committee of the Korean Workers
Party. The three first appeared as committee members
at the fourth session of the assembly in November
1974. Their rank is not clear, although they all seem
to be in the lower third of the committee's candidate
members.
Yun Ki-pok, most recently identified as director
of the party's Science and Education Department, joined
the Central Committee in 1970. His past assignments
include service as minister of Common Education, min-
ister of Finance, chairman of the State Planning Com-
mission, and vice chairman of the Committee for Cul-
tural Relations with Foreign Countries.
Chon Mun-sop, a veteran of Kim 11-song's prewar
guerrilla band, is a colonel general in the Korean
Workers Party. He has been a member of the Central
Committee since 1961, and in the mid-sixties served as
vice minister of the Ministry of-Public Security, which
handles domestic police and intelligence affairs. Chon
is accompanying President Kim on his visit to Peking
this week.
Information on Chong Kyong-hui, on the Central
Committee since 1970, is not available. (CONFIDENTIAL)
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Insurgency in Thailand--A Standoff
Bangkok newspapers were recently filled with
stories that north Thailand was being invaded by
a foreign communist army. The stories vanished from
the front pages almost as fast as they surfaced, but
as is often the case in Bangkok press treatment of
communist insurgency, there was some element of
truth in all the furor. A Thai insurgent band had
indeed attacked a government outpost on the periph-
ery of insurgent controlled territory near the Lao
border, but fact ended there and fancy took over.
The episode illustrates the tendency in Bangkok--by
press and government alike--to perceive the insur-
gency as a remote and somewhat irrelevant problem
that must be "glamorized" or embellished to attract
attention. This approach, however, has worked to
undermine the government's credibility and has often
led government officials to disregard intelligence
assessments of communist political and military
strength in the countryside.
Thai communist strategists, turning Bangkok's
parochialism to their own advantage, have avoided
the kind of spectacular terrorism that would force
the government to pay greater attention to the in-
surgency. When they decided in the late 1950s to
move from political to armed struggle, the strategists
concentrated their operations in remote areas where
the government's political interest and presence
are limited. As a result, few government officials
believe that enormous expenditures of resources
in an attempt to eliminate the insurgency are justi-
fiable. While it can be said that the insurgents
have only made a virtue of necessity, they never-
theless have achieved their intended results.
Although communist advances in Indochina will
buoy the morale of the Thai insurgents, the Com-
munist Party of Thailand is not in a position
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politically or militarily to take immediate advan-
tage of the situation. Insurgent strength has con-
tinued to grow over the years, now numbering some
8,000 armed men who operate in groups of from 10
to 100 in widely scattered parts of the country.
But there is still little popular support for the
communists outside of their enclaves, and the evi-
dence suggests that even in these enclaves, villagers
support the communists more out of fear than out of
any deep resentment against the government. In short,
the insurgency poses little immediate threat to Bangkok
or other heavily populated areas, and the government
sees little prospect of its doing so in the near
future.
The Communist Party of Thailand still has strong
ideological ties to Peking. Its leadership is mostly
Sino-Thai and has never been close to the North
Vietnamese, despite a willingness to accept training
and supplies from Hanoi over the years. Because of
its strict Chinese orientation and its dependence
on foreign support, the party has had limited polit-
ical appeal among the Thai. Moreover, Thailand's
strong anti-communist law, which makes party member-
ship illegal, has inhibited the party from trying
to build up an urban base.
This could change, however, if the newly elected
Thai National Assembly carries out plans to abolish
the anti-communist act. The Khukrit government is
divided on the issue. Prime Minister Khukrit report-
edly believes that the act merely keeps the communists
underground and out of view, and thus harder to
monitor and to counter. Foreign Minister Chatchai
Chunhawan wants to abolish the act in the belief
that this would facilitate efforts to improve rela-
tions with Peking and Hanoi. Army commander Krit
Siwara opposes abolition, claiming that this would
give an aura of legitimacy to the Communist Party
of Thailand and that many people who would not
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otherwise become members will be encouraged to join.
Krit believes that the net effect would be to
strengthen communist influence in Thai politics.
Krit's fears may be unfounded. Although some
groups, such as the more radical members of the
student movement, would welcome elimination of the
anti-communist law, it does not appear likely that
the communist party itself would seize the oppor-
tunity to compete openly with the government in the
political arena. Party propaganda continues to
be sensitive to those who question the wisdom of
pursuing armed struggle in the jungle, suggesting
that there is still a serious ideological hurdle
to any shift in strategy. Party leaders probably
would suspect that abolition of the law was a gov-
ernment "trick" to learn the identity and where-
abouts of key party members. Despite evidence that
the communists have had limited success in in-
fluencing some student radicals, leftist journalists,
and at least one political party, the insurgent move-
ment is still the focal point of communist activity
and is likely to remain so for the foreseeable future.
The party will want to watch the experiment in
representative government carefully for some time
before deciding whether to risk shifting more of
its efforts to the political arena. (SECRET NO
FOREIGN DISSEM/CONTROLLED DISSEM)
April 21, 1975
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Burma: A More Visible President
Student-initiated disorders in Rangoon last
December raised new doubts about Ne Win's staying
power in office. The President, who came to power
in 1962 and is now in his mid-60s, had indicated
that he was tiring of his job and might step down.
He appeared to have lost prestige as a result of a
government miscalculation that allowed the student
protests over funeral arrangements for U Thant to
get out of hand.
Ne.Win's actions during the past several weeks
have served to dispel any doubts about his plans--
he has given the impression of a President not only
fully in charge, but optimistic about the future of
his country. In contrast to the image of self-imposed
isolation that has long characterized Ne Win's rule,
the President has made several highly publicized
appearances in recent weeks.
Early this month, Ne Win spent a week touring
military facilities in northeast Burma. The journey
served to reinforce Ne Win's ties with the army--his
major power base. Any damage to his position last
December probably has been at least partially offset
by recent army successes against the communist
insurgents, and the trip demonstrates the President's
ability to travel in an area where insurgency had
been a major problem.
Last month, Ne Win visited a US Information
Service book exhibit in Rangoon, and the President's
office ensured that the occasion was given front-
page treatment in the government-controlled press.
According to US embassy officers, Ne Win appeared
in excellent health and spirits. He indicated that
he believed Burma's efforts to combat insurgency
were going well and that economic prospects were
bright.
April 21, 1975
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Although Ne Win's recent behavior suggests that
prospects for a change at the top of the Burmese
government have been reduced for the moment, the
country still faces serious economic and insurgency
problems, and renewed unrest on the part of students
and other groups remains possible. Such a development
would not lead to an overthrow of the regime as long
as the army remained loyal, but it could cause a new
downturn in Ne Win's spirits and trigger further
speculation about his retirement. Moreover, the
President has a long history of serious illnesses,
which could also affect his tenure in office. (SECRET
NO FOREIGN DISSEM/BACKGROUND USE ONLY)
April 21, 1975
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Burma: A Decade of Economic Mismanagement
Under Ne Win's reign, Burma has grown poorer
with each passing year. Pitted against average popu-
lation gains of over 2 percent a year, per capita
income is less today than in the early 1960s. Dur-
ing 1963-73 real annual growth of gross national
product averaged 1.8 percent: agriculture grew 1.1
percent, mining 1.5 percent, and industrial pro-
duction--the star performer--only 2.5 percent.
Once the world's largest rice exporter, Burma
has seen its surplus dwindle away in the course of
one short decade. Rice exports dropped from nearly
2 million tons annually in the early 1960s to only
200,000 tons in 1974. Official statistics may
understate actual production somewhat, but they show
almost no growth-in total rice output from 1964 to
1974--an implied decline in per capita rice produc-
tion of about 25 percent for the period. This and
other evidence of Burmese mismanagement has prompted
one East European diplomat to remark that Burma was
giving socialism a bad name.
The persistent stagnation of Burma's economy,
feeds on itself. Because of poor agricultural and
industrial performance, foreign exchange earnings
have diminished as exports declined steadily. Re-
stricted foreign exchange reserves forced Rangoon
last year to limit imports to about 40 percent of
their 1964 level. Adjusted for inflation, real
imports last year were only 20 percent of the 1964
level.
Even with curtailed imports, the government
has been compelled to take out short-term, high-
interest loans to meet its most essential needs.
Debt repayment is now beginning to choke out im-
ports in the competition for scarce foreign exchange.
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Short-term debt obligations alone took up some 25
percent of foreign exchange expenditure in the,
third quarter of 1974, while total debt obligations
drained off a staggering 40 percent of all foreign
exchange spending--compared with only 5 percent in
1967.
As a result of the debt burden, foreign exchange
reserves are now at a point where they will pay for
less than two months of imports at the 1964 rate,
dangerously low by international standards.
Burma's policy options have narrowed as cred-
itors press for more stringent actions. Reluctant
to antagonize the International Monetary Fund and
World Bank while new assistance is pending, the
Burmese government held down growth of the burgeon-
ing money supply somewhat in the last quarter of
1974, after a year of expansion of nearly 30 percent.
Now, after a period of serious inflation, local
currency shortages are appearing and threatening
government rice procurement programs. Farmers are
reluctant to accept government I.O.U.s for their
rice and are demanding cash, which can be spent in
the thriving black market. Caught in the center
of the cash squeeze, the government is having a hard
time meeting payrolls at state enterprises.
Perhaps the most fundamental deficiencies at
play in Burma's economy are the restrictive gov-
ernment policies that hamper normal market mechanisms.
For example, rice for consumption by urban workers
and for export is acquired through government pro-
curement at fixed prices. Low prices failed to
induce farmers to produce much beyond their own
needs, and government acquisitions have regularly
fallen short of targets.
There are also strong disincentives to saving
and investment. Savings declined from 13 percent
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of gross national product in 1968 to 7 percent in
1974 because of shrinking real incomes and negative
real. returns from low nominal interest rates. Con-
sequently, domestic sources of investment funds were
limited, and long-standing restrictions on foreign
investment prevented foreign capital from filling
the gap. Foreign capital inflow last year amounted
to some 1.5 percent of gross national product leav-
ing gross investment from all sources at well under
10 percent. This is less than half that of Thailand
and Malaysia, regional neighbors with similar
national resources.
Instances of liberalized government policy
since the early 1960s have been short lived, nar-
rowly conceived, and usually brought on only by
sharp pressure. Following last June's riots over
food and consumer goods shortages, for example, the
government authorized private rice merchants to
operate in a free market to supply cities. The
authorization was rescinded after three months, when
rice supplies began to improve. Subsequently, gov-
ernment procurement prices offered rice farmers were
temporarily increased by 50 percent--a measure which
promises to ensure adequate urban supplies. On the
other hand, retail rice prices in state stores have
not been changed, and rice is sold to the urban
population at a loss that indirectly has to be cov-
ered by foreign borrowing.
If the present economic picture is bad, the
future has begun to look grim. Problems abound in
transportation and industry because of spare parts
shortages and outdated equipment. Investment is too
small to replace worn-out equipment, much less sup-
port any expansion. Private foreign capital is
thwarted by the regime's overwhelming instinct to
insulate the country from foreign influence.
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Government support of the all-important agri-
cultural sector is particularly weak. Of the total
capital budget, expenditures devoted to agriculture
declined from 16 percent in 1963 to less than 8
percent ten years later and in the current 1975/76
budget increased marginally to only 9 percent.
Continuation of past rice production trends with
expected population growth will make Burma a net
food importer within five years. Moreover, Rangoon
is under the illusion that offshore oil discoveries
will alter its current financial crisis, even though
perhaps five to seven years are required to develop
any deposits that may be found. No offshore strikes
have yet been made.
Perhaps one small area for optimism exists in
the dialogue now going with the International Mone-
tary Fund and the World Bank. Loans from these
institutions probably will not be specifically tied
to economic reforms, but a reform message and cer-
tain guidelines no doubt will be emphasized. High
on the list of recommendations will be debt-reschedul-
ing to relieve the current foreign exchange squeeze.
Relaxation of price controls will be encouraged to
remove price distortions and to offset the black
market. A boost in production and exports is needed
to reverse the trend of declining imports so that
capital goods for development can flow in. Here the
focus will be on agriculture, requiring heavy gov-
ernment financial support.
Despite Fund and World Bank recommendations, it
will be difficult to dispel a deep-rooted Burmese
view that private business or market mechanisms
are the real barriers to socio-economic development.
Probably the best that can be expected is a limited
acceptance of the need for change and a handful of
timid attempts at application.
There is the ever-present hazard that continued
austerity could produce public outbursts that force
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increased consumption at the expense of investment.
In any event, time is needed to reverse the momentum
of decay, and the likely result over the next sev-
eral years is further deterioration of already poor
economic conditions.
Intellectual and popular dissatisfacton with
the economy could lead to political trouble for the
government. Nevertheless, the military remains in
firm control, and it seems unlikely that the regime
will be unseated in the immediate future. Bleak
economic prospects or being on the threshold of
bankruptcy do not necessarily portend total disaster.
Burma might stumble along indefinitely in India-like
fashion. (SECRET NO FOREIGN DISSEM)
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Malaysia: A Red Rash
A recent spate of Communist terrorist attacks
has spurred the Malaysian government to stronger
efforts against the country's nagging insurgency.
Government officials were alarmed by coordi-
nated rocket attacks at the end of March against
five military installations, some of them well down
the Malaysian Peninsula from usual insurgent haunts
along the Thai border. The attacks close to Kuala
Lumpur raise the specter of urban terrorism, which
has been only sporadic in the past. Security offi-
cials, impressed by the terrorists' ingenuity in
making efficient rockets from simple materials,
have concluded that they now face a more intelli-
gent and resourceful enemy.
The rocketing incidents in previously secure
areas have also aroused fears that there may be
an acceleration of the slow southward drift by the
insurgents in recent years from their sanctuaries
on the Thai side of the border. For the most part,
the some 1,600 rebels have stayed close to the border
refuge ever since the long post - World War II in-
surgency was finally contained in 1960.
Following the rocket attacks there were commu-
nist ambushes in two border states that resulted in
13 government fatalities. Government road and dam
projects in the same area have been the target of.
fairly frequent communist attacks over the past
year as the rebels sought to counter the extension
of a government presence into their jungle retreats.
The government is further discomfited by indi-
cations of a revival of rebel activity in the Borneo
state of Sarawak, where a smaller scale insurgency
had been deflated through a surrender and amnesty
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program last year. A rebel ambush in Sarawak this
month resulted in the first military fatalities
there in a year and a half.
Government authorities do not see any connec-
tion between the upsurge in insurgent activity and
events in Indochina, although they admit that re-
cent communist military victories in Cambodia and
Vietnam may have emboldened the local communists.
Security officials are probably correct in believing
that the step-up is primarily a consequence of
Malaysian communist factional competition. Evidence
has come to light over the past year that internal
squabbling has resulted in two breakaway factions,
and there has been a trend toward more aggressive
action as each faction seeks to establish its
supremacy.
In an effort to head off further incidents,
the government will intensify the monitoring of
communist activity in 300 special security areas.
The army is also sending additional units to the
Thai border area and has launched sweep operations--
so far with no enemy contact. The government hopes
these countermeasures will ease public fears, fed
by the local press, of broadening domestic communist
insurgency as a consequence of the communist suc-
cesses in Indochina.
Intensified counterinsurgency efforts will have
only limited effect, however, if the insurgents
retreat to their bases on the Thai side of the
border. Bangkok has been giving only grudging co-
operation to cross-border operations on the assump-
tion that the rebels pose no threat to Thailand.
Although a high-level Malaysian official claimed
after a recent visit to Bangkok that the Thai have
agreed to closer cooperation, Thailand's increasing
concern over its problems on the Cambodian border
raises doubts whether Bangkok's attention can now
be focused on the insurgents along the Malaysian
border. (SECRET NO FOREIGN DISSEM)
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Philippines: A Visit from a
Romanian Head of State
President and Mrs. Marcos pulled out all the
stops in playing host to the visit of Romanian
President Ceausescu from April 9 to 12--the first
by a communist head of state to the Philippines.
A massive publicity campaign surrounded the visit,
including coverage of the arrival and departure
ceremonies, the state dinners, and the granting of
honorary degrees. to both Ceausescu and his wife.
Marcos used the visit to emphasize the new
directions he is taking in foreign policy. At
Bataan Day celebrations, which were put off a day
so Ceausescu could attend, Marcos balanced the
occasion's traditional expressions of US-Philippine
friendship with statements of lessening dependence
on the US. At one point in his speech Marcos
stated that the "lesson" of Bataan is that Filipinos
must never again depend on foreign powers to defend
them.
Despite the fanfare accorded Ceausescu, little
of political or economic substance was gained by
either the Philippines or Romania. The visit was
capped with a joint communique and a set of small
economic agreements. Among other things, the
communique endorsed the concept of nuclear-free
zones in the Balkans and the Indian Ocean and
expressed "hope" for a similar zone in Southeast
Asia. On the economic side, the Filipinos reportedly
agreed to buy 500 Romanian tractors and $3.6 million
worth of oil-drilling equipment, while the Romanians
reportedly granted a $31-million soft loan for a
Philippine thermal power plant. The Romanians ap-
parently agreed prior to the visit to purchase a
considerable quantity of Philippine nickel over
April 21, 1975
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the next six years and, in apparent deference to
Manila's concern that the present balance of trade
favors Bucharest, authorized an official to stay
on in Manila for continuing discussions after
Ceausescu's departure.
Aside from its usefulness as a forum for
emphasizing new trends in Philippine foreign policy,
the visit's meager tangible results point up the
problems that Manila faces in trying to modify its
foreign policy alignment. In short, neither the
communist states nor the Philippines have much to
offer each other, and Manila for the present has
no really effective alternative to continued reliance
on its traditional partners for its major trade and
defense requirements. (CONFIDENTIAL)
April 21, 1975
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