EAST ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A001300010001-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: July 13, 2001
• Sequence Number: 1
• Publication Date: July 1, 1975
• Content Type: NOTES

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No Foreign Dissent
East Asia
Top Secret
1' 2
Handle via TALENT-KEYHOLE-
COMINT Channels July 1, 1975
TCS No. 781/75
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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
July 1, 1975
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Indonesia: On the Road with Suharto. . . . . . . . 7
China and Japan Weigh Oil Agreement. . . . . . . . 10
Burma: Student and Worker Discontent . . . . . . . 12
Malaysian Party Elections . . . . . . . . . . . . . 14
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Indonesia: On the Road with Suharto
President Suharto set off on June 26 for a
two-week tour that will take him to five world
capitals, including Washington. Suharto's trip,
which will also take him to Iran, Yugoslavia,
Canada, and Japan, is designed to burnish his
international image as a Third World statesman
and, more mundanely, to explore the prospects for
increased economic and military aid. Although the
trip was planned well in advance of the communist
victories in Indochina, Suharto can be expected
to present Indonesia's ideas about the future of
Southeast Asia and seek support for Jakarta's
regional leadership aspirations.
Suharto's first stop is a five-day official
visit to Iran, reciprocating the Shah's visit to
Jakarta in 1974. Indonesia hopes for greater
development assistance from Iran; Tehran has already
agreed to finance a fertilizer plant but, thus far,
has made no general commitments for further aid.
Nevertheless, Iran has been more forthcoming on
economic aid than other Middle East oil-rich states.
The original itinerary scheduled state visits
to Saudi Arabia and Egypt, after Iran. The Saudi
trip was postponed after the death of King Faisal,
and the Cairo stop was scrubbed soon after. Jakarta
is very unhappy that the Arab portion of the trip
fell through. Suharto had counted on successful
state visits there to help counteract domestic and
foreign criticism that he is anti-Muslim. He had
intended to make the pilgrimage to Mecca during
the visit to Saudi Arabia, fulfilling a major
Muslim religious obligation. His advisers believe
that doubts about Suharto's Muslim credentials are
an important reason for Arab unwillingness to
provide economic aid to Indonesia.
July 1, 1975
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From Iran, Suharto will go to Yugoslavia (June
30-July 2), where his primary objective is to
refurbish Indonesia's standing as a nonaligned
nation. The President's advisers hope that a
well-publicized visit will impart to Suharto some
of President Tito's aura of elder statesman of the
nonaligned movement. Indonesia has been perturbed
by the allegations of some nonaligned leaders that
Jakarta is now part of the US sphere of influence.
Suharto believes that these charges have diluted
Jakarta's ability to exercise a moderating influence
in recent nonaligned conferences and given the
radical states more power.
A visit to Ottawa (July 2-5) is the last
state visit of the present tour. Suharto will be
returning Prime Minister Trudeau's visit to Jakarta
as well as discussing Canada's economic assistance
projects.
Suharto will stop unofficially in Washington
on July 5 for one day. He wants to talk with Presi-
dent Ford and top US officials about increased US
military assistance and will argue that recent events
in Indochina pose new security threats to Indonesia
that require substantial improvements in Indonesia's
armed forces. Suharto is also looking for US sup-
port for Jakarta's desires to enhance its regional
leadership role in Southeast Asia, as well as some
indication of the future US role in the area. His
economic advisers will insist that, despite increased
income from oil, Indonesia remains a poor country in
need of substantial US economic assistance.
After leaving Washington, Suharto will pay an
unofficial visit to Japan (July 6-8) en route home.
He will be discussing future Japanese economic
assistance for Indonesia, in particular Tokyo's
willingness to finance the Asahan hydroelectric
and aluminum smelting project in North Sumatra.
This project has been under discussion for some
July 1, 1975
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time, and Indonesia views progress on the negotiations
as a barometer of Indonesian-Japanese relations in
general. Jakarta believes that Japan benefits
significantly from imports of Indonesian raw
materials and should be more forthcoming on assis-
tance to Indonesia's major development projects.
(SECRET NO FOREIGN DISSEM/NO DISSEM ABROAD/BACKGROUND
USE ONLY/CONTROLLED DISSEM)
July 1, 1975
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China and Japan Weigh Oil Agreement
Sino-Japanese negotiations on a long-term oil
agreement may be completed by year's end. The de-
pendability of oil revenues became an urgent issue
to Peking when Japan failed to take delivery of
almost a fifth of the 100,000 barrels per day of
crude contracted for in 1974. With the fifth five
year plan (1976-80) now being drafted, Chinese
planners need to know how much oil income can be
counted on to finance purchases of Western machinery
and equipment.
Japanese purchases of Chinese crude, which
began with 20,000 barrels per day in 1973, have
been handled on a case by case basis by the Council
of Petroleum Importers and the International Oil
Company, two Japanese organizations established
expressly for that purpose. Chinese disappointment
with sales in 1974 led to a search for broader
channels to the Japanese market. In February,
Inayama Yoshihiro, president of the Japan-China
Trade Association, agreed to assume overall
responsibility for a plan to guarantee sales to
Japan over a number of years. Peking reportedly
is ready to sell "tens of millions" of tons a year
through 1980, while Japan is willing to reduce the
share of imports obtained from the Near East and
Indonesia to make room for Chinese crude. Guaranteed
long-term contracts do not, however, assure the
Chinese that Japanese companies will actually take
delivery of all oil under contract. This will be
determined by market conditions at the time.
Back in Japan, Inayama consulted with the
Ministry of International Trade and Industry and
with businessmen. Earlier this month, they
tentatively decided to increase purchases of
Chinese crude by about 160,000 barrels per day
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each year to 1 million barrels per day in 1980.
This schedule no doubt would please Peking; it
closely matches our estimates of Chinese ability to
produce and transport oil for export. The business-
men asked for more time to consider the question
of price. Thus, a final proposal to the Chinese
is not expected until July. Inayama anticipates
signing an agreement with China in November.
The Japanese want to diversify their sources
of crude in order to reduce vulnerability to
another Arab oil cutoff and to enhance their
bargaining power over price with Indonesia, whose
crude is similar to China's. Furthermore, buying
more oil from China would help Peking reduce its
sizable trade deficit with Japan. This deficit
amounted to $840 million in 1974, compared with
the $630 million that will be earned from delivery
of 160,000 barrels per day of crude to Japan in
1975. The 160,000 barrels per day will include
20,000 barrels per day the Japanese contracted for
but did not accept in 1974.
The Chinese, for their part, are beginning to
recognize that Japan is the only major market
immediately on the horizon and are willing to
soften prices. Chinese oil delivered in the first
half of 1975 was reduced 70 cents a barrel from
last year's price of $12.80. Peking also agreed
to quote the sales in dollars so that Japan will
not repeat the 1974 experience of paying an
effective price of about $14 (after devaluations
of the yen relative to the Chinese yuan were taken
into account). (SECRET NO FOREIGN DISSEM)
July 1, 1975
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Student and labor protests in Burma-earlier this
month marked the third time within a year that there
has been significant agitation against the Ne Win
regime. Unlike the labor strikes a year ago and the
student-initiated disorders last December, the
government was able to restore calm this time without
violence after a week of unrest. Although the
government remains firmly in control, the recurrent
protests indicate that President We Win and his
colleagues have done little to alleviate worsening
economic conditions, the root cause of discontent,
and that further outbursts by disaffected groups
are likely.
The trouble this month started with worker
sitdown strikes over spiraling prices and frozen
wages, but students quickly moved in to stage
demonstrations calling for the overthrow of the
government. The students and workers made more of
an effort to work together than during past protests,
but because their objectives were different, the
government had little trouble preventing any real
coordination.
The government also made a more concerted
effort to use restraint this time than it had during
the disorders last year. High-ranking officials
were sent to meet with both student and worker groups
to explain government policies. The meetings with
students were quickly called off after officials
met a hostile reception, and to defuse the situation,
the government used the now-familiar tactic of
closing the universities and sending the students
home. The schools had only been open for a few
weeks after being closed during the disorders
last December. The government did make more than
July 1, 1975
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200 arrests, however, nearly half of which involved
high school students; only about 35 were university
students.
The renewal of demonstrations so soon after the
government's use of troops and widespread arrests
to halt earlier student protests reflects the depth
of student disaffection from the regime.
The government sees the workers as a greater
threat to stability and has treated them more
cautiously. It has promised to meet some of their
economic demands by increasing rice supplies and
overtime pay. At the same time, however, the
authorities reportedly are identifying and arresting
strike leaders. For the most part, the government
has used only stopgap measures to appease the
workers since labor unrest first developed during
the spring of 1974. Discontent has thus manifested
itself periodically during the past year and will
undoubtedly persist unless or until the government
deals more effectively with the country's worsening
economic problems.
Despite the prospect of further unrest, the
regime does not appear to be seriously threatened
at this time. The army continues to monopolize
power, and it has shown no sign of disloyalty to
Ne Win and his colleagues. (SECRET NO FOREIGN DISSEM)
July 1, 1975
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Malaysian Party Elections
Prime Minister Razak scored a strong personal
victory in the party leadership elections-at the
annual congress of his United Malays National Or-
ganization (UMNO). He and Deputy Prime Minister
Hussein were unopposed as party president and
deputy president. All of Razak's party loyalists
were successful in their bids for various party
posts. A continuation of Razak's moderate leader-
ship seems assured through the next national elec-
tions in 1979, after which he may retire.
The strongest reflection of Razak's control
appeared in the contests for the party's third
echelon of leadership--the vice presidencies.
Razak candidates captured all three elected slots,
and each of these individuals now has some potential
for becoming prime minister, because Deputy Prime
Minister Hussein's health problems appear to rule
out his succeeding Razak.
The surprise defeat of Razak's principal po-
litical rival, UMNO youth organization leader Harun,
was unquestionably gratifying to the Prime Minister.
Harun had been considered front-runner for one of
the party's vice presidencies. His Malay chauvinism
had on several occasions embarrassed the Razak gov-
ernment, which is committed to a multiracial society.
Harun had also been tainted by several scandals, and
a strong anti-corruption speech by Hussein may have
influenced undecided delegates not to vote for him.
As the dominant force in the nine-party National
Front that governs Malaysia, UMMNO determines the
course of Malaysian politics. The leadership elec-
tions were closely watched by the non-Malay majority
in Malaysia as indicators of the government's com-
munal policy. Although the chauvinistic Harun was
July 1, 1975
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defeated, other advocates of Malay political su-
premacy were elected. In particular, the elec-
tion to the party's supreme council of several
individuals with strong Islamic orientation in-
dicated a resurgence of the conservative reli-
gious group within the party.
The decision of the UMNO congress to reaffirm
and accelerate the government's pro-Malay social
and economic programs will confirm non-Malay fear
that the Razak goxYernment is excessively concerned
with the Malay sector of the racially diverse pop-
ulation. The government's pledge that non-Malays
will not be hurt by efforts to give Malays a larger
slice of the Chinese dominated economy will no
doubt be greeted with some skepticism. Although
Razak has achieved his goal of building a multi-
racial coalition government, he clearly has some
way to go in convincing non-Malays that his admin-
istration is following an evenhanded communal
policy. (CONFIDENTIAL)
July 1, 1975
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