INDONESIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01443R000200120006-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 9, 2016
• Document Release Date: October 6, 1998
• Sequence Number: 6
• Publication Date: January 21, 1954
• Content Type: BRIEF

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NSC BRIEFING 21 January 1954
INDONESIA
I. The trend in Indonesia favoring the
Communists continues uninterrupted as
prospects for the cabinet's overthrow
by parliamentary action or a military
coup fade.
A. The opposition has been unable
to cause the defection of small
party government supporters, and
even should these parties defect
the government could still rely
on the Communist vote in Parlia-
ment to insure a majority.
B. Anti-Communist elements in the
army appear unable to organize
for forceful action because of
lack of political support and
disunity in their own commands.
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C. Communist cooperation continues
with the National Party, which
heads the cabinet, and joint
objectives of the National and
Communist parties are being
achieved.
D. A major factor in the present
situation is President Sukarno's
full support of the government.
1. In past, he has not been
thought Communist or even
pro-Communist but only
naive in his confidence
to use Communists.
2. Recently, his actions and
reported contacts suggest
greater sympathy with
Communism than formerly
believed.
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3. It is reliably reported
that
the parliamentary leader
of the Communist Party
is now his chief adviser.
4. He dealt a heavy blow to
anti-Communists in the
army by siding with the
pro-Communist defense
minister in a dispute
over the latter's policies.
II. An important propaganda charge of the
Communists in Indonesia, and one that
has been adopted by the government,
is that the United States, by forcing
down prices for tin and rubber, is
responsible for Indonesia's deter-
iorating economy.
A. Tin constitutes some 10% of
Indonesia's total exports and
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B. Since US is major consumer of
these products, Indonesians are
easily convinced that we manipu-
late prices for our own devious
purposes.
III. Fact is that tin and rubber are now
selling at prices which approximate
those obtaining before outbreak of
Korean war but have fallen sharply
from boom prices of 1951.
A. But Indonesians tend to look
at boom prices as "normal."
B. Without a windfall return of
a seller's market, the govern-
ment faced with serious budget-
ary problems, trade deficit and
increase in unemployment.
IV. Indonesia's tin comes from islands of
Bangka, Billiton, and Singkep, where
there has been no insecurity from
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A. Two thirds of output is from
government-owned mines super-
vised by Dutch technicians.
B. Remainder from Billiton Tin
Co. in which government has
controlling share; Dutch
interests hold a minor share.
V. Currently at issue is price which US
will pay for 20,000.t_onsof Indonesian
tin during last year of three year
contract.
A. Indonesians worried over price
aspect, particularly possibility
US will not stockpile new tin as
heretofore but put it on market
and further depress prices.
B. Indonesians long interested in
buffer stock plan which would
prevent further price declines.
1. This plan is favored by
both British (for Malaya)
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VI. Bolivia, though not as large a producer
as Indonesia and Malaya, is even more
dependent on tin exports.
A. Tin accounts for some 60% of
its foreign exchange.
1. Importance pointed up
by fact country imports
half its foodstuffs.
B. British firm has contracted to
take 52% of Bolivia's tin
through 1955.
C. US has been buying remainder
on spot basis at world prices.
1. But estimated that if
Bolivia able to sell
all 1954 output at
present price, return
would be inadequate to
pay for essential imports.
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VII. Political complexion of present
government and deteriorating economy
have prompted Indonesians to look to
Soviet Bloc as a market.
A. Rubber and tin mentioned as
Indonesian exports in 30
November trade agreement
with Communist China.
1. But China is a large
tin exporter and its
current rubber require-
ments are. met by Ceylon.
B. Orbit quite ready to hold out
bait of more trade for whatever
propaganda it is worth.
1. May actually take some
Indonesian products.
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a. Recent report
stated Soviets
working through
Swiss agent for
purchase of 50,000
tons Indonesian
copra.
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