INDONESIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01443R000200360009-3
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 9, 2016
• Document Release Date: December 8, 1998
• Sequence Number: 9
• Publication Date: July 15, 1954
• Content Type: BRIEF

Approved For Release 2000/08/30 : CIA-RDP80RO1443R000200360009-3
15 July 1954
I. After nearly year in office (about average life-span
for Indonesian governments) position of All cabinet
appears fairly secure for time being.
A. Of two small parties that were reported ready
withdraw support two weeks ago, one has had
change of heart, other is still wavering.
1. Even should both withdraw,;, the government,
by relying on Communist supporters, might
still survive..
2. President Sukarno apparently determined
to keep present line-up.
B. Recent reassignment of parliamentary seats gave
National Party (PNI), which heads government,
four more than major opposition party (Masjumi).
C. Although considerable deterioration in nation's
export economy, this not yet important political
issue.
1. Main sufferers are Chinese and European
trading interests who are politically
powerless.
Also, opposition parties are not eager to
inherit economic mess.
Approved For Release 2000/08/30 : CIA-RDP80RO1443R000200360009-3
 Approved For Release 2000/08/30 : AR01443R000200360009-3
II. Ali's confidence probably a factor in timing of
apparent decision to ship rubber to China.
A. Polish vessel loading rubber in Djakarta harbor
since 1 July.
1. Although rubber marked for Western ports,
covering documents indicate China destination.
2. First shipment reportedly 6000 tons.
3. Loading temporarily ceased after 250 tons
on board, suggesting government decision
not yet firm.
B. PNI, with strident support of Communists, has
advocated rubber sales to China since UN embargo
first imposed.
1. Indications in past Indonesians having
trouble making deal with Peiping.
a. China's strategic requirements met by
Ceylon rubber; any purchase from Indonesia
believed primarily political--perhaps
to strain US-Indo relations.
C. Indo government's view of world alignment may
also be factor in decision.
1. Prime Minister Ali, noting Chou-Nehru talks,
said "balance of power in world seems to be
shifting to new positions."
SECRET
Approved For Release 2000/08/30 : CIA-RDP80RO1443R000200360009-3
 Approved For Release 2000/08/ C4A-RDP80RO1443R000200360009-3
uL
V
B. In talks with our ambassador, Ali did not admit
shipment going forward.
1. But hoped Battle Act would not be invoked
should few tons rubber go to China.
2. Noted that, in any case, US aid to Indo so
small that would' not be missed.
III. Indo world's largest natural rubber producer--comprises
over one: third of exports.
A. More than half Indonesia's rubber produced by
"small-holders" rather than large plantations
Cbstates").
1. Interests of small-holders are important
political factor.
B. Such rubber: not top quality and Indos claim hard
to market.
C. But there is current demand for it on NY market.
1. Importers there note reduced availability
such rubber; several Indo firms have de-
faulted on contracts.
a. Probably result Indonesia's complex
exchange, export regulations.
b. But possible Indos holding it off
market, accumulating for sale China.
EC EI
Approved For Release 2000/08/30 : CIA-RDP80RO1443R000200360009-3