DOWNTURN IN INDONESIAN-US RELATIONS: PERCEPTIONS AND IMPLICATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83B00551R000100200007-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: March 30, 2007
• Sequence Number: 7
• Publication Date: August 1, 1980
• Content Type: MEMO

Approved For Release 2007/04/02 : CIA-RDP83B00551 R000100200007-0
ecret
Foreign
Assessment
Center
Downturn in Indonesian-US
Relations: Perceptions
and Implications
so
Secret
PA 80-10368
August 1980
Copy 0 8 7
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
Approved For Release 2007/04/02 : CIA-RDP83B00551 R000100200007-0
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
Secret
Downturn in Indonesian-US
Relations: Perce tions
and Implications
Summary Indonesian-US relations have deteriorated sharply over the past year after a
series of US policy decisions on ship transit, rice sales, and military aid that
Jakarta believes did not take into account Indonesian sensitivities. The
Indonesians have long considered their relationship with the United States a
special one, and the Suharto regime has nurtured good relations with
Washington despite Jakarta's nonaligned foreign policy.
Even at the height of anti-Americanism under former President Sukarno,
some technocrats and members of the military quietly maintained their
American contacts. Jakarta now fears that the special relationship is
eroding, and Indonesian military leaders are taking steps to signal
Washington that it cannot take Indonesia for granted. Indonesia's capacity
to retaliate is severely limited, but the personal good will that has
characterized US-Indonesian relations is in jeopardy.
This memorandum was prepared bylf the East Asia-Pac~ric Division, Office of
Political Analysis. It was coordinated with the National Intelligence Officer for East Asia,
the Office of Economic Research, and the Office of Strategic Research. Information
available as of 14 August 1980 was used in its preparation. Comments and queries are
welcome and should be dir the Chief, Southeast Asia Branch, East Asia-Pacific
Division,
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
Secret
and Implication
Relations: Perceptions
Downturn in Indonesian-US
Recent US policy decisions regarding ship transit, rice sales, and military
aid have raised doubts in Jakarta about the nature of the US commitment.
US friendship and assistance to Indonesia have been key factors in the
Suharto government's success. Indonesia, which believes superpower rivalry
in Southeast Asia is growing, fears that Washington is abandoning support
just when it is needed most to assure stability in the region.
Domestic concerns, particularly the elections in which Suharto will seek a
fourth term, have heightened the significance Suharto attaches to US
support. He believes his regime must survive into the late 1980s to prove the
appropriateness of his strategy for achieving economic and political
stability. Although the government-controlled party does not face a
parliamentary election until 1982 and Suharto's term lasts until 1983, the
highest levels of the government have an almost obsessive preoccupation
with the election process. As a result, domestic and foreign issues that might
otherwise be merely troublesome are seen as pitfalls, and potential
weaknesses assume a sharper focus.
Warship Transit The most serious affront to Indonesian national pride was the US decision
last May that it would no longer provide notification of the passage of
warships through Indonesian waters-revoking a courtesy begun in the
early 1970s. Jakarta reacted with the unprecedented step of presenting a
diplomatic note to the US State Department on 13 June that clearly signaled
Indonesia's consternation and disannnintmcnt nver the d ricinn The
The US decision struck at the heart of Jakarta's claim of sovereignty over all
the waters enenmr seed by the In`Innecion -hi..ol.,,. 17- 1
Indonesian waters just as freely and secretly.
ul~l reversa on ship transit notifications
as a rebuff to Indonesian efforts to get the archipelagic principle accepted in
international law. The Indonesians have pointedly reminded Washington
that its new policy provides justification for Soviet warships to transit
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
The Indonesian Navy has an extremely limited patrol and surveillance
capacity, primarily because economic development has taken precedence
since 1965 over improving defense capabilities. This policy is gradually
changing, however, stimulated by the Communist victories in Indochina in
1975 and the subsequent growth of the Soviet naval presence in the area.
0
The dispute over notification has been kept out of the controlled Indonesian
press, but made
public, could be used by the radical nationalists and fanatical Muslims to . hysteria arouse xenopho to the detriment of the Suharto regime as well as
the Americans. ny disturbance
in the stability of Indonesia would redound against US policy interests in
Southeast Asia
Rice Supplies The ship transit decision came when Jakarta was just recovering from its
dismay over adverse US policies regarding another hallowed Indonesian
priority-rice. Even though its rice production may exceed a record 18
million tons this year, Indonesia is the world's largest rice importer,
purchasing almost 3 million tons annually to feed its rapidly growing
population of nearly 150 million. The government equates rice supplies with
political stability and is already preparing to obtain sufficient rice stocks to
prevent the possibility of embarrassing shortages during the national
election campaign. Although elections are two years away, the Indonesians
are determined to assure a huge stockpile
Early this year the United States informed Indonesia that in 1981, the PL-
480 assistance program, which provides part of.Jakarta's rice imports, would
drop from $100 million to zero. The Indonesians subsequently discovered
that Washington also was pressing Japan to limit its sales of rice at
concessionary prices to Indonesia. Jakarta's technocrats, most of them US-
trained and longstanding friends, complained bitterly about this apparent
double blow-a unilateral cutoff of cheap rice, coupled with pressure on
another US ally to limit sales-in an area where Indonesia is vulnerable.
The technocrats pointed out that Indonesia is a good customer, buying
commercially some $200 million of food from the U *ted States in 1979 in
addition to the $100 million at concessionary prices.
Although PL-480 aid eventually was restored to $50 million and US
pressure on the Japanese ceased, the political damage had been done.
Although Indonesians profess to understand US budgetary problems, they
are miffed by what they see as US insensitivity to a crucial Indonesian
political issue. The technocrats reportedly have instructed their government
buyers not to purchase US commercial rice this year.
25
25
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
Military Assistance Jakarta considers US military assistance a barometer of US good will. The
Indonesians do not want a security treaty with the United States, but they
want assistance. They believe they had personal assurances from Vice
President Mondale when he visited Suharto in May 1978 that Washington
would provide adequate military support. They therefore interpret recent
reductions in military credits and military training programs as a betrayal of
the symbolic links forged between Southeast Asia and the United States.
Indonesia sees itself as the major partner in the Association of Southeast
Asian Nations and as the only one whose armed forces could rival
Vietnam's. The Indonesian Armed Forces, however, are ill equipped with a
conglomeration of obsolete, mostly Soviet, arms and have poorly trained
personnel. Last year, Jakarta embarked on a major program to reequip and
revitalize its military.
Indonesian military headquarters. The warning, while reflecting the depth
of Indonesian feeling, serves as a bargaining chip in seeking a restoration of
cuts in military aid. The Indonesian military, which prefers US equipment,
still keenly wants to maintain its military supply links with the United
States. Most of Indonesia's military leaders were trained in the United
States and influenced by US military doctrine. For a variety of reasons,
including cheap prices, the Indonesians buy military equipment worldwide,
but they would prefer a steady supply of US arms, planes, and ships.
Indonesia also is a proponent of achieving standardization of arms among
ASEAN states; the Philippines and Thailand are already US equipped
decided to ask Washington to withdraw US military advisers assigned to
The Indonesian Government already may have
Consequences and The Indonesians have little leverage and few options in seeking redress of
Implications their grievances with Washington. They want US trade, aid, investment,
technology, and friendship. The relative importance of the United States as
an influential aid donor has been declining in a financial sense and will
decrease even more in the next few years. Indonesia's burgeoning wealth
from oil revenues makes Jakarta increasingly able to buy goods and
expertise
Nevertheless, Indonesian officials attach symbolic significance to US
assistance greatly out of proportion to its economic or security importance.
Suharto believed he had achieved, through the Mondale visit, a relationship
at an "intimate and special level." He is upset by the apparent crumbling of
3 Secret
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
this percei%ed relationship and believes the blame lies in the inconsistency of
US policy.
negotiations have been under way since 1973
Suharto's concern with what he sees as reduced US support is intensified
because the reduction coincides with increasing criticism of his regime by a
revitalized nationalistic opposition, which is looking for issues to exploit in
the election campaign. Political pressure from such opponents and irritation
with US policy could prompt Suharto to demonstrate his strength and self-
reliance by striking at US interests in Indonesia and encouraging the
xenophobia already displayed by some domestic news media. Suharto's
government could retaliate by imposing tighter restrictions on US foreign
investors, expelling press correspondents, assuming a more aggressive
posture in OPEC, or stalling negotiations on pending capital investment
projects. Suharto could also terminate US-Indonesian discussions on
shipments of liquefied natural gas to the Pacific coast, for which
domestic problem
The sense of betrayal is heightened because the Indonesians believe that
they have supported US policy interests in international forums, backing US
positions in the United Nations and often acting as backstage mediators for
US interests. They have been supportive on Iran and Afghanistan and have
espoused a moderate position on Third World issues, such as the North-
South dialogue, and in OPEC. During the Vietnam refugee crisis, Indonesia
acted with uncharacteristic swiftness to provide humanitarian support,
despite limited resources. The Indonesians have responded to US initiatives
on human rights by releasing tens of thousands of political prisoners over the
past few years in an effort to counter Congressional criticism. They. also
have tried to comply with US pressure by allowing limited, but symbolic,
foreign visits to assess conditions in East Timor, despite its sensitivity as a
passage of US ships
Indonesia is in a strategic position astride the major sea lanes linking the
Pacific and Indian Oceans, and US military deployments depend on
maintaining friendly relations with Indonesia to keep its straits open.
Although unlikely, Suharto could create enormous difficulties for US
strategic interests should he change his policy on overflights or unhindered
Suharto's unhappiness with recent US policy decisions has not reached the
point where a revival of anti-Americanism is imminent. Nevertheless, he
may decide to limit access to his government by US diplomatic, business,
and military representatives; good personal relations between those repre-
sentatives and their Indonesian counterparts have been a key to implement-
ing US policy goals in Indonesia. Although such a move would be
detrimental to Indonesia's long-term interests, it is a tactic the Indonesians
Secret 4
?
Z5X
?
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
e
have used before. It also would be popular among many elements of
Indonesian society who are critical of Jakarta's close economic and foreign
policy ties with foreign, particularly Western, governments
Deteriorating relations with the United States are unlikely to result in closer
ties with the Soviets. Suharto and his military advisers are anti-Communists
and distrust Moscow and its ambitions in Southeast Asia. The more likely
response would be for the leadership to join a growing backlash against
Western-style modernization by turning inward and succumbing to calls for
40
more nationalistic policies.
 Secret
Secret
Approved For Release 2007/04/02 : CIA-RDP83B00551 R000100200007-0
 Approved For Release 2007/04/02 : CIA-RDP83B00551 R0001 00200007-0
Approved For Release 2007/04/02 : CIA-RDP83B00551 R000100200007-0