CAMBODIA - MILITARY SITUATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP69-00642R000100050116-0
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: December 9, 2016
• Document Release Date: February 20, 2001
• Sequence Number: 116
• Publication Date: February 16, 1954
• Content Type: REPORT

Approved For Release 2001/03/02 oQiAyRDP69-0064 R000100050116-0
CONS TIM
Cambodia -'Military Situation
Saigon
16th February, 1954.
Since the 23rd December 1953 there have been several small
operations against the Viet Minh. The toll on the enemy in terms of
casualties and material has been very small - a total of 74 killed during
December for example - but the psychological effect on the Khmer Issaraks
may have been greater.
At all events it has been reported that on 10th February a1
ceremony at Kompong Speu, the Issarak leaders Savangvong and Chantarang-
say made their submission along with their bands. These appear to have
been far more numerous than we had been led to believe (see our Savingrarr
under reference) and 5000 are reported to have surrendered. ?Cf these
1600 will be incorporated into the Royal Khmer Army and the remainder
have been invited to abandon a career of arms and to cultivate rice
fields. The munitions recovered by this surrender are said to be 700
modern arms including several American bagookas, grenade throwers and
mortars.
Of greater interest was the announcement that Esi (Eas) Chau
allegedly the right hand man of Son Ngoc Thanh, made his submission ka
on 8th February and returned to Son Ngoc Thanh's hiding place with
terms for his surrender.. It is however too early to comment on this
report. No information as to the conditions offered by the government
is available, but it is safe to say that Song Ngoc Thanh could not be
fobbed off with a colonelcy,in the Royal Khmer Army such as other Issara1.
leaders have accepted, and it.:is likely that the negotiations will be
protracted.
The Sihanouk Plan for mobilising the forces vives of the
nation is now less in the news than previously anc' , since his return
from operation Samakki, the King's attention has dwelt a great deal upc
plans for creating a Cambodian air force and supplying the Royal. Khmer
Army with artillery. France Is understood to have aggreed to supply
some training aircraft. Since that date the Cambodian Defence Minister
and the Chief of Staff have witnessed a demonstration of a new Japanese
fighter plane and are contemplating buying about ten of them. These
planes are built in Japan under American licence and can be used for
observation as well as fnr/pursuit. They have a 250 h.p. engine, cruise
at 200 m.p.h., have a maximum speed of 250 m.p.h. and can throttle back
to 80 m.p.h. Their armament consists of 2 cannon, 8 rockets and 2
bombs of 250 lbs. They are claimed to be particularly suitable for
Cambodian conditions, but are also understood to be very expensive.
The Viet Minh thrust into Laos has received some prominence
in the Cambodian press, but does not appear to have inspired much
anxiety. There has been one article in Cambod e (8th January) dealing
with the threat to Cambodia, but its only conclusions were that all
Cambodians should forget their internal quarrels and unite behind the
King. "It is above all upon the units of the mobilisation of the
forces vives and upon our young army that the hope of our Cambodia rests'
Approved For Release 2001/04~i~1M9-00642R0001000501 16-0
 Approved For Release 2001/03/R3 0 M aRDP69-0064 R000100050116-0
CONFIDENTIAL
Djakarta,
27th February, 1954.
The present economic situation in Indonesia may be summarised
as follows:-
Indonesia's balance of payments deficit for 1953 was $US132
million, and he 'oreign currency reserves were down to $US163 million.
However, there is reason to believe that these estimates are optimistic
and that the real position is rather worse than the Government had
admitted. As no improvement is expected in her export earnings for the
coming year, Indonesia faces the problem of reducing imports considerably
if she is to avoid the dangers of insolvency.
The Government has announced that it will reduce the balance
of payments deficit to $US53 million this year which in effect means
that imports will have to be reduced by roughly $US80 million on last
year's level. A saving of $US26 million is expected from the reduction
in rice imports in 1954, as the result of increased rice production
(which went from 6.4 trillion tons in 1952 to 6.8 million tons id 1953).
Hence the Government must reduce other imports by over $US50 million, if
the deficit which they envisage is to be achieved. However, these
estimates do not allow any margin for the possibility of further falls
in Indonesia's export earnings from the 1953 level.
Besides reductions in imports of consumer goods, Government
spending whddh carried a deficit of Rp.2.5 thousand million last year,
will also probably have to be reduced:
(a) where imports are involved;
(b) to offset the inflationary effects of reduced imports.
It seems likely that the Government's capital expenditure programme
which last year was below the level which it is estimated is necessary
to keep capital intact, will have to be reduced further during 1954.
There has lately been considerable public comment, clearly
disturbing the Government, on the score that the ratio of the Bank of
Indonesia's holdings of gold and other convertible foreign exchange
reserves to its note issue and bank deposits, has been falling steadily
over the last year (as the result of falling exchange reserves and an
increasing note issue) is now close to the statutory 20% limit.
The way in which the. Government, during the next two of three
months paddles this difficult economic situation must have some effect
on its prospects of remaining in office. The problems which will
confront Indonesian importers as the result of any severe deductions
in imports; the political effects of any retrenchment which might be
undertaken In the field of budgetary spending; increased costs of
living especially for those Indonesians attempting to exist at a
European or sem'-Eurppean standard; and the fear of international
insolvency with possfbie effects on confidence in the currency are all
factos which could disturb the present political balance.
CONPOINTIAE
Approved For Release 2001/03/02 : CIA-RDP69-00642R000100050116-0