INDONESIA

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06571779
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 5
• Document Creation Date: December 28, 2022
• Document Release Date: June 20, 2018
• Case Number: F-2016-01698
• Publication Date: February 27, 1967

Approved for Release: 2018/04/17 C06571779
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BRIEFING PACKGAE 27 February 1967
INDONESIA
I. In Indonesia, the Suharto regime, 17 months after
the abortive coup of October 1,1965, is still
preoccupied with the same two major problems:
how to deal with President Sukarno, and the
effort toward economic stabilization.
II. In view of Sukarno's continued obstruction, the
regime on February 20 forced him to turn over his
remaining government power to General Suharto but
permitted him to remain titular president.
A. An emergency session of congress is scheduled
to meet on March 7 which will ratify the power
turnover and perhaps take further anti-
Sukarno measures.
1. Anti-Sukarno activists still demand Sukarno's
suspension as president and his public
trial.
2. General Suharto apparently wants to avoid
a trial fearing it might provoke violence
in pro-Sukarno areas, but he may support
the removal of Sukarno as president.
INDON -1
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III. Indonesia has begun to implement the economic
stabilization plan which it developed last year
with the help of the International Monetary Fund.
A. Its major efforts to increase government
income are new foreign exchange regulations,
an intensified drive to collect taxes, and
the partial removal of price controls.
1. Other moves toward hudget balancing are
credit limitations, higher interest
rates for government bank loans, and
some luxury taxes.
B. The present regime favors increased partic-
ipation in the economy by private capital,
both foreign and domestic.
1. In December, parliament passed a new
law governing foreign investment, and
Indonesia has negotiated an investment
guarantee agreement with the United States.
C. Indonesia exported more in 1966 than in 1965,
and achieved slight improvement in its balance-
of-payments.
D. Indonesia plans bilateral discussions to obtain
assistance to support the stabilization program.
INDON -2
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1. The US has offered $65 million for calendar
year '67 which would consist of loans to
finance imports and credits for the purchase
of agricultural products.
IV. Since Indonesia is practically bankrupt, all
creditors--both Western and bloc--have agreed
to reschedule Indonesia's payments on its large
foreign debt of about $2.4 billion.
A. Both groups of governments have agreed on a
grace period. Repayments to the West on part
of the Indonesian debt are to begin in 1971
and to be carried out over a period of eight
years; repayment to the bloc will begin in
1969 and be over a 13-year period.
V. Indonesia formally ended its three-year undeclared
war against Malaysia last August.
A. Indications are that Djakarta will maintain
at least a low-grade campaign of political
subversion designed to develop in Malaysia
a susceptibility to Indonesian influence.
B. Djakarta has ordered a stop to paramilitary
operations, and is withdrawing the bulk of
its "confrontation" forces from the border
areas.
INDON -3
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C. Meanwhile the area of cooperation between
Indonesia and Malaysia ics steadily enlarging.
1. The two governments have exchanged mili-
tary liaison teams; the ban on trade has
been lifted; visa issuing offices are
about to be established.
D. The resumption of diplomatic relations, how-
ever, has been deferred/
VI. Indonesia has recognized Singapore, and the two
governments have exchanged "liaison" officers who
handle trade and visa matters.
A. Singapore does not plan to establish Vormal
diplomatic relations with Indonesia nntil
Malaysia does.
INDON-4
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VII. Foreign Minister Adam Malik stated publicly in
mid-December that Indonesia will hold a plebi-
scite in West Irian--formerly Netherlands New
Guinea and now administered by Indonesia--in
1969 as understood in a Netherlands-Indonesian
agreement.
A. Malik's assurances--whatever their relia-
bility,--are part of the continuing effort
by the present regime to restore ihternational
confidence in Indonesian commitments.
B. Meanwhile small-scale dissidence, largely
censored by Indonesia, is being conducted in
West Irian by a small, poorly-armed rebel group
that opposes Indonesian administration.
INDON -5
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