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Document Number (FOIA) /ESDN (CREST): 
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Document Creation Date: 
November 16, 2016
Document Release Date: 
July 14, 1998
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Publication Date: 
December 7, 1956
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PDF icon CIA-RDP78-01634R000100040002-5.pdf210.59 KB
Approved For Reke 2000/05/05: CIA-RDP01 OPERATIONS COORDINATING BOARD Washington 25, D. C. December 7, 1956 SUBJECT: Outline Plan of Operations on Indonesia The Chairman of the Working Group has prepared additional operating guidance, a course of action, and an evaluation of the summary and con- clusions of the document entitled Soviet Bloc Economic Penetration of Ir?onesia, dated November 30, 1956, which was forwarded to you on Decem- ber 3. It is proposed that an anr_ex,entitled Annex A with the subject: Soviet Bloc Economic Penetraticr_ of Indonesia (Report as of November 30, 1956), be attached to the draft Outline Plan to consist of the following: (1) Sum- mary and Conclusions as it appears in the paper on the above subject which was distributed to you on December 3; and (2) Implications for U. S. Policy tC Objectives in Indonesia, a draft of which is attached. The following Special Operating Guidance would appear as Item B. 6. on page 1 of the Outline Plan: Imo- " , "6. Communist bloc economic pen ration efforts in Indonesia should be kept under constant observ ion and reassessment, and special attention should be given to thy---fora lati Q__of--new- coursee -aeon dosigned_ _to emerging aspects of this, offensive." The following course of action would be inserted in the Outline Plan as the first item on page 7 under NSC Para. 17, to appear between Items 25 and 26, to read as follows: "Seek to discredit, on economic grounds, Soviet bloc economic assistance by publicizing its failures and shortcomings in other countries of Free Asia currently accepting, such aid. "Assigned to: USIA, ICA; Support: State; Target Date: Continuing" In view of the shortness of time, it is proposed that the special group working on this aspect of the Outline Plan., namely, representatives of State, ICA, CIA, Commerce and Treasury, meF;t onTues~,av,,, December ?_1 :gin m~.. QC~? B, 7p0J ,cson,~,ace. Naturally, ;,Mere is no objection if other members of the working group take a particular interest in countering Soviet bloc economic penetration and wish to enjoy2X$9faightful meeting. Attachment: Draft re Implic ations for U.S. Policy Objectives in Indonesia. 0CB Staff Representative Approved For Release 2000/05/05: CIA-RDP78-01634R000100040002-5 /.I21 c T g view - Approved,.F~~,~?? /05/ CIA-8* 0 2-5 E3 economic penetration in Indonesia is still in its preliminar stages, The Soviet $100 million loan agreement does not come into effect until it is ratified by the Soviet and Indonesian Parlienients and the instruments of that a completion date can be set. Trade with the bloc, while substan- / in Indonesia are yet in operation, nor have any even progressed to the point ratification deposited in Moscow. lone of the bloc industrial projects less been established, and a danger ofKw1d rangi g economic penetration nesiass exports and 6,6 percent of its import.. ~bachhead has neverthe- tially above previous years, still represents only 3.6 percent of Indo- exists, Indonesia in achieving some of its most cherished economic objectives, tle Soviet bloc economic offensive in Indonesia presents special problems for U. S. policy in that country. In the service of such goals, and with no apparent political or military preconditions, these offers are almost immune to frontal attack from domestic anti-communist elements. They are in accordance w:t h, and in fact reaffirm, Indonesiafs "active and inde- pendent" foreign policy,. Continued economic contacts between Indonesia AA& As overt, and ostensibly friendly and altruistic offers o assis and the Soviet bloc, however, must be accepted, and it is possible that Indo ef: a?s maturation as a nation may in fact be served by ?s and &jqp,&~c-e,i41th the communist as a businessman. The U. S, must work to _"4W VV_V1_ (11 minimize the1political and economic significance of these contacts, r The factors which have tended to impede U. S. economic assistance to Indonesia - suspicion, hyper-sensitive nationalism, bureaucratic inefficiency l~T .s In evaluating this problem, it should be noted that the carntnu~`st bloc ? Approved For Release 2000/05/05: CIA-RDP78-01634RO 0002-5 I! t , .110 ad Approved For Re;l,,se 2000/05/05: CIA-RDP78-01,3 R000100040002-5 and reluctance to make binding decisions - in this instance will serve U. S. objectives if they similarly hinder communist bloc efforts. If, in addition to these factors, it is possible to raise in the Indonesian mind question of the economic wisdom of closer ties with the bloc and concern cvsr political problems likely to grow out of such association, Soviet economic penetration can be impeded. At the same time Indonesia must be convinced that closer economic ties with the West are justified on the grounds of national economic self-interest and that the United States and the Free World are prepared to assist Indonesia in coping with its economic problems without imposing political or military commitments. It is not yet possible to measure the impact of recent developments in Hunger.?y on Indonesian receptivity to Soviet bloc assistance. Some delay in parliamentary action on the Soviet loan agreement at least appears likely, and it is possible that Soviet repression of Hungarian independence may have reestablished Indonesian suspicions and damaged irreparably the carefully cultivated Soviet myth of peaceful co-existence on which the entire concept of aid to Indonesia rests. Approved For Release 2000/05/05: CIA-RDP78-01634R000100040002-5