INDONESIA- COMMUNIST CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00890A001100120005-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 19, 2016
• Document Release Date: April 14, 2005
• Sequence Number: 5
• Publication Date: December 16, 1959
• Content Type: BRIEF

Approved For Release 2005/1f'~{y~M!'4Zi~= _ 5-7
NSC BRIEFING 16 December 1959
INDONESIA-COMMUNIST CHINA
I. Relations between Indonesia and Communist China have hit bottom
as result of current Indonesian policy toward alien Chinese.
A. Dispute, which has been gathering momentum since late summer,
is based on Indonesian decree banning alien (in effect,
Chinese) retail merchants in rural areas; related order in
certain areas requires resettlement of these retailers in
nearby towns and cities.
B. Decree is part of campaign of "economic nationalism" which
was directed first against Dutch, then against Nationalist
Chinese, and now against Peiping-oriented Chinese who have
failed to register as Indonesian citizens.
II. Peiping strongly pressured Indonesian government for repeal of
decree; when this unsuccessful, ordered Chinese embassy officials
to circulate among Indonesian Chinese and instruct them to re-
sist Indonesian government orders.
A. Peiping's latest protest on 9 December renewed accusations of
Indonesia's "intolerable" treatment of Overseas Chinese,
proposed immediate implementation of long-pending Sino-
Indonesian nationality treaty.
III. Indonesia's Foreign Minister Subandrio replied 11 December,
rejected Peiping's accusations and explained Indonesia had been
ready for some time to implement nationality treaty. He said,
however, implementation of treaty would not affect preseit
DOCUMENT NO. O
enforcement of ban. NO 0'_A33. LJ
CLA.`.S. CF, ;Ni-.E D TO: TL
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B. Government recently has reaffirmed 1 January 1960 as
deadline for implementation of ban.
IV. In Chicom view, Indonesian decree has critical bearing on contest
between Peiping and Taipei for loyalties of Overseas Chinese.
A. Peiping's People's Daily on 12 December warned that it is a
"great mistake" to assume that Overseas Chinese have nowhere
to go or that Communist China will watch "unjust discrimination
and persecution with arms folded."
B. Chinese have launched mass propaganda campaign in mainland
China; may threaten economic retaliation.
C. To ensure that the largest possible number of those who leave
Indonesia as a result of rough treatment will choose the
mainland over Taiwan, Peiping is publicizing the warm welcome
25X1
given some recent returnees.
-2-
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VI. On Indonesian political scene, President Sukarno continuing to
press his concept of "guided democracy" with strong support of
army under Chief of Staff General Nasution and First Minister
D,j uanda .
A. The continuation of martial law under presidential decree an-
nounced today facilitates both "guided democracy" and the
army's political role.
B. Indonesian Communist Party, although opposing presidential
decrees on Overseas Chinese and local government changes,
continues to support Sukarno himself, has carefully avoided
putting direct blame on Sukarno and has held specific cabinet
ministers responsible.
VII. Widespread dissidence continues to be a major problem facing
government, and military operations account for major financial
drain.
A. Army reportedly plans to mount new offensive in Sumatra some
time between early January and May.
B. "Revolutionary" forces are estimated at 8,000 in Sumatra and
4,000 in Celebes. Government must also cope with dissidence
by fanatic Moslem and bandit groups in North Sumatra, West
Java, and South Celebes, combined forces of which are esti-
mated at 12,000
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VIAL
VIII. Monetary reform measures of last August, which were supposed to
correct serious inflationary situation, have been relatively in-
effective.
A. Money in circulation by end of calendar year 1959 is expected
to be 32.3 billion rupiahs, about same as before 25 August
measures.
B. As of 5 December rupiah,, officially valued at 45 to US dollar,
was selling at 185 to dollar in Singapore, and will probably
go higher.
C. But this only one phase of generally gloomy economic picture,
which requires drastic government action. This not now in
offing.
DID 17LIi~.J!~MTIAL.
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