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Document Creation Date: 
December 9, 2016
Document Release Date: 
March 19, 2001
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October 1, 1965
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Approved For Release 2001/04/17 CIA-RDP rpe 02400150001-8 INDONESIAN REQUIREMENTS SHORT-TERM ECONOMIC ASSISTANCE DIRECTORATE OF INTELLIGENCE Office of Research and Reports SECRET GROUP I Excludod'from automatic downgrading and declassification pproved For Release 2001/04/17 : CIA-RDP79TO1003A002400150001-8 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02400150001-8 This material contains information affecting the National Defense of the United States within the meaning of the espionage laws, Title 18, USC, Secs. 793 and 194, the trans- mission or revelation of which in any manner to an unauthorized person is prohibited by law. Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02400150001-8 Approved For Release 2001/04/17 : CIAJF D 9T~0,1100 iA002400150001-8 INDONESIAN REQUIREMENTS FOR SHORT-TERM ECONOMIC ASSISTANCE The changes in the political balance of power following the 30 Sep- tember coup in Indonesia do not alter the country's economic problems, but they may offer opportunities for renewed economic assistance from the West. The shifting fortunes of the Army and the PKI are not ex- pected to change either the intense nationalism of the government or Sukarno's presentation of the United States as a symbol of NECOLIM (neo-colonialists, colonialists, imperialists). Thus the emerging Indonesian government probably will not find it expedient to effect an abrupt change in its posture toward the United States. It may be pos- sible, however, for the United States to provide assistance* indirectly and to influence the assistance provided by other nations. This assist- ance could be directed at maintaining and improving living conditions in order to mitigate developing discontent, especially in urban areas, which could undermine government stability. In addition, spare parts and repair facilities for trucks and for the inter-island merchant fleet; rice, cotton, coal, kerosine, and lubricating oils; and road construction aid would all be of short-run assistance. 1, Spare Parts and Technical Assistance for Transportation Economic assistance in the form of spare parts and technical assist- ance for the Indonesian transportation system would improve domestic distribution facilities and thus insure a more efficient use of available resources. Although there have been recent imports of trucks and, roll- ing stock from the US, West Germany, Japan, Yugoslavia, Rumania, Czechoslovakia, and East Germany, the existing vehi=cle stock has been so badly maintained that investments in repair facilities and spare parts would have been more productive. The road system is badly in need of repair, and trucks and buses are operating at less than 50 percent of capacity. * The US aid program to Indonesia was terminated in mid-FY 1965. During FY 1965, $3. 8 million in existing economic aid grants and loans was withdrawn. The PL-480 program amounted to $5. 7 million in grants shipped under Title II and Title III. These shipments included dry milk, bulgar wheat, corn, and fats and oils. Military assistance, primarily training, totaled $5. 0 million. No new aid was extended for FY 1966 but some programs -- educational exchanges and a harbor rehabilitation contract -- are continuing with funds still in the pipeline. Approved For Release 2001/04/17 : Cl P TQ1P_Q*002400150001-8 Approved For Release 2001/04/17 : CIA-RDP79T01003A002400150001-8 S-E-C-R-E-T The Minister of Sea Communications estimates that almost 60 per- cent of the Indonesian merchant fleet is idle, because of a lack of spare parts, port congestion, and the low operating efficiency of ports. The air transport system, on the other hand, is relatively efficient. Moreover, certain forms of aid to the air transport system (for example, meeting Indonesia's request for C-130 spares) would have the disad- vantage of supporting the confrontation policy against Malaysia. Assist- ance could be provided to certain other elements of the Indonesian transport system, however, without giving material aid to confrontation. US equipment was introduced into Indonesia to rehabilitate the transportation system following the Japanese occupation, and thus spare parts for US-manufactured equipment could be used. Western technicians could also direct repair work on roads and rail facilities to make the transport system more efficient. A severe rice shortage in Indonesia would create serious political problems for any new government. The seasonal shortage that usually occurs between December and March did not materialize in 1964, because rice imports were available for immediate distribution to rice-deficit areas. This year, however, imports were sharply cut back in line with Sukarno's August 1964 edict that Indonesia im- port no more rice. During 1965, Indonesia imported only 150, 000 metric tons (mt), compared with annual imports of more than a mil- lion tons during recent years. As a result of a record rice harvest of 10.4 million mt this year, Indonesia should have sufficient rice available if it were not for internal distribution problems, which are likely to create localized shortages. The difficulties posed by mal- functioning of the distribution system have been highlighted during the recent political upheaval. Between 30 September and 6 October the price of rice in Medan rose by more than 100 percent. Localized shortages could be eased by US rice shipments. * Some rice could probably be procured from Thailand, but most other countries that The US government maintains no stockpiles of rice, and most domestic production is sold commercially. Most surplus rice is now shipped to Vietnam, and Indonesia would have to take precedence over Vietnam to obtain rice under PL-480 programs. Vietnam has commitments for 150, 000 to 200, 000 mt for calendar year 1965, and for 1966 the commitment may reach as high as 400, 000 mt. - 2 - Approved For Release 2001/04/17 : CIA-RDP79T01003A002400150001-8 S-E-C-R-E-T Approved For Release 2001/04/17 : CIRJ~P7,9T01003A002400150001-8 R-E-T are traditionally major sources of Indonesia's rice imports have no surplus stocks available at the present time. Although other food- stuffs could be shipped, substitute grains are considered inferior to rice, for which the Indonesians have a marked preference. Although Indonesia produces and refines a large volume of petroleum, there is a perennial shortfall problem, requiring Indonesia to import various petroleum products. Kerosine, an important con- sumers' good used for heating, cooking, and illumination, has been in chronic short supply. While it is doubtful if kerosine is imported to meet consumer demands, additional supplies could be utilized if available. Indonesia is dependent on imports for much of its supply of lubricating oils. Other shortages of petroleum products are likely to develop now that the Indonesian government has taken over the internal distribution and marketing of all petroleum products. A recent report noted that the Kemajoran Airport at Djarkarta was with- out jet fuel for three days because of internal distribution problems. 4. Cotton and Spare Parts for Textile Machinery Indonesia could also use raw cotton and spare parts to rehabilitate its textile production facilities and thus reduce its need to import textiles. Domestic spinning capacity has increased during the past two years, but actual production has declined. The government-owned railroad has been beset by coal shortages, created in part by the declining output of Indonesia's coal mines and in part by the inefficiency of local transportation facilities. The rail- road company estimates its monthly requirements at 35, 000 mt whereas the coal board will provide only 25, 000 mt. This shortage is likely to reduce the operating efficiency of the railroad, still further aggra- vating distribution problems. 25X1A Coord: ONE Approved For Release 2001/04/17 : CIA 7RTT0PA002400150001-8 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02400150001-8 SE( "R 1~;'1' Approved For Release 2001/04/17 : C ~~LpTO1003A002400150001-8 CONTROL RECORD FOR SUPPLEMENTAL DISTRIBUTION 25X1A SERIES NUMBER CIA/RR CB 65-65 CLASSIFICATION OF REPORT SECRET DISTRIBUTION TO RC 55 DATE OF DOCUMENT October 1965 NUMBER OF COPIES 325 NUMBER IN RC COPY RECIPIENT DATE NO. (S) SENT RETURNED 177-187 O DDI 25X1A 28 Oct 65 188 ? OCR I' 1 19S. 189 , St/P II 190 CGS/HR/O s 1G81 H q. " 191 G~J s 192-196 7 197 198 r/ 199-201 0 02 25X1 03 04 ~ 7 z 0 5 06 207 SJ 08-210 11 12 // 13 14 604) 7- 215 2d' 16-258 Filed in St/P/C 28 Oct 65 259-2601 Trudy. O AD ORR If - Aga mod, n . V C _ cos 37hTe ! /lyzJ~S' 25X1 A L 9 25X1A ,2 09 /~ ~I ~s 25X1A __ -j.. 3-0 -10 (f ve F 0 17 . CIA DF 79T 1003A002400 1 6 Analyst: I/A Approved For Release 2001/04/17: CIA-RDP79TO1003Ad( OO1Sb0 - 284) ^no~oppr~ved For Release 2001/0#11TP:, .4-RDP79T01003AO024001 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02400150001-8 ES T Annroved For Release 2001/04/17 - CIA-RDP79T01003A002400150001-8 St/A/DS Distribution of Current Support Brief No. 65-65, Indonesian Requirements for Short-Term Economic Assistance --- October 1965 (SECR, T) Copy No. Recipient 1 5 O/DDI, Room 7E32 H . 25X1A 6 O / DDI, 7 D/ORR care a by WPM 26 Oct 65), 8 & 9 DD/ORR (hand carried by St/P/C, 26 Oct 65) y 176 SA/RR (hand carried by St/P/C, 26 Oct 65) 10 Ch/E 11 - 13 D/ONE 14 - 19 St/CS 20 St:/PR 21 - 27 D/T (1 each branch) 28 - 34 D/R (1 each branch) 35 MRA 36 - 40 D/P (1 each branch) 41 - 46 D/F (1 each branch) 47 St/PS 48 - 53 D/I (1 each branch) 54 - 58 D/A (1 each branch) 59 - 60 GD/OBI 61 - 62 CD/OBI 63 CD/X/OBI. 64 - 69 RID/SS/DS, Unit 4, Room 1B4004, Hq. 25X1A 70 St/P/A 71 St/FM 72 Analyst/B ranch I/At 73 GR/CR 74 BR/CR 75 FIB/SR/CR, Room 1G27, Hq. 76 Library/CR 77 IPI/CR 78 Archival, File - Records Center 79 Chief, OCR/FDD 80 DCS/SD 81 OCI/SA/R, Room 5G19, Hq. 82 DD1/CGS, Room 7G00, Hq. 83 - 84 DDI/CGS/HR, Room 7G00, Hq. 85 DDI/RS, Room 4G39, Hq. I GROUP i RU Excluded train catcr?anc Approved For Release 2001/04/17 P 9T*AOOr3A002 00150001-8 declacsltlcatlon -,Approved For Release 2001/04/17: Cl 01003A002400150001-8 Copy No. Recipient 86 - 88 D/OSI 89 D/OBI 90 DD/S& T/SpIN T 91 - 92 OTR/IS/IP, Room 532, 1000 Glebe (1 - OTR/SIC) 93 NPIC/CSD/REF, Room 15518, 25X1A 94 NSAL , Room 3W136, Ft. Meade (via GB31, Hq.) 95 - 103 OCI Internal (via , SDS/DD/OCR) 25X1A 104 - 112 NSA_via GB31, Hq.) 113 - 114 National Indications Center, Room 1E821, Pentagon 115 - 126 State, INR Communications Center, Room 6527, State 25X1A Dept. Bldg. 127 - 130 USIA, IRS/A, Room 1002, 1750 - Pennsylvania Avenue, N. W., Attn: Warren Phelps 131 - 175 Defense Intelligence Agency, DIAAQ-3, A Building, Arlington Hall Station 176 - Z60 St/P/C/RR, Room 4F41, Hq. (held in St/P/C 28 Oct 65) Approved For Release 2001/04/17 : CIA-RDP79T01003A002400150001-8 OPTIONAL FORM NO. 10 S E C RE T Ap~t-~~rj Rgas~/~ TCIA-RDP79T01003A002400150001-8 Memorandum Chief, Dissemination Control Branch, DATE: 29 Oct ber 1965 Chief, Publications Staff, ORR SUBJECT: Transmittal of Material It is requested that the attached copy of CIA/RR CB 65-65, Indonesian Re uirements for Short-Term Economic Assistance, October 1965, Secret, be forwarded as follows: ACTION L 01P? Tr partment of State, I NR Communications .aa . Center.. Room 6527. State Dent. Slc . the d 155Orr rraI pn rrc-ueTfed by Attn: Mr R Kent Goodspeed this memorandum has been completedX Chief., Indonesian Desk BY: jt/ Room 5315, State Department Date. v Iw...__. Ggatir 25X1A ove t cl ad r M Approved Approved For For Release 2001/04/17: I~- I 3A002400150001-8 SECRET R._.~ .~.~., SECRET Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02400150001-8 2 November 1965 MEMORANDUM FOR: Chief, Dissemination Control Branch, DD/CR FROM Acting Chief, Publications Staff, ORR SUBJECT . Transmittal of Material It is requested that the attached copies of CIA/RR CB 65-65, done:ian Re uirements for Short-Term Economic Assistance October 1965, caret,: be fbrwarcted. as follows; State, INR Communications Center, Room 6527, State Dept. Bldg. Suggested distribution for Embassies in The Hague, Bew ok, Djakarta,, Rangoon, and Tokyo ACTR''l COMPLETED The dissem;not,on re'.uue.stod by this memorandum has been completed; BY: Date: `7U-1/. 6 S Attachments: Copies #218 - #222 of CB 65-65 cc; CGS/RB 25X1A Approved For Release 20Q.1gte1~~CI A-R YWY,; , "12400150001-8 ;! ((, c:cs!s? i:a4Cu Approved For Release 2001/04/17: CIA-R 03A002400150001-8 Project No. 46.5284 Report Series CIA/RR CB 65-65 Assistance LSecretj_ Responsible Analyst and Branch I/A RECOMMENDED DISTRIBUTION TO STATE POSTS Berlin, Germany Bucharest, Romania Budapest, Hungary Moscow, USSR Prague, Czechoslovakia Sofia, Bulgaria Warsaw, Poland Europe Belgrade, Yugoslavia Bern, Switzerland Bonn, Germany Brussels, Belgium Copenhagen, Denmark Geneva, Switzerland Helsinki, Finland 1,4he Hague, Netherlands Lisbon, Portugal London, England Luxembourg, Luxembourg Madrid, Spain Oslo, Norway Paris, France Rome, Italy Stockholm, Sweden Vienna, Austria Wellington, New Zealand Manila, Philippines Canberra, Australia Melbourne, Australia '}.B-angkok, Thailand j akarta, Indonesia Hong Kong tngoon, Burma Kuala Lumpur, Malaya Saigon, Vietnam Seoul, Korea Singapore, British Malaya Taipei, Formosa okyo, Japan Vientiane, Laos Colombo, Ceylon Ankara, Turkey Athens, Greece Cairo, Egypt Damascus, Syria Kabul, Afghanistan Karachi, Pakistan New Delhi, India Nicosia, Cyprus Tehran, Iran Baghdad, Iraq Tel Aviv, Israel Beirut, Lebanon Amman, Jordon Jidda, Saudi Arabia Ottawa, Canada S Approved For Release 2001/04/17 : Cl SW RE 25X1A Mexico Guatemala Panama Brazillia, Brazil Buenos Aires, Argentina Bogota, Colombia Santigao, Chile La Paz, Bolivia Montevideo, Uruguay Caracas, Venezuela Yaounde, Cameroun Leopoldville, Congo Addis Ababa,, Ethopia Accra, Ghana Abidjan, Ivory Coast Nairobi, Kenya Monrovia, Liberia Tripoli, Libya Rabat, Morocco Lagos, Nigeria Mogadiscio, Somal Khartoum, Sudan Tunis, Tunisia Pretoria, South Africa Algiers, Algeria Cotonou, Dahomey Dakar, Senegal Bamako, Mali RECORD OF REVIEW OF ORR PUBLICATIONS FOR SECURITY/SANITIZATION APPROVAL SUU ANA (q~ BRA EMS ON SECURITY REVIEW SANITIZING INSTRUCTIONS ITEM DATE INITIALS REMOVE 25X1A UNEDITED DRAFT EDITED DRAFT DELETE 25X1 C SUBSTITUTE REMARKS c ^ ~. 25X1 A C 11 C^ a.--+~1 A , [ Z 25X1A / FORM 235 SECRE F_ GROUP I 9RA '9 SECRET Approved For Release 2001/04/17 - QlACR0P'?Tt6l6nAO024OO15QQQ1-R r p6rovead-Fa qr a 2001/04/17 : CIA-RDP79TO1003AO02400150001-8 Djakarta, For* igri ,Agri ;l tWe Service, . f ? 2, 8 July 1 , V=D~ssif D r in Dj r t4, 077 Imoming ', eiegrem, 6 October 179, 4 September 165, CQ I;j . Djekar ;, 179, 4 Septentber 1)65, CC3 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02400150001-8