Document Type: 
Document Number (FOIA) /ESDN (CREST): 
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Document Creation Date: 
December 9, 2016
Document Release Date: 
October 6, 1998
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Publication Date: 
January 21, 1954
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PDF icon CIA-RDP80R01443R000200120006-2.pdf170.98 KB
Approved For?Release 2000/0 DP80R01443R000200120006-2 NSC BRIEFING 21 January 1954 INDONESIA I. The trend in Indonesia favoring the Communists continues uninterrupted as prospects for the cabinet's overthrow by parliamentary action or a military coup fade. A. The opposition has been unable to cause the defection of small party government supporters, and even should these parties defect the government could still rely on the Communist vote in Parlia- ment to insure a majority. B. Anti-Communist elements in the army appear unable to organize for forceful action because of lack of political support and disunity in their own commands. Approved For Release 2000/08/30 : qlA-RDP80R01443R000200120006-2 Approved For-Release 2000/0Eff: 4 RDP80RO1443R000200120006-2 C. Communist cooperation continues with the National Party, which heads the cabinet, and joint objectives of the National and Communist parties are being achieved. D. A major factor in the present situation is President Sukarno's full support of the government. 1. In past, he has not been thought Communist or even pro-Communist but only naive in his confidence to use Communists. 2. Recently, his actions and reported contacts suggest greater sympathy with Communism than formerly believed. Approved For Release 2000/08/30 : CIA-RDP80RO1443R000200120006-2 SECRET Approved For-Release 2000/0 A RDP80R01443R000200120006-2 ^ 25X1 X4 3. It is reliably reported that the parliamentary leader of the Communist Party is now his chief adviser. 4. He dealt a heavy blow to anti-Communists in the army by siding with the pro-Communist defense minister in a dispute over the latter's policies. II. An important propaganda charge of the Communists in Indonesia, and one that has been adopted by the government, is that the United States, by forcing down prices for tin and rubber, is responsible for Indonesia's deter- iorating economy. A. Tin constitutes some 10% of Indonesia's total exports and Approved Fo telease 266QiOa18Oui I pP80R01443R000200120006-2 SECRET Approved For Release 2000/08 c8I DP80R01443R000200120006-2 B. Since US is major consumer of these products, Indonesians are easily convinced that we manipu- late prices for our own devious purposes. III. Fact is that tin and rubber are now selling at prices which approximate those obtaining before outbreak of Korean war but have fallen sharply from boom prices of 1951. A. But Indonesians tend to look at boom prices as "normal." B. Without a windfall return of a seller's market, the govern- ment faced with serious budget- ary problems, trade deficit and increase in unemployment. IV. Indonesia's tin comes from islands of Bangka, Billiton, and Singkep, where there has been no insecurity from ins Release Approved For Release 860/08 " /36 ljlA-RDP80R01443R000200120006-2 SECRET Approved For Release 2000/08 c$4NTtDP80R01443R000200120006-2 A. Two thirds of output is from government-owned mines super- vised by Dutch technicians. B. Remainder from Billiton Tin Co. in which government has controlling share; Dutch interests hold a minor share. V. Currently at issue is price which US will pay for 20,000.t_onsof Indonesian tin during last year of three year contract. A. Indonesians worried over price aspect, particularly possibility US will not stockpile new tin as heretofore but put it on market and further depress prices. B. Indonesians long interested in buffer stock plan which would prevent further price declines. 1. This plan is favored by both British (for Malaya) Appr ved For Release 2000/c gOby*- t'CYI'g0R01443R000200120006-2 SECRET Approved For Release 2000/08MC ADP80R01443R000200120006-2 VI. Bolivia, though not as large a producer as Indonesia and Malaya, is even more dependent on tin exports. A. Tin accounts for some 60% of its foreign exchange. 1. Importance pointed up by fact country imports half its foodstuffs. B. British firm has contracted to take 52% of Bolivia's tin through 1955. C. US has been buying remainder on spot basis at world prices. 1. But estimated that if Bolivia able to sell all 1954 output at present price, return would be inadequate to pay for essential imports. Approved For Release 2000/08/30 : CIA-RDP80R01443R000200120006-2 SECRET Approved For Release 2000/08WG'8W3kDP80RO1443R000200120006-2 VII. Political complexion of present government and deteriorating economy have prompted Indonesians to look to Soviet Bloc as a market. A. Rubber and tin mentioned as Indonesian exports in 30 November trade agreement with Communist China. 1. But China is a large tin exporter and its current rubber require- ments are. met by Ceylon. B. Orbit quite ready to hold out bait of more trade for whatever propaganda it is worth. 1. May actually take some Indonesian products. Approved For Release 2000/08/30 : CIA-RDP80RO1443R000200120006-2 SECRET CV X-T Approved For Release 2000/08 c-6I RDP80RO1443R000200120006-2 a. Recent report stated Soviets working through Swiss agent for purchase of 50,000 tons Indonesian copra. Approved For Release 2000/08/30 : rglA-RDP80R01443R000200120006-2 SECRET