163. Telegram From the Department of State to the Embassy in Indonesia1

545. 1. Following is our tentative analysis of developing situation in Indonesia and implications for US. We very conscious you have most or all of what follows in mind, but would like your comments and observations in order to develop it into policy recommendations.2

2. Nasution’s speech October 25 and the openly declared campaign against Subandrio are first conclusive evidence that Army leaders are determined make all-out fight against PKI and its fellow-travelers, and will not be deflected from this purpose by Sukarno’s opposition.

3. Army leaders are increasingly asserting themselves against Sukarno. Their game appears be to separate him from his anti-Army advisers; isolate him; and then use him, or possibly dispose of him, as situation requires. Seems inconceivable, at this stage, they can afford let initiative slip from their hands back to Sukarno’s.

4. PKI in headlong retreat in face of mass attacks encouraged by Army. However, at some stage PKI will reconstitute some of their forces and fight back—by strikes, sabotage, or guerrilla action, against [Page 341] background of propaganda that Army is reactionary tool of imperialist powers and C.I.A. Army will have no choice except meet this counterattack and will need more or less coherent government to back up their efforts.

5. Army has traditionally maintained that its role is non-political and has shied away from any idea taking power or sharing direct responsibility for governing. But appalling fact in Indonesia, with collapse NASAKOM concept, is that there is no organized or disciplined force capable of providing leadership and direction to successor government, except Army. Unless Army accepts the responsibility for taking lead in new government, however unready or unwilling it may be, there will be anarchy in government, further economic chaos, and Army will be handicapped in meeting the PKI challenge. Sooner or later, and probably sooner, it will become increasingly clear to Army leaders they are only force capable of creating order in Indonesia, and that they must take initiative to form a military or civilian-military provisional government, with or without Sukarno. The Army is already making top policy decisions independently of Sukarno and is more and more acting as de facto government.

6. Relations with Red China are increasingly strained, and given the suspicion of Army leaders that Chinese Communists were behind the coup, and the course Army must take—i.e., destruction of PKI—a break with China cannot be ruled out. The Soviet Union has begun to exert pressure on Army to call off its campaign against the left, even hinting aid would be cut off. Army cannot capitulate to this pressure without endangering its whole position.

7. If foregoing analysis correct, we can begin see shape of some problems that may be posed for us:

a.

As the Army begins to think in terms of new government, they may move toward military junta, a civil government, or a military-civil coalition. If our views are sought, any doubts they may have should be resolved by encouraging them to form a civil-military coalition, on grounds that their presence in government as a unified and disciplined force is essential in at least early stages, to stability of such a government, to campaign against PKI, to economic reform, and to plotting Indonesia’s new course independent of outside influence.

b.

Chinese Communist open hostility toward Indonesian Army bound to increase as Army moves against PKI. Soviets are in somewhat different position, since they blame Peiping for aborted coup, but they will also be embarrassed as Army engages the PKI. If they support the PKI against the Army, they will put strain on their relations, but they cannot support Army. They will probably take nebulous and opportunist position. Both China and Russia are probably hoping Sukarno can [Page 342] still reestablish his control and force Army to accept “purged” leftist party in a reconstituted NASAKOM.

c.

If our assumption correct that Army must carry on its campaign against PKI, that PKI will react, and that China and Russia cannot ignore Army’s destruction of PKI and may criticize it—in fact they are already doing this—then Army will be forced to examine its attitude toward China and Russia.

d.

From there it is only one step for Army to conclude that they must look elsewhere for friends and support. We can expect they will approach Japanese, other powers, and, no doubt, us. They will need little education in fact that Sukarno’s and PKI’s extreme foreign and domestic policies have isolated Indonesia and led Indonesia to brink of economic, political and social chaos. But given warped Sukarno thinking to which they have been exposed for so long, they will be less certain what to do about all this and fearful or suspicious of our advice and assistance. The Indonesian Army leaders’ close service-to-service relations with our military provide important channel of influence.

8. The next few days, weeks or months may offer unprecedented opportunities for us to begin to influence people and events, as the military begin to understand problems and dilemmas in which they find themselves.

a.

We should try to fortify their confidence that Indonesia can be saved from chaos, and that Army is main instrument for saving it.

b.

We should get across that Indonesia and Army have real friends who are ready to help.

c.

When asked for help by Nasution we should respond by saying we are ready to help as they begin tackling their problems in sensible way.

d.

They will need food, and we can point out that the International Red Cross can supply it, if they find direct help from us or others embarrassing. (Japan, Brazil, Malaysia, Thailand, Taiwan, and even the Republic of Korea have rice.) Raw materials and spare parts for machinery may be needed soon.

e.

Indonesia’s currency and credit chaos needs immediate expert attention. We can point out that IMF can provide advice and that IMF and Indonesia’s real friends can provide assistance. But this will require change in recent attitude toward the IMF and toward friends.

f.

Small arms and equipment may be needed to deal with the PKI. (Would the Soviet Union supply Army with equipment so long as it is attacking PKI?)

g.

As events develop, the Army may find itself in major military campaign against PKI, and we must be ready for that contingency.

h.

POL requirements may give us opening to suggest a de facto moratorium on nationalization of oil industry so as permit companies to give all-out support to Army’s and the country’s needs.

9. It may well be that Army will turn to Japanese in first instance. Japan can play notable part in this evolution toward more rational Indonesia. Japanese have a vital national interest in success of Army’s campaign against PKI and in a stable and independent Indonesia. The Japanese are already taking initiative. (See Djakarta’s 1238.)3

10. For the moment Japan is still hypnotized by Sukarno as the “essential” man and they are being careful not to antagonize him. But if events move in direction we have indicated, and Sukarno is isolated or removed, very different situation will present itself to Japanese. At some stage we must have quiet discussions with Japanese, compare notes on developments, and work out with them agreed lines of action. The time for that may well be not long after Subandrio is removed. We shall, of course, want to consult with British, Australians, and others as well.