By 1965, Indonesia's Communist Party (PKI) had 3.5 million members and 20 million supporters in trade unions, youth and women's movements and artist, scholar and veteran organizations. It was the third largest Communist Party in the world. Indonesia had around twelve political parties but the PKI was the largest and the most disciplined. Its leaders expected their party to be on top in the next general election. Tactically the party presented itself as sympathetic to religion, ignoring the atheism of Marx and Lenin. Some members were moderate Muslims. Some were Christians. The party appealed to the patriotism of Indonesia's recent struggle for independence – the PKI presenting itself as anti-imperialist. The party spoke against the tactics of violence in seeking political objectives. The Communists spoke up for democracy, which coincided with the freedom that President Sukarno had been offering the young republic.
But the economy was not doing well. Sales abroad of oil, rubber and tin were were covering only half of what was being bought from abroad. Inflation for the year 1965 was running around 650 percent. Ships were unable to put to sea because they lacked needed equipment repairs. Thousands of miles of road had reverted to dirt tracks. Sukarno was moving away from the capitalist West toward the socialist world, especially China. In 1964 he had told the US to "go to hell with your aid." He had kicked the Peace Corps out of Indonesia. In January 1965 he took Indonesia out of the United Nations. In August, 1965, Sukarno severed links with the World Bank and the International Monetary Fund.
Sukarno was 65 and ill. In 1964 he had gone to Vienna for a medical check up concerning his kidneys. He is said to have declined surgery because a seer had predicted that he would die by the knife. He had turned instead to Chinese medicine. He remained in ill-health, and talk about his death was circulating along with concern about who would replace him.
Indonesia had anti-Communists in its military, and there had been talk among them that China was smuggling arms to the Communists. Sukarno worried about his military. He had announced in January 1965 that he was embracing Indonesia's armed peasants and workers as a political force – a Communist force – to defend democracy. Sukarno's relationship with his Minister of Defense, General Abdul Haris Nasution, had turned cold. Nasution had become a symbol of the army's hostility toward Communists, Nasution wanting no place for Communists in Indonesia's political power distribution. Sukarno had warmer relations with his Army Chief of Staff, Lieutenant General Ahmad Yani, who was also an anti-Communist, but more tolerant.
In the United States many were unhappy with Sukarno. The Johnson administration was pursuing a war against Communism in Vietnam and concerned about China's support for North Vietnam. Indonesia was the sixth most populous nation in the world and would have been a loss too great to accept for those concerned about the spread of Communism. Indonesia appeared to be a domino tottering and about to fall if something were not done to stop it, and the Johnson administration dismissed Sukarno as somebody they could rely on to prevent Communism from winning in Indonesia. The Central Intelligence Agency still had contacts in Indonesia. Some of Indonesia's military men had been trained in the United States and still had contacts with Americans and the CIA. US newspapers wrote of US funds for Indonesia having ended, but Congress was treating funding to Indonesian military men as a covert matter, which restricted congressional review of the matter.
One of Indonesia's anti-Communist army officers in contact with Americans was Haji Mohammad Suharto. He had quietly established contacts also with the British and Japanese. He was one of the military officers who had participated in smuggling, or was at least accused of it. In 1959 he had been transferred to the army Staff College in Bandung, West Java. He was involved with a shipping company operated by an army division in central Java. He was shrewd and ambitious but not recognized as having any special influence among the anti-Communist generals, but it was he who was destined to be Sukarno's successor.
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