269. Memorandum From the Director of Central Intelligence’s Assistant (Knoche) to Director of Central Intelligence McCone0
[1 line of source text not declassified] a number of recent indications that the Indonesians may be planning large scale attacks in the West New Guinea area in the near future. [less than 1 line of source text not declassified] include such things as the apparent movement of military units to eastern Indonesia, rumors that a “big decision” is to be made in early June, and crash efforts by the Indonesian military to purchase from Japan 5,000 military compasses.
[1 paragraph 1-1/2 lines of source text) not declassified]
[less than 1 line of source text not declassified] Indonesians would like hit Dutch hard one, perhaps by sinking troop ship and or taking and holding some Dutch real estate, in order make up for Aru Sea debacle and get Dutch interested in negotiating seriously. We not sure hitting Dutch hard will achieve second aim, but believe Indonesians convinced Dutch not serious about negotiations to date and such move may force them change position.
[1 line of source text not declassified] Dutch complete acceptance of Bunker proposal principle, with public announcement, could not only pull rug out from under Indonesian plans, but possibly strike serious and lasting blow to presently successful Soviet policy vis-à-vis Indonesia. As situation now stands, whatever equity U.S. has built up over last number of years may be lost [less than 1 line of source text not declassified] for foreseeable future if Dutch hold to erroneous policy of “Let Sukarno Perish.” Indonesia is not going to crumble from economic erosion or impending chaos. Indonesian military strength will eventually overwhelm Dutch forces in West Irian (if no foreign intervention occurs), and military might of Indonesia, whose prime importance to U.S. policy in Asia may be during next ten to twenty years, may for latter period be alienated from us over this forthcoming incident. We have some friends left in Indonesia in influential positions, but if we finally lose friendship of military forces, we can expect our star to fall and star of Soviets to shine ever brighter in this area. With present indications of impending trouble in Thailand over Laos, we would hope country to rear of such action could be kept on friendly terms with U.S.
[less than 1 line of source text not declassified] we do not wish to leave impression that solution of West Irian problem would leave door open for love feast between U.S. and Indonesia. Far from that, but solution [Page 596] would, in our opinion, open door for dealing frankly with Indonesians without irritant so long hindering our relations with this country People who wish to work with U.S. and its agencies would be less shackled by fear of being seen dealing with Americans. [4 lines of source text not declassified]