Jakarta, 8 July 1965
35 . Confidential
[ matter omitted ]
Malaysia
15. Hostility towards Malaysia will be a constant and continuing factor in Indonesian foreign policy in the months ahead. The Indonesians will continue to attack Malaysia in the familiar terms of it being a ‘Puppet regime’ created as part of a neo-colonialist plot to surround and destroy Indonesia, the leader of the new emerging forces. It will be the excuse which the political establishment of this country will use for periodical calls for national unity as the cloak for suppressing any signs of internal dissention.
16. There is no likelihood of Indonesia entering into serious or meaningful negotiations to settle the Malaysia dispute. However as has been the case in the past, there is always the possibility of the Indonesians making gestures of seeming agreement to negotiate, but, if so, this is almost certain to be for tactical reasons such as trying to regain some respectability among their Afro-Asian associates. But if the ease and speed with which the PKI and Subandrio have destroyed previous attempts to begin negotiations are any guide, the likelihood of Indonesia’s entering into new talks, even for tactical reasons, is probably not great.
17. At the same time the Indonesians are conscious of some of the realities of the Malaysian situation and must now be fully aware of the limitations on their capacity to mount serious military operations against Malaysia and what will be the consequence if they attempt to raise the stakes militarily. In short, we believe the Indonesians will be sufficiently realistic in the coming months to want to avoid actions likely to prompt substantial and direct military response.
18. However, their commitment to confrontation against Malaysia is such that it is unlikely that the Indonesians will be able, or will want to stop it. While they are sorting out some of their present uncertainty about exactly what to do next to keep the initiative against Malaysia, they are almost certain to keep up their present small scale terrorist activities, their subversive activities, their plastic bombings1 and their attempts to make political propaganda from the internal political dissentions in the Malaysian Federation. In each of these activities, the chances are that the Indonesians will profit from their growing experience and probably become more adept at them.
19. One important factor which would probably encourage the Indonesians to become more adverture some in their military tactics (but still below the threshold of open war) would be any serious reverses to the U.S. military position in South Vietnam. If this were to happen it would probably be accompanied by renewed propaganda attacks, demonstrations and other gestures in which Australia, as well as the other active supporters of Malaysia and South Vietnam would almost certainly share.
[NAA: A6364, JA1965/0IS]
1 On 10 March, the first Indonesian-attributed act of sabotage in Singapore that resulted in the loss of life had occurred with the detonation of a bomb in the MacDonald Building in which the Australian High Commission and the Hong Kong and Shanghai Bank were located. Since then the bombings had continued in what captured agents said was deliberate policy designed, by avoiding casualties, ‘to make the people restive, but not angry with Indonesia’.