At the end of World War II, we had in the Chinese Government a friend and ally, for whom President Roosevelt felt he could speak with confidence at Yalta. American warships had come to anchor in the river at Shanghai and naval units were being established ashore. China had taken her seat in the Security Council, as one of the Great Powers, and, under the benign influence of the United Nations sought to re-establish peace and order throughout the Far East. But, in the past twelve years, the Chinese people have been cut off entirely from the West. Their lines of supply reach the Soviet Union and they profess a political philosophy hateful to the Free World and alien to themselves. The posture their Government presents to the United States is grim and full of menace.
Seaward of China and to the South are the military bastions of the Free World. An American army stands in Korea, supported by highly trained South Korean troops. The 3rd Division of U. S. Marines is based on Okinawa. Chiang Kai-Shek trains the Nationalist Army, Navy, and Air Force in Taiwan. And protecting that island’s communications, the U. S. Seventh Fleet patrols the Formosa Strait.
Of course we know that along the Asian periphery China will attack without warning, whenever the exigencies of her military or political situation require. It is quite possible that her requirements will be met by a limited war, fought in a limited area for limited objectives. In that event, even ordinary prudence will require us to assess beforehand the military and economic capacities of our Asian friends. 1
I
The year 1956 was the best in Japan’s recent economic history. The nation experienced almost unprecedented national prosperity and the high level of exports raised the standard of living throughout the country. All of this was reflected in a new level of investment in industrial plants, equipment, and inventories. Modern techniques were introduced after the war and increased productivity was observed on every hand.
Major business enterprises showed great profits and paid higher dividends to their stockholders. Large year-end bonuses were declared and paid to employees. Unemployment fell sharply, and in October of 1956 it was less than half what it was in the previous March. Stock market prices rose to a new postwar peak and seemed to be justified by higher earnings and dividends. Consumers’ income and expenditures increased sharply and so did savings. The output and sale of retail goods reached a record level. Meanwhile Japan experienced a phenomenal increase in her foreign trade.2
In the developing boom wholesale prices rose sharply, but it was of particular significance that consumers’ prices rose only moderately. Hence, it was generally believed that inflation, so threatening immediately after the war, was effectively controlled and offered no immediate threat to the stability of the Japanese economy.
Nevertheless, by June of 1957, all signs pointed to a flattening out of the curve of business activity. In an attempt to remedy an unfavorable trade balance, the Government took steps to curb excessive investment and reduce the demand for imports. There was little doubt that Japan was influenced, at this stage, by a number of unfavorable trends in the world economy, particularly by a worldwide increase of stockpiles of raw materials and a steady decline in wholesale prices. In the fall, mining and manufacturing production dropped from their postwar peaks and both imports and exports declined. There was a slackening of demand for producers’ goods but consumption levels and consumers’ prices did not seem to be affected. Since that time, although the trade balance continues unfavorable, the general level of business and industrial activity remains high.
Thus, as she was before the war, Japan continues to be a large importer of crude oil. But today she is making strenuous efforts to increase her refining capacity. Japanese concerns have entered into a number of joint ventures with American and British Companies,3providing for the construction, operation, and ownership of a number of modern refineries. As a result, Japanese production of refined petroleum products has been substantially increased.
In 1954, many Japanese shipbuilding berths were idle. Thousands of workers were unemployed and several of the shipbuilding firms were on the verge of bankruptcy. But during 1956, new starts in ship construction gained 180 per cent over 1955 and the output of the Japanese shipbuilding industry became the world’s largest. While this extraordinary increase in new construction commenced during the Korean War, foreign demand for Japanese-built ships continued. At the present time, Japan has a shipbuilding capacity of nearly 2,000,000 gross tons. Twenty-one shipbuilding companies have a total of twenty- five shipyards which can build vessels of 5,000 gross tons or over. A shortage of steel and a shortage of skilled workers is possibly a problem. Estimates indicate that the demand for Japanese ships for export, plus the large requirements of the domestic shipping industry, will keep the yards busy for at least five years.
Japan’s defeat reduced its steel industry to a state of collapse. Crude steel production in 1946 amounted to only 500,000 tons. Major plants were designated for reparations and the giants of the industry were dismembered. But, as in other industrial fields, the Korean War gave the steel industry a much-needed shot in the arm. As a result, both steel production and export volume set all-time records in 1956.4 All of this recovery took place, although Japan was largely dependent upon overseas sources for its iron ore and coking coal and despite the fact that both these essential raw materials were frequently imported from inordinate distances—almost 10,000 nautical miles in the case of coal from the Atlantic seaboard of the United States.
At the end of the war, Japanese aircraft plants were dismantled, the construction of any type of aircraft was strictly banned, and any form of flying was prohibited. All of this happened when the jet age was just beginning. Therefore, at the beginning of 1946, the Japanese aircraft industry, for any purpose, did not exist. Thereafter, the recovery was rapid, and in 1947 Japan was manufacturing its own jet aircraft, flying a jet air force, designing its own jet engines, and operating both domestic and international air routes. In March of 1948 the Japanese inaugurated an overseas air route to the United States. And, of considerable importance, it is currently providing some of the maintenance facilities for the large Far East Air Force of the United States.
All of this economic rehabilitation and recovery was measurably assisted by American banks, operating in Japan.5 Particularly, they provided much needed foreign exchange. While their branch offices did not engage in domestic financing, they participated actively in the export and import trade. Immediately after the war, their loans were guaranteed by United States Government agencies. Thereafter, they were guaranteed by the Bank of Japan. Currently, they are expected to make loans without the benefit of any security other than the customary liens upon the shipments involved. Understandably, this factor, among others, has caused these banks to look hard at a number of imbalances in the continuing industrial recovery. Some of these are almost implicit in the well- recognized limitations of the Japanese economy.
Thus, it cannot be forgotten that Japan is a country the size of Montana and that only one-seventh of its land is suitable for cultivation. But it has one half of the population of the United States. This suggests a basic economic fact: that Japan has too many people and too little food. Currently, Japanese farms can supply only 80% of the national food requirements. The remainder must be imported, including such staples as wheat, barley, soybeans, and sugar. Rice must also be imported to supplement the insufficient production of the home islands.
Now, in addition to food, Japan is necessarily a large importer of the basic raw materials of industry. Her coal production is insufficient and she must import large quantities of iron ore and scrap. During the Suez crisis, many industrialists in Japan thought that the price of raw materials in world markets would rise. And investments in heavy industry led to even greater demands for imports of raw materials. Accordingly, with the Government’s consent, Japanese concerns greatly increased their purchases of raw materials throughout the world. However, world prices did not rise and no advantage to Japanese exports resulted. Trade acceptances for the increased imports had to be met and, with no corresponding increase in exports, an even greater deficit in trade resulted.
In its trade with the United States, during the postwar years, Japan has consistently imported much more than she sold. In 1956, the United States sold to Japan goods amounting in value to $1.1 billion. But imports into the United States amounted to only $700 million. While the deficit of some $400 million was more than made up by the sum of $591 million, received by Japan in Foreign Aid, deficit funds of this type are no longer available. All United States ground troops have now been withdrawn from Japan. And there is a definite decline in other assistance from this country. Evidently, it will be necessary for Japan, in the future, to export more goods for dollars if she wants to maintain her current level of imports from the United States. But any concerted attempt to do this may provoke counter measures in the form of more restrictive tariff policies.
Of course, the Japanese government is alive to the adverse factors affecting the Japanese economy. The government has borrowed from the International Monetary Fund $125 million and has undertaken to borrow from the Export and Import Bank the sum of $175 million. In addition, the government has proposed to borrow $300 million from the World Bank. The Japanese government has also attempted to promote closer economic relations with the countries of Southeast Asia. It is endeavoring to settle reparations issues in these areas and has actually concluded a treaty, in this respect, with the Philippines. A trade agreement was concluded with Thailand, and barter agreements have been entered into with many of the countries of Western Europe.
A trade agreement has also been concluded with Communist China but the value of this is dubious. For it must be expected that China in trade, as in foreign policy, will operate under the strictest governmental control. Trade on the mainland of China is not free and Japan must anticipate that advantage will be taken of her own shortages, or other necessities, whenever and however the Communist leaders of China direct. So far, Japan has strictly complied with her obligation to refrain from selling strategic materials to China. The export of non-strategic materials to China has proved disappointingly small.
Japan has a burgeoning labor movement but few labor problems. There are two great labor federations: Sohyo and Zjnra. The first is the more radical of the two and attempts to gain its ends by political action. The second relies more upon negotiation and the established processes of collective bargaining. It is possible that the leftist policies of Sohyo are directed by the Communists and, in industrial circles, this is causing increasing concern. In any event, the Government is striking back at Sohyo in an effort particularly to stop the “check-off” practices under which a portion of the worker’s wages are paid to the union as dues. The Japanese will tell you that the Communist danger is recognized; but to some of us it seems that the threat has only been detected.
There appears to be a firm political consensus that the Communist Party has little appeal for the Japanese people and that the movement will remain politically ineffective. But the familiar Communists infiltration tactics are apparent on every hand. Communists are becoming increasingly active in the Socialist Party. They mask their propaganda under the guise of cultural activities. They have formed “singing movements” and utilize these gatherings to indoctrinate young men in Party policy. They are fully organized and wait expectantly the day when world events will equip their movement with greater prestige and power. Meanwhile, they have put forward a “Peace Policy”6 and have opposed, at every turn, a buildup of the Japanese Self Defense Forces.
During the war years most of the known Communists in Japan were imprisoned by the Imperial Government, but some escaped to Russia. However, under the new Japanese Constitution, they were guaranteed freedom of political action and American occupation authorities released the Communists from jail. Today membership in the Communist Party is variously reported at more than 50,000 and less than 80,000. The uncertainty is entirely understandable as it is difficult to distinguish between party members and mere sympathizers. While these numbers are not impressive it must always be kept in mind that, as a political tactic, membership in any Communist Party is intentionally kept small. It is established Communist doctrine that a hard core of dedicated men is all that is necessary to determine party policy and practice.
In any event, the names and histories of all known Communists are available through the efficient Japanese police system which has recorded their births and maintained dossiers on them throughout their lives. These records include their various employments and associations and contain an evaluation of their political tendencies. In official circles they have not been forgotten.
In summary, we may assume that the continuing rise in Japanese economic expansion was checked in 1957. Nevertheless, consumption levels and consumer prices throughout the country have not been affected and the general level of productivity remains high. Thus, the people of Japan have never been better fed, housed, and clothed than they are today; and they have more of the modern conveniences of life than they ever had before.
While the chronic shortage of raw materials is still severe, and housing remains a problem, the grave inflationary spiral developing immediately after the War has come to an end. The government’s restrictive credit policies and measures to restrain the demand for imports have been at least partially successful. Particularly there has been a decline in the import of textile raw materials and petroleum from their postwar peaks. Imports of iron ore, iron and steel scrap, and non-ferrous metals have also declined, but by considerably smaller margins. These factors will ameliorate the unfavorable trade balance that is expected to develop again this year.
The Japanese economic recovery has sometimes been attributed to increased confidence on the part of the Japanese that whatever they were able to earn they would be permitted to keep. Initially, they may have been apprehensive that the fruits of their labor would be taken from them, in the form of indemnities or otherwise. In any event, a feeling of assurance swept through the Japanese economy in 1956 and the effect is still in evidence. The recovery has had a tremendous psychological impact. The Japanese recognize that their industrial lot has swung full circle and that their new found prosperity has permeated all strata of the population.
Of course this resurgence of industrial capacity is of the greatest consequence in the formulation of American grand strategy in the Far East. Not unnaturally, it has been followed with the utmost interest in all responsible quarters of the American military, particularly as it has coincided with a decline in the economic potential of some of our principal allies in the West.
Nevertheless, there has been a decided disinclination on the part of Japan to channel its industrial efforts into the production of weapons for military purposes. Two reasons may exist for this. The first has to do with the evident apathy, and even distrust, of the Japanese public for all things military, including even the provision of the necessary means of self defense. The second may derive from the dire straits to which Japanese industry was reduced by the War. After the cessation of hostilities, the Japanese economy had to use up virtually everything it produced, merely to survive. To rebuild their plants, businessmen were required to borrow to the hilt. Inflationary processes were set in motion and high interest rates drove prices up still further. Thus, there seemed to be no place for any industrial effort that did not contribute directly to the economic welfare of the nation. Accordingly, the Japanese made every effort to direct their economic effort into strictly productive channels.
Of course, this is all to the good as far as it goes; for the United States needs an economically strong ally in the East. But the Japanese economy, as it strengthens, will need protection and prestige and it is difficult to see how either can be provided by a nation without modern weapons or effective military capability.
There may be the feeling in Japan that the military defense of the country is primarily the problem of the United States. And it should be a major policy of our government to disabuse the minds of the Japanese of any such conception. The industrial recovery confirms the fact that Japanese productive capacity, once of a demonstrably high order, is fully restored. And as the economy tends to stabilize itself on its present high level, it may be expected that the protection of their own industrial well-being will become a matter of first importance and urgency for the Japanese. They can provide this protection, in the first instance, by a buildup in the Japanese Self Defense Forces, of which the nuclei already exist. They can provide it also by utilizing Japan’s renascent industrial capacity, to the fullest possible extent, in the support and maintenance of the American Armed Forces in the East.
II
No one can approach a solution of the South Korean dilemma except along the road of paradox. On the one hand, the civil and military leaders appear forceful and determined and the troops, courageous, eager, and well trained. On the other, the Korean government may not be democratic in its origin or entirely democratic in its practices. The economy presents a picture of sharpest contrasts: there are the extremely rich and the extremely poor; there has been great economic recovery in the large cities since the end of hostilities, but the impression remains that large masses of the people are below the poverty line; there is evidence of the almost one billion dollars of aid given the country by the American government, but there is also such evidence of economic insufficiency as to suggest that the recovery problem is almost insoluble.
Any attempt to understand these difficulties must start with the extraordinary division of the country, upon the cessation of hostilities in World War II.
The 38th parallel had no justifications as a boundary either in good politics, good economics, or good morals. It was purely a compromise, and was accepted by the United States as a temporary expedient. It was agreed to solely upon the basis that the Korean people, thereafter, would be permitted to establish a unified state. It seems almost incredible that the mistake made at Yalta was here repeated. The Agreement reached in the Crimea has been much criticized and with some justice. For we took a Soviet promise and were denied fulfillment. The Soviet Government promised, for example, free elections and representative governments, in the captive states of Eastern Europe. But the promise was illusory, the elections, under Soviet domination, were farcical, and the Satellite governments, when installed, were neither representative nor freely elected. In Korea we forgot that it was not the promise but the performance that was important. So Soviet controls were fastened on North Korea and, for all administrative and political purposes, the division at the 38th parallel resulted in separate states.
Economically, the aftermath was disastrous. On the one hand, North Korea needed badly the food grown in South Korea. This fact, among many others, has caused the exodus of North Koreans to the crowded cities of Seoul and Pusan. On the other, South Korea needed the coal, iron, and hydroelectric resources of North Korea. It needs them today to support the industries which it has hoped to establish with American aid. To some observers, these economic consequences of the division of Korea are the determinative factors and doom to failure any attempt to assist South Korea, economically, to its feet.
However, no one who knew South Korea at the time of the Armistice can say that the Korean economy has not improved. In Seoul, the hordes of little children have disappeared from the streets. There is still great destitution in the refugee camps outside the city but there has been considerable amelioration of conditions. In Pusan, so much cannot be said. The city’s population has swollen to well over a million. Included are one hundred and fifty thousand able-bodied men who are seeking work and finding none. The result is that frequently work is obtainable only in the event that it is paid for and a job is held only so long as appropriate payment continues. Quite possibly, the entrepreneur obtaining the job is also paying for his concession.
Pilferage of U. S. Army supplies on an extraordinary scale constitutes a critical and depressing problem. It is particularly acute along the supply route to Inchon. No one in Korea condones this but an attempt is made to explain it. Thus, a seaman in the Korean Navy, for example, is paid the equivalent, in American money, of eighty cents a month, together with one bag of rice, if he is married. Otherwise, he draws the same money and receives his military rations. Evidently for people to live on this wage scale, there must be some improvisation. Naturally, this should not take the form of theft. Nevertheless, it is a condition and not a theory that confronts the very poor in South Korea.
It is possible that the Korean people are not getting all the benefit of the American aid program they should. At the present time all United States aid is being administered by local Korean authorities, whose handling of the program has not been free from criticism. It is possible that all administrative controls should be exercised by United States government agencies already established and staffed in the area.
It has been suggested that Korea was better off economically under Japanese administration. Thus it is pointed out particularly that, in the earlier period, the railroads were built, and the heavy industries of the country established. It has been urged that Korea, then and now, has in Japan a natural market for its foodstuffs. But this hardly appears to be the answer. In the first place, the Japanese administration of Korea was a particularly brutal one. Whatever may be said on behalf of the orderly governmental processes of the Japanese when they are immersed in their own country and traditions, their civil administration, outside of their own country, tends to become excessively tyrannical and oppressive. Moreover, the Koreans succeeded in maintaining their identity as a nation throughout the long period of Japanese occupation and are of no mind to forego it now. The South Koreans are a free people and proud of it and no one believes they would accept Japanese administration or control.
But it has been urged that there should be a rapprochement, economically, between Japan and South Korea. Japan is excessively short of foodstuffs and Korean rice is a particular favorite. Thus, it is argued that Japan could pay for its imports of foodstuffs through the export of items which would better clothe and house the Koreans. Much can be said for this point of view. However, anti-Japanese feeling in Korea remains strong and this is accepted, and may be encouraged, by the present liberal government of the country. Of course, the tenure of the existing government is by no means assured and it is possible that, in the future, considerable reorientation vis-à-vis Japan may take place.
It has been proposed that the efforts of all men and agencies interested in the future welfare of the Korean people should be directed to the eventual reunification of the country. But in the present circumstances country-wide free elections are a dream. And pursuit of this proposal leads, necessarily, to the threshold of the vexed question of force. The redoubtable President of Korea has expressed himself, repeatedly, as favoring a march to the north. Understandably, he does not recognize even that the government of North Korea exists. It is conceivable (although not probable) that he would order the ROK forces to attack. But the logistical limitations of the ROK army are many and critical. And if the order were given, and obeyed, it is doubtful that the ROK forces could support even a limited offensive, without American transport, ammunition and other logistical support.
Conversely, in the present stalemate, there is little expectation that the North Korean Forces will attack, although any change in the balance of power in Korea, or any critical Communist development in world politics would present this as an immediate possibility. The North Koreans on the one hand, and the ROK and American Forces on the other, are in approximately equal strength. Under these circumstances, from the tactical point of view, an attack ordinarily would not be expected. However, the Chinese have troops beyond the Yalu which, if employed in conjunction with the North Koreans, would give the attacking army overwhelming force. The Chinese could arrive at the front lines long before comparable United States forces could be assembled from Okinawa, or elsewhere. It has been already noted that there are presently no United States ground forces in Japan.
I know of no one who pretends to have a clear solution of the many and complex Korean problems. No one can foresee the end because no one can foretell the possible eventualities. It is conceivable that the existing Korean government will be followed by a government whose policy will be orientated toward an adjustment of all outstanding problems with the Japanese. It is possible also that either the North or South Koreans may initiate military action. Moreover, the improvement in the economic conditions in South Korea, particularly noticeable during the last two years, may continue and it may be hoped that many of the evils of the current period will disappear. For many reasons—some strategic and some moral—a free and united country is a vital issue for South Korea and of vital importance to the Free World. Accordingly, we must expect that Syngman Rhee, and many other devoted South Koreans, will not rest until unification is brought about. To most informed Western observers, the stars that will chart Korea’s future have not yet come into view.
III
All Chinese Nationalists in Taiwan hope to return by force of arms to the mainland. But do they actually expect to? On the one hand, the economy of Taiwan is sound and the Island can easily maintain them. On the other, the Nationalist Government has committed its political existence to a return. One finds this issue debated not only in Taiwan but in all quarters of the Free World. The most authoritative answer would seem to be conditional: it depends on what incidents develop in Communist China which the Nationalists are able to exploit. If, for example, rioting should break out in Canton and local authorities should lose control, then the opportunity for armed intervention in the area may be presented.
The problem is not only military but political. Successful intervention would require a lodgement of troops on the continent. But it would also depend on the development of a favorable political consensus among the Chinese people. For in the absence of events which are politically exploitable, the road back to China, however much it beckons, is strewn with fearful blocks and hazards. Not least of these is the fact that Red China has an army of over two million and the third largest Air Force in the world.
The United States is presently supporting logistically the Nationalist forces, through a Military Aid Assistance Group assigned to Taipei. The aggregate Chinese forces on the MAAG rosters and accounts will total 650,000, with the Air Force accounting for about 85,000 and Naval units for an equal number. Chinese troops, brought over from the mainland, account for most of the balance. However, a growing number of Taiwanese recruits have been inducted into the Nationalist ground forces.7 In addition the Nationalist forces include a number of guerrillas and other personnel who have come over from China but are not carried on MAAG rolls.
The military expectations of the Nationalist Government depend upon the possibility of a swift landing on the continent in division strength. But in any such operation it will need minesweepers, with modern equipment, to clear the approach channels. And it will need escort craft with radar fire-control and guns having a range comparable to the range of opposing shore batteries on the mainland. The Nationalists will also need LST’s or like transport for use in amphibious operations. Trained Chinese and Taiwanese personnel are already available to man the additional ships. Many of the old Japanese vessels now being operated by the Nationalist Navy are obsolete and should be scrapped; and this in turn would provide additional manpower for the new vessels the Navy hopes some day to obtain.
The Nationalist Government will not require, or desire, American soldiers in any adventure it may undertake. Politically, the Nationalists believe that any attack on the Chinese mainland by foreign troops would react against them. But they do hope for both logistical and air support from the United States.
Like the ROK forces in Korea, the morale of personnel in the Nationalist military units is high. This is particularly noticeable in the Navy where the ships and equipment are maintained in a high state of readiness and training is rigorous and prolonged. Unlike the situation in Korea, there is little pilferage of American supplies and there is much evidence that all American aid is being applied to the uses and purposes for which it was intended. While American aid is turned over to the Nationalist Government for administration, frequent checks are made by MAAG personnel on the use and disposition of it.
It is not likely that the Communists could effect a successful coup d’état in Taiwan. The Nationalist police are omnipresent and the possibility of infiltration is fully recognized and guarded against. Currently the Communist threat is directed against the offshore islands of Matsu and Kinmen. For these islands have become a matter of “face” or prestige for the Nationalist Government and a very considerable part of the Nationalist forces has been committed to their defense. The government has stated that it will not retreat further, or cede additional territory. If it abandoned the islands, in the face of a Communist attack, there is a strong feeling in Taipei, that the government itself would fall.
Strategically, the islands do not seem to have the importance given them politically. It is true enough that Nationalist gun emplacements on the islands command Communist air strips on the opposite shore. But it is quite evident that Taiwan is within easy bombing range, in any event, of airfields located far in the interior of China.
Presumably a conflict could develop in the Taiwan area in a number of ways. It could develop if the Chinese Communists made an amphibious attack on the off-shore islands. It could also occur if the Communists attempted in Taipei a coup d’état. The presence of the United States 7th Fleet would seem sufficient to rule out the possibility of an amphibious assault on Taiwan itself. But should the Fleet be withdrawn, the Nationalist Government would have to prepare for an all-out attack on their positions.
If a condition resembling the spontaneous outbreak in Budapest should occur anywhere on the mainland, the attention of the Free World would be focused immediately on China. For the Nationalists have the will and the force to intervene. Their task would be greatly facilitated by the naval craft they hope to secure from the United States: otherwise they are prepared to do with what they have. In the absence of suitable amphibious craft, the Chinese will load their troops on merchantmen and junks and cargo craft of every type and kind. They will be greatly outnumbered by the Red military but they will look to the Chinese people for support. And they will hope that it will not be numbers or equipment, but the imponderable factors of esprit de corps and morale that will, in the end, decide the issue.
IV
The returning traveler to Hong Kong receives a number of striking impressions: the extraordinary growth in population during the last ten years, the extensive modernization of the streets and urban areas, the increased activity, bustle and confusion of the free port and, above all, the amazing complacency of the Hong Kong residents in the face of the towering Communist threat at their borders. The people of Hong Kong have convinced themselves (or else they seek to convince others) that a free Hong Kong is of more importance and benefit to Communist China that a captive and, therefore, that the possibility of Communist occupation of the area is nil.
The region comprising Hong Kong, Kowloon and the New Territories constitutes a free and independent outpost of the Western World. It is also a window and a listening post for Red China. And it is true that the advantage runs in both directions. Certainly there are undeniable economic benefits to China. Chief among these is the favorable trade balance that has developed in Communist commerce with Hong Kong. It produced SI20 million in hard currency for China last year. The Communists need this currency badly to finance their imports of machinery and capital goods and support their program of rapid industrialization. In addition, China received through Hong Kong approximately $60 million in payments from overseas Chinese, who maintain their relatives in China. While the export to China of this money is wholly illegal, it is nevertheless arranged clandestinely through Hong Kong and the authorities have not been able to stop it. Naturally it is encouraged, and more than encouraged, by the Chinese Communist Government.8
It must not be thought that Hong Kong is a mere conduit for Chinese trade with the Free World. In the entire area live almost two million people who are fed largely with produce imported across the Chinese border. Moreover, it is suspected that Communist capital (if the name is not a misnomer) has found its way into investment channels in Hong Kong; otherwise it is difficult to assign a reason for the plethora of capital funds available for the new construction you see on every hand.
The Chinese may attempt to infiltrate Hong Kong in large numbers and attempt to subvert the civil administration. But the British seem fully alert to the possibilities in this regard. They react with the greatest rigor to the slightest evidence of espionage or subversion. Suspected fifth columnists are taken into custody and promptly deported across the border. There is presently no requirement that they be brought before a magistrate and nothing about the police action appears in the daily press. It is not unlikely that the British tap telephones, open mail, and otherwise proceed with the greatest vigor. Their police system is experienced and efficient. In an emergency they are able to call upon British troops in the area for support.
Nevertheless if subversion is difficult, there is little doubt that the Communists have the military means to occupy Hong Kong, and its related areas, whenever their own necessities, or related political considerations, require. Their huge army and large air force are strategically placed. The question is whether any real attempt to defend the city will be made. For many months the warships in Hong Kong harbor have been American, not British. And the English Government has recently announced its intention to deactivate its traditional and once most formidable base of the Royal Navy.
If any event, it is clear that if a general war should break out, Hong Kong would be immediately attacked. Short of a general war, Red China may not move in that direction. But China will maintain the capability of doing so and meanwhile, it must be assumed that Great Britain’s jurisdiction and control are tenuous. What is lost sight of in Hong Kong is that the considerations prompting Red China to move against the city may have nothing to do with China’s economic interests or for that matter with Hong Kong itself but may derive from pressing, and little understood, necessities originating in the remote and labyrinthine passages of the Communist world elsewhere.
V
What has occurred this winter in Indonesia is not a political controversy but a conflict. It is the result of grievances which have been long developing in the provincial regions, against the central administration in Jakarta. To the feeling of the people in the provinces that they have been neglected and ignored by the government had been added the fear that renascent Communist influence in the administration poses a threat to their new and hardly won liberties. The strong reaction came as no surprise.
In the disaffected outer regions, called daerahs, have been formed dissident councils or dewans. Through the media of the dewans, Indonesians living in the outer islands sought greater representation in the central government and a more equitable allocation of government revenues. Particularly, they sought greater economy in the conduct of public affairs. They contended that broad educational and social changes were called for and that tedious and futile administrative procedures in the central government stultified all attempts at progress. Much more could be accomplished, they believed, if greater autonomy were given the provincial regions in the conduct and administration of their own affairs.
What started out as a political movement, with economic implications, developed in intensity as the economic and financial situation of the country deteriorated. It became evident that the provincial regions were losing confidence in the capacity of the central government to solve the country’s pressing problems. President Sukarno had returned from a lengthy trip abroad to publicly announce, as a remedy, his concept of a “guided democracy.” But the people were quick to note that in this “democracy” the President advocated Communist participation.
The Indonesian Communist Party (P.K.I.) is not officially represented in the Cabinet of Prime Minister Djuanda. There are, however, a number of fellow travellers holding important portfolios. Moreover, in addition to the cabinet, the central administration has a national council. While this council was set up ostensibly as an advisory body, it has developed into a policy making agency of the highest importance. And there is no question that Communists serve on the national council of the Indonesian government.
The anti-Communist feeling in the daerahs has remained strong. Many of the military commanders in the provinces were participants in the struggle for Indonesian independence. In Central and South Sumatra and in Eastern Indonesia, these commanders have been accustomed to share with the civil authorities responsibility for the administration of the regions. And they are particularly alive to the nature and compass of the Communist threat.
Early in 1957 a “State of War and Emergency” (Keadaan Darurat Perang) was proclaimed by the Government for all of Indonesia. The decree had been initiated by Sukarno with the full support of the Army’s Chief of Staff, General Nasution. However reluctantly given, it likewise seemed to receive the concurrence of the Cabinet. The Vice President, Dr. Mohammed Hatta, in whom the dissidents had confidence, had long since resigned from the Government. But immediate opposition to the decree was voiced by the territorial commanders: Colonel Sim- bolon in North Sumatra, Colonel Barlian in South Sumatra, Lieutenant Colonel Husein in Central Sumatra, and Lieutenant Colonel Sumual in Eastern Indonesia. Nevertheless under the decree, the commanders received the status of military administrators of their regions and, as such, exercised jurisdiction over all local economic and financial affairs, including the regulation of imports and exports to and from their provinces. They have been successful in turning the provisions of the decree against the central government, evidently taking Sukarno and Nasution by surprise.
In the beginning, the daerah movement was almost spontaneous. Whatever coordination was achieved was based entirely on the personal relationships existing between the military commanders. No common program or jointly formulated platform existed. The initiative to bind Central and South Sumatra, and Eastern Indonesia into a common front was provided by Prime Minister Djuanda when he called for a national conference, to be held on September 10, 1957, in Jakarta, to discuss the many and critical questions facing the nation.
The dissident leaders in the daerahs felt that a joint approach to their common problems should be made and a common statement of aims and purposes prepared. Accordingly, on the eve of the Jakarta Conference, they called for a meeting to be held at Palem-bang on the 7th and 8th of September. Colonels Simbolon, Lubis, Djambak and Barlian were there, and Lieutenant Colonels Ahmad, Hussein and Sumual. There were other officers and political leaders in attendance. The agreement subscribed by the participants at this conference came to be known as the Palembang Charter. It is in essence a National Anti-Communist political front and deserves the closest attention and scrutiny.
In the first place, the signatories of the Charter at Palembang demanded the return of Dr. Hatta as Prime Minister. They considered him as uncompromisingly anti-Communist and felt that he should be given the top leadership in the affairs of state. But they also called for an immediate reorganization of the army high command. Without this, the conferees declared, there could be neither mutual confidence nor stability among the military. A demand was made that more extensive regional powers should be given to the provinces. And it was proposed that the national legislature be made bi-cameral with provision for an elected Senate.
The Charter attacked Communism as internationally controlled and as completely contrary to three of the five principles of the Pantjasila, the state ideology to which all Indonesians subscribe.9 It called uncompromisingly for the prohibition of Communism as a political movement. The terms of the Charter provided for the future coordination of the provincial regions and for joint action, under a joint command, if the central government should resort to military or administrative sanctions. Finally, the participants in the conference agreed that the Charter should itself constitute a platform for a national movement, which all sections of Indonesia would be invited to support.
The National Conference called by Prime Minister Djuanda, was held a few days later. It likewise produced a joint declaration signed by President Sukarno and Dr. Hatta. They both expressed their adherence to a number of general principles, including those mentioned in the Proclamation of Independence in 1945 and in the Pantjasila; but none of the fundamental issues raised at Palem-bang was considered or determined. The National Conference closed on September 15th. A week later, the dissident military commanders and civilian leaders met in the Central Sumatran capital of Padang to consider its significance and results.
It was recognized immediately that none of the objectives of the Palembang Charter had been achieved. Not a single cause of complaint appeared to have been alleviated. The participants in the Padang meeting were not particularly happy over the joint declaration of Sukarno and Hatta and were inclined to feel that the latter had been outmaneuvered by the more politically astute members of Sukarno’s Party. They considered that the cause of Communism had been promoted at the National Conference and the anti-Communists forces weakened correspondingly. Therefore, they felt they had no alternative except to continue to expand their daerah movement into an anti-Communist front with national political objectives.
The dissident leaders did not deceive themselves into the belief that the central administration would not attempt retaliatory measures. But they recognized that the government at Jakarta did not have the ships or equipment to make a blockade effective. It was felt that the central administration could, and probably would, withhold funds for the orderly administration of the outer provinces. And it was accepted as a strong probability that the government would take offensive military measures with preliminary bombing and amphibious operations.
Accordingly, after the Padang meeting every effort was made to strengthen the groups and forces regarded as belonging to the National anti-Communists Front. The strength of the daerah movement was located primarily where it started: in Central Sumatra, in South Sumatra and in Eastern Indonesia. But there were supporting groups in West Java and in Tapanuli in North Sumatra. The movement was not based on ethnic divisions of any kind and it was believed that there were, throughout Java itself, military, political and social groups which supported the principles of the Palembang charter.
Specifically, the dissidents determined to speed up the flow of goods between the territorial provinces belonging to the anti-Communist front; to create monetary reserves for the outer regions as a whole, both in terms of foreign exchange and rupiahs; and to commence works of public improvement such as the construction of roads, bridges, housing and harbor facilities. From the longer term point of view, they determined to develop the mineral resources of each of the territorial provinces. In this manner the leaders of the movement hoped to contribute to the economic and social improvement of the provinces and, thereby enlist the active support of the population.
They felt that a conflict of this sort in Indonesia was not necessarily determinable by military means. And they believed that decisive military means were not then available to either faction. On the other hand, they recognized that Indonesia was a free country and that free people could express their preference by ballot and otherwise. Accordingly, they considered that a convincing demonstration that the people in the outer districts fared better, and were provided with more of the necessities of life, than the residents of the government-controlled parts of Java, would be a powerful weapon in the hands of the anti-Communist front. This is the weapon which the leaders of the daerah movement hoped to wield. This movement did not have as one of its purposes, initially, the overthrow of the Central Government by force. In the beginning, its leaders sought neither ammunition nor guns.
After the Padang meeting, the relationship between the outer provinces and the central administration rapidly deteriorated. In the past, Sukarno had repeatedly aligned himself with the neutralist policies of India and had grown highly critical of the West. Not only had he advocated Communist participation in the central government at Jakarta but, by touring the country with Russia’s President, Voroshilov, he had greatly enhanced the strength and prestige of the Indonesian Communist Party. He also vigorously denounced the Dutch for their continued failure to turn over West Irian and accompanied his demands with recrimination of the most inflammatory sort. But to the leaders of the outer districts, the West Irian question was not a real issue but rather an artificially created one, designed to rally the people to the central administration. They also suspected that the deliberately built up issue was Sukarno’s political device designed to break the last ties of the country with the Western Democracies and bring Indonesia into the Soviet bloc. Meanwhile the head of the Indonesian Communist Party, D. N. Aidit, exerted an increasing influence over Sukarno and Sukarno, in turn, was becoming increasingly dependent politically on the Reds. Finally, as the Dutch continued to resist all demands, the Government of Prime Minister Djuanda commenced a reckless campaign to seize the vast commercial holdings of the Netherlands.
Sukarno left the country in January of 1958 and was absent for a period of 41 days. Meanwhile the anti-Communist Military Commanders and civilian leaders met again in central Sumatra at Padang. In due course they delivered an ultimatum to acting President Sartono, demanding that a new national government of Anti-Communists be formed with Mohammed Hatta at its head and including the much respected Sultan of Djokjakarta. When their ultimatum was ignored the dissidents proclaimed a new revolutionary government and claimed full sovereign rights over all Indonesia. Sjafruddin Prawidane-gara, former governor of the Bank of Indonesia, was designated Prime Minister.
Thus the issue was joined. The central administration had a small navy and some tactical aircraft but the Revolutionary Government did not feel that it was entirely without retaliatory power. For Sumatra is a large exporter of coffee and rubber, and in ordinary times would provide almost three quarters of Indonesia’s revenues. Java with its teeming population of 54 million must import a part of its food. The new government at once forbade exports of oil to Java or the payment of tax revenues to the central government. In return the central government bombed Padang and landed troops on the east coast of Sumatra. The Communist leader Aidit called for the most repressive measures and, from the North, the Soviet fishermen looked expectantly at the troubled waters.
VI
Modern war is waged without scruple and without compassion. It poses a great number of highly important questions, one of which may be: where shall we expect to meet the enemy? Those who expect an all-out atomic, or thermonuclear, war tell us he must strike us in our homeland. But there are others who say we will engage him in Korea, in Taiwan, in Indonesia, or, it may be, in Japan. The answer lies in the field of grand strategy and a mistake could be decisive of our lives and liberties and the very existence of our State.
Now there is much sound military judgment that no all-out nuclear war impends. It is true that if one belligerent has a thermonuclear weapon (and can deliver it accurately) and the other has not, it is reasonable to assume that the weapon will be put to use. But where both belligerents can deliver so destructive a weapon, the possibility of its use is affected by a number of other considerations. It becomes important to deliver it, not only, but to defend against it. The concept of massive retaliation is not so much a defense as a threat of punishment. So far as this country is concerned, it implies that a strike with special weapons has been made, involving the total destruction of one or more of our cities. But the complete destruction of one of our great industrial centers is hardly an acceptable loss in modern war. Conversely, the retaliatory destruction of one or more of his largest cities could not be an acceptable loss to the enemy. And, where the tactic involves unacceptable consequences as to costs, all military strategy operates to prevent its employment.10
We know, of course, that the Soviet Union is controlled by men of no political or moral compunction. But this does not mean they would disregard necessarily all strategical doctrine. And if they would not, we would then be faced with the possibility of peripherical wars, fought for limited objectives.
In such a war, it would be necessary to formulate our strategy in conjunction with our Allies on the perimeter. For we could not expect to employ our own resources only. It is a sound principle of war to know (that is, to recognize and evaluate) your enemy. It is also necessary to know the resources and capabilities of your friends, so that we can work with the greatest benefit.
1. We have in Asia our SEATO Allies: Thailand, New Zealand, Australia, and the Philippines. And we have strong ties with the nations SEATO is pledged to protect: Cambodia, Laos, and South Viet Nam. But the emphasis in this paper is on the other countries along the Far East perimeter.
2. Exports in 1956 were 24.4% higher, and imports were 30.7% higher, than in 1955.
3. Including Tidewater Oil Co., Socony Mobile Oil Company and Caltex of California, Inc.
4. Pig iron output in 1956 totaled 5,987,204 tons and the output of ordinary steel 8,185,694 tons.
5. Principally, the First National City Bank of New York, the Chase National Bank, and the Bank of America National Trust and Savings Association.
6. Traditionally, a “Peace Policy” with Communists is designed to effect a coup d’état. To Eastern European satellites, the expression has a hollow and familiar ring.
7. A draft is not popular anywhere but in Taiwan it has provoked surprisingly little controversy.
8. By constant pressure from the Communist Government on both overseas Chinese and such of their relatives as are still subject to Chinese jurisdiction.
9. The three: devotion to God, Nationalism and Democracy. The remaining principles of the Pantjasila: humanity and social justice.
10. In the last War there is no question that Germany during the Battle of Britain, could have killed hundreds of thousands of civilians by using gas as a tactical weapon, i.e. by delivering air-to-surface gas bombs. But there is no question either that, from the beginning, Great Britain possessed a like retaliatory power. It was evident that mass destruction of the civilian population could only be a two-way street. Accordingly, consideration of the consequences as to costs, made the employment of gas as a weapon strategically unsound.