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Thursday, 10 March 1966

In Indonesia the situation is in truth still so fluid that it would be neither prudent nor helpful for me to engage in comment or speculation about it. It has been noteworthy that most countries, like Australia, have recognised that this is a domestic crisis. We have been circumspect in our comments on it, as have most other countries. The notable exception has been the Communist regime in Peking which, under considerable suspicion of involvement in the abortive coup of last September, has been aggressively outspoken and partisan about the whole situation ever since. Peking has used all its considerable resources of propaganda in seeking to influence openly the course of internal political developments within Indonesia. We in this country, and other countries of Asia and Africa which are observing these events, should take careful note of the light thrown on the conduct and motivation of Peking's external policies, including its readiness to interfere in the domestic policies of other governments.

Unfortunately, in Indonesia the past few months have also seen a continuing deterioration of the economic situation, with the erosion of capital assets, the running down of foreign exchange and accumulation of debts, problems of credit and stagnating production. There is, as I said in October last, a formidable task to be done in concentrating resources, both human and material, on domestic construction and development. The longer this is postponed, the harder the task will be.

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