In 1948 the Communist Party of Malaya--a mostly Chinese movement formed in 1930 that had provided the backbone of the anti-Japanese resistance--went into the jungles and began a guerrilla insurgency to defeat the colonial government, sparking a 12-year period of unrest known as the Emergency. The communists waged a violent and ultimately unsuccessful struggle supported by only a minority of the Chinese community. The British struggled to suppress the insurgency by military means, including an unpopular strategy that forcibly moved many rural Chinese into tightly controlled New Villages. Although this policy isolated villagers from guerrillas, it also increased the government's unpopularity. The British finally achieved success when, under the leadership of British high commissioner Sir Gerald Templer, they began addressing political and economic grievances as well, increasingly isolating the rebels. Promising independence, British officials began negotiating with the various ethnic leaders, including the UMNO and the Malayan Chinese Association (MCA), formed in 1949 by wealthy Chinese businessmen. A coalition consisting of the UMNO (led by the aristocratic moderate Tunku Abdul Rahman), the MCA, and the Malayan Indian Congress contested the national legislative elections held in 1955 and won all but one seat; this established a permanent political pattern of a ruling coalition--known first as the Alliance Party and later as the National Front--that united ethnically based, mostly elite-led parties of moderate to conservative political leanings, with the UMNO as the major force.

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In 1948, communist terrorists, many of whom were Chinese, began disrupting village life in the jungles of the newly established Federation of Malaya (under the rule of a British high commissioner). They carried on hit-and-run guerrilla warface against army outposts, police stations, and other government places; a state of emergency was declared, and British and indigenous Malay forces fought back. In 1949, an intense campaign was mounted against the guerrillas, hundreds of whom were slain or captured. One effect of the jungle warfare was to bring leaders of the various ethnic and religious communities closer together with more mutual understanding. The government-implemented Briggs plan (1950) resettled so-called "squatter" Chinese farmers, who were easy prey for raiding guerrillas, in protected Malay areas. In 1951, the terrorists increased their activities, destroyed rubber trees, intimidated plantation workers, and assassinated the British high commissioner. Sir Gerald Templer (1898-1979), the new high commissioner (1952), headed the government forces, began a concerted antirebel campaign, and encouraged cooperation among the diverse Malay peoples. Rigid food control in suspected rebel areas forced many terrorists to surrender or starve. By 1954, the communist high command in Malaya had moved to Sumatra. After the Malay Federation became an independent state in the British Commonwealth (1957), the war petered out; increasing numbers of terrorists surrendered (a government amnesty was offered to them in 1955, and many accepted it). Still, a hard core of several hundred communist guerrillas continued to operate in the thick jungles along the Malay-Thai border until 1960, when they were defeated.