Canberra, 15 March 1965
Secret
Background
1. The Tunku told Critchley on 3rd March that Lee had over-played his hand and there was no present prospect of ‘disengagement’ with Singapore.
2. This is not surprising. Once they started to think about it carefully the leadership in Kuala Lumpur were scarcely likely to weaken their constitutional ‘hold’ on Singapore (internal security and law and order) and give Singapore an advantageous arrangement of full internal self-government plus a Malaysian common market.
3. The problem facing Australia has thus changed since Mr. Hasluck’s telegram of instructions of 24th February.2 It was then a question of exerting influence on both the Tunku and Lee. Lee will no doubt advocate ‘disengagement’, but he can scarcely any longer assert, in answer to our expression of anxieties about its political dangers, that it can be arranged by quiet agreement without major political controversy.
Our objectives
4. There are at present fairly serious stresses and strains between Kuala Lumpur and Singapore. There are also points of friction between Kuala Lumpur and the Borneo States where resistance is rising among the indigenous peoples to what they consider to be the imposition of Malay values by a Malay-controlled Government in Kuala Lumpur. In the long run, throughout Malaysia, there is a fundamental social and political issue of full political equality between the different racial groupings. Sooner or later the modem minded, politically sophisticated Chinese (possibly with the support of other non-Malay groupings) will challenge the Malay preponderance in Government, Parliament and Civil Service. This challenge will be strongly contested by the Malay leadership, the argument being that this Malay preponderance is essential in order to redress the balance of the economic and professional supremacy of the Chinese.
5. The problem has not yet become acute in Malaya where the Chinese are a junior partner in the political power alliance. But Singapore has a well-organised and energetic Chinese leadership and the existence of this independently assured Chinese political grouping gives Kuala Lumpur a sense of insecurity and uncertainty for the future. Lee Kuan Yew would argue that, with good leadership in Kuala Lumpur and Singapore and a common understanding on the future character of Malaysia, these problems are not insoluble. But he asserts that Kuala Lumpur shows no signs of understanding the new social and political issues to which Malaysia has given rise and shows every sign of wishing to consolidate Malay leadership, to adapt itself more and more to the requirements of the Malay extremist wing of U.M.N.O., and to bottle up and contain Singapore. In our view, Lee’s charges are not to be dismissed lightly, but the overall situation has not deteriorated to a degree which makes impossible the search for a basis of mutual association and understanding.
6. As intellectually well-equipped ‘Malaysian Chinese’, relatively free of the instincts of traditional Chinese chauvinism, Lee and his colleagues are well placed to make a major contribution to the handling of these problems. Our objectives should be both to:—
(i) encourage Lee to take the long view of the problems of Malaysia; and
(ii) discourage him from over-reacting to his immediate difficulties, either by forcing a political crisis and asserting his demand for ‘disengagement’ through pressure tactics or by yielding to the view in his Party that the P.A.P. should turn itself into a Malaysiawide party and fight the Alliance. In our view either course will sharpen communal difficulties very considerably and will dangerously threaten Malaysia.
Making an impact on Lee
7. Lee is not by nature a sober and restraining leader of his Party. He often raises the political temperature because temperamentally he is excitable, impressionable and highlystrung. We may be able to induce in him a more sound and balanced outlook by the way we handle him. Some suggestions are:—
(i) Senior Ministers might impress upon him their careful and deliberative approach and their evident concern to weigh the serious issues in question in terms of Australia’s national interests and stability in South East Asia. Lee should be given the feeling that he needs to present a solid and well-founded case if he is to carry the Australian Government with him.
(ii) It is important that Ministers show a sympathetic awareness and grasp of his problems, both his immediate political difficulties and the underlying problems of the future social and political structure of Malaysia.
(iii) Ministers might make clear to him the high regard we have for him and his Party; for what he and his Party have achieved; and the expectations we have of the valuable role they are to play in the future of Malaysia (in other words, we should let it be apparent that we accept that Lee and his colleagues represent a nationally-oriented Malaysia-minded body of Chinese).
(iv) Ministers might intimate very discreetly that our understanding of his present problems and requirements will be reflected in what we do in Kuala Lumpur—just as we are urging certain views upon him.
The dialogue with Lee: notes for Minister
8. Mr. Hasluck might open the discussion by saying that on the basis of reports from Critchley and Pritchett he authorised them to put certain views before the Tunku and Lee. He understood this was done. He would now greatly value Lee’s exposition of the situation but before this he would like to explain why the Australian Government, which was strongly attached to the principle of no outside intervention in domestic matters, saw fit to offer views.
9. The Australian Government believed that it had a legitimate and immediate concern with the integrity of Malaysia both in fact and in international appearance. Malaysia was under test. Indonesia’s hostility did not take the clear-cut form of conventional aggression against an established country. It was a many-sided challenge invoking, internally, the political functioning and structure of Malaysia and, externally, Afro-Asian and United Nations opinion. None knew this better than Lee. But the Minister’s point was that the standing of Malaysia’s allies was also involved in the handling of this challenge and in the outcome—in the region, among the Afro-Asians and the United Nations. In this political sense our support for Malaysia was a major national commitment.
10. Our decision to give military aid to Malaysia could bring us on to a collision course with Indonesia and lead to long-term Indonesian hostility. In terms of bilateral Australian— Indonesian relations we saw no current reason of necessity, whatever the future might hold, for us to plan on the basis of a hostile Indonesia. But because of our actual and potential involvement in Malaysia (and elsewhere in South East Asia) the Government had introduced conscription and had modified the pace of national development by greater expenditure on defence—which would run at an annual rate of six times higher than Malaysia’s.3 These aspects aside, it was a momentous decision for Australia—a country of European background—to support one Asian country with arms against another and to take the stand it had in relation to its closest Asian neighbour of 100 million people.
11. It was considerations like these that led us to express the view that we would expect Malaysian leaders in Kuala Lumpur and Singapore to be extremely cautious about precipitating major political issues at a time when there is a compelling need for national cohesion. We also are concerned, if the concept of Malaysia is to change, to understand thoroughly what is happening and where it is likely to lead.
Lee’s presentation
12. Lee will speak along the following lines:—
(a) Malaysia had never been conceived by the Kuala Lumpur Malays and the conservative M C A. Chinese as anything more than a ‘means of holding Singapore down’.
(b) The Tunku and other moderate Malays were increasingly in the hands of rightwing, traditionalist Malays supported by a corrupt, unrepresentative group of Chinese.
(c) The U.M.N.O. right-wing was willing to stir up trouble—Singapore (race riots); to use federal power to ‘contain’ Singapore politicians; and Tan Siew Sim would not lift a finger to ease the economic pressures on Singapore caused by confrontation. Kuala Lumpur politicians had not respected the political ‘truce’ which had been negotiated after the riots.4
(d) What were the alternatives?
(i) A coalition Government. (Lee may not say much about this. He might say it is out of the question from Kuala Lumpur’s viewpoint and that in any event he would have great difficulty in sharing responsibility for the Central Government’s conservative policies.)
(ii) A political truce. (He may say this has been tried and failed.)
(iii) ‘Engagement’. Lee will say that many in his Party wish to launch the fight for a multi-racial Malaysia based on Malaysia-wide multi-racial political parties. (In other words the entry of the Chinese-dominated P.A.P. into Malaysia and the Borneo States.) He will also say that he has no choice if the U.M.N.O. right-wing continues trying to undermine the P.A.P. in Singapore.
(iv) ‘Disengagement’. Lee will say that he personally sees the risks of course
He is thus led to disengagement as the sole means of avoiding frictions and political struggle between Kuala Lumpur and Singapore.
Points of Commentary
13. It may be possible to work in some of the following points by way of commentary and response to Lee Kuan Yew’s statements.
14. We fully recognise the need for a process of adjustment. The Malaysia constitutional arrangements cannot be immutable and there will have to be evolution. But we are genuinely apprehensive of the political complications and risks which could affect Sabah and Sarawak as well as Singapore and Malaya. In the present time of national emergency the prospective improvement must be clearly attainable and substantial or the present difficulties intolerable before major political negotiations would be justified.
15. We doubt whether there is anything like a sufficient basis of understanding or meeting of minds to permit a smooth process of ‘disengagement’. Are all the key political elements in agreement?
16. We see dangers in hardening the issues. Despite Lee’s remarks about its conservatism (views we do not share) Malaya has been a success story in South East Asia. Similarly, Malaysia has so of far stood up to the internal and external pressures upon it. Malaysia has inherited a tradition of an open, liberal society with major interests being reasonably accommodated through peaceful processes of negotiation. Singapore has shared the benefit. There is a lot to lose. (Lee would agree and say the source of the trouble is elsewhere, but the points are still worth making.)
17. We are not convinced that the Alliance must yield to multi-racial political groupings. Whatever success has been achieved in the urban, sophisticated environment of Singapore (and even there we are really talking about a Chinese-led Party accommodating minority interests rather than a multi-racial Party), it is a different matter in Malaya. Under pressure, the Malay is more likely to be driven back to the protection and comfort of a Malay Party, which is not only a political organisation but which has value to him socially, culturally and for his security.
18. We look to the goal of a genuine multi-racial Malaysia subject to the necessary protections and balances required in such a complex grouping. This means in our judgment the retention of a preponderant Malay influence in the Central Government for some time and the retention of advantages for the Malay short of anything seriously approaching discrimination. As the Malaysian community becomes more sophisticated through the spread of modernism and economic development these traditional patterns can be modified. Our view is that the P.A.P. has a major role in this sensitive and immensely delicate process of adjustment and in creating a climate of economic and social progress.
19. It is important that the present loss of confidence among Lee and his associates, combined with what Lee describes as extremist pressures on the moderate Malay leadership in Kuala Lumpur, should not produce decisions which jeopardise these prospects. We were always interested in the suggestion for a political truce as offering the best course in current circumstances. Can this idea be revived? It seems to us that the important point is that the parties recognise the need for a modus vivendi and think in terms of this rather than political struggle. It seems to us that political struggle among pro-Malaysia parties should be suspended as far as possible for some time. The first essential is to bring about a situation in which the parties can review the current difficulties and explore each others positions. This situation could be brought about by returning to the idea of a political truce in order to create the proper atmosphere for working out a modus vivendi and determining the role of the P.A.P. within Malaysia.
[NAA: A4940, C4142]
1 During his 19-day visit to Australia, 15 March to 2 April, Lee was to have talks in Canberra 16&ndas;18 March.
2 Document 251.
3 In addition to increases in personnel strengths (see footnote 4, Document 236), the reassessment of the Australian defence establishment announced on 10 November 1964 included increases in major equipment purchases, the formation of an additional two battalions, and the expansion of the SAS regiment t of our squadrons. The government also decided to introduce selective compulsory Army service requiring an obligation to serve overseas as necessary. This decision resulted from the failure to increase the numbers in all three services through volunteer recruitment programs conducted throughout 1964.
4 In a bid to reduce communal tensions following the riots, Lee and the Tunku had met on 25 September 1964 and a two-year truce between the Alliance and the PAP had been declared, during which both parties would abstain from expanding their branches and activities. The next month, however, a federal minister had announced a proposed overhaul of the Singapore Alliance to curtail PAP’s power in the 1967 election. Singapore’s claims that this action contravened the truce agreement were rejected by Kuala Lumpur on the grounds that the agreement referred only to communal issues. (While Lee was visiting Australia and New Zealand, the Singapore Alliance would bring out a new constitution and be renamed the Malaysian Alliance Party of Singapura.) Then in his November budget, Tan Siew Sin had announced a new turnover tax on the gross earnings of all businesses (especially burdensome to Singapore’s labour-intensive industries), and a payroll tax on total company payrolls. Tan had claimed these new taxes as being necessary to raise revenue for defence against Indonesia. For UMNO’s involvement in the Singapore riots, see Documents 193 and 194.