Kuala Lumpur, 16 August 1965
1790. Secret Priority
Singapore and Indonesia
I agree generally with the assessment in para 2 of your 1188,1 and particularly the importance Singapore must place on satisfying its own trading community. However, I would not think that Singapore has much doubt about reactions in Kuala Lumpur or misunderstandings [about] the limit of using this issue to put pressure on Kuala Lumpur especially in view of the bases. I would also include two additional considerations. There is a clear understanding on both sides of the causeway that the defence of Malaya and Singapore is indivisible. On the other hand, in the long term and especially if relations with Malaysia deteriorate, Singapore may look increasingly to Indonesia for trade and in particular as a market for her industries.
2. Kuala Lumpur is extremely sensitive about Singapore’s relations with Indonesia and this sensitivity is heightened by the deep suspicions that the Tunku and other Alliance leaders feel for Singapore and for Lee and Rajaratnam in particular. Any Singapore moves could easily be misunderstood. While verbal gestures towards Indonesia will deepen Malaysia’s suspicions, they are unlikely to lead to positive measures against Singapore. On the other hand, the Tunku has made it explicitly clear to Singapore that he would regard any resumption of relations with Indonesia that could in any way affect Malaysia’s security as a breach of their agreement and a major hostile act to which he would react most strongly.
3. One point which seems to be overlooked is that from a security viewpoint the only trade with Indonesia that is being restricted is by small boats under 200 tons and on Indonesian registered ships or ships with Indonesian crews. Malaysia has so far raised no objection to trade by bigger non-Indonesian ships. This was a ban imposed by Indonesia. If the Indonesians were clever they would open up trade with Singapore at least for some months and then use the threat of closing it down to bring pressure on Singapore. The Singapore Government would find it much more difficult to deal with a prospective loss of trade than the present issue of restoring it. I asked the Tunku what he would do in these circumstances. His first reaction was hostile but he admitted that he had not thought about it and on second thoughts agreed that if the issue arose he would have to give it further consideration.
4. I would expect the Chinese communists to encourage Indonesia to trade with Singapore but because the basis of confrontation is her internal problems, Indonesia would find it extremely difficult to do so. Indonesia’s policy will almost certainly be to claim that Singapore is not really independent and I do not expect any major change in the confrontation pattern.
5. There could therefore be some limited scope for diplomatic manoeuvre by Singapore but as pointed out this would almost certainly deepen suspicions here. Singapore would therefore be well advised to conduct any diplomatic exercises with Indonesia in consultation with Malaysia. At least on the Goh/Razak level this should be possible.
6. Malaysia is still approaching its problems with Singapore on the basis of establishing co-operation but there will be many difficulties and pinpricks. I shall deal with this in a separate telegram on the Malaysia/Singapore outlook.
7. Looking further ahead, we can expect complications if and when there are further high level talks on confrontation. For example, talks between Sukarno and Tunku would have to include Lee.
[NAA: A1838, 3006/4/7 part 37]
1 Document 311.