Kuala Lumpur, 25 October 1965
2258. Secret Immediate
Barter Trade with Indonesia
Our 2251.1
Head spoke to Razak on 22nd October suggesting that he should ask Singapore to raise the resumption of barter trade in the C.O.C.2 Razak declined, saying it would be wrong for him to take the initiative because the purpose of the Malaysians would be to shoot the proposal down.
2. I understand that Fenner and Tunku Osman are strongly opposed to the resumption on security grounds. Dollard3 is in London but Vice-Admiral Twiss,4 according to Head, takes the view that if resumption is wanted, it should be possible to make arrangements, whereas if it is not wanted, a security case could be made against it. Conceivably, the Navy may be able to influence Fenner and reduce his concern over security.
3. Razak is still strongly opposed to a resumption. However, he has told Head and confirmed with me that if Singapore requested it, he would be prepared to call an emergency meeting of the C.D.C. at any time.
4. Tunku is in the mood to order the Malaysian Navy to shoot Indonesian ships in Singapore waters on sight. Over the weekend I tried discreetly to exercise restraint but did not feel that I had made much progress. This was confirmed last night (24th October) when Head told Cotton (New Zealand High Commission)5 and me that he had talked to the Tunku that day following the morning announcement in the press that resumption of barter trade with Indonesia through Pulau Senang was imminent. Head said Tunku was in an ‘over my dead body’ and ‘I’ll close the causeway’ mood and was proposing to make a unilateral statement that resumption of trading would not be accepted my Malaysia. Head was able to persuade the Tunku that such a statement would not be in Malaysia’s interests and that the best approach would be to seek to have the issue discussed in the C.D.C.
5. Head is afraid that in the C.D.C. Malaysia and Singapore would disagree and that the British Commander in Chief6 may be appealed to for a Solomon’s decision. He hopes that this can be avoided.
6. The risk is that Lee, realising that the weight of technical argument will probably be against him in the C.O.C. and C.D.C., will not submit the issue but take unilateral action. This is certainly what the Malaysians expect and what is implied in this morning’s press. We understand from the British High Commission that Robb7 has been instructed to see Lee to explain that any unilateral decision would put the British, Australian and New Zealand navies in a very difficult position. He has been told to urge Lee to take the issue out of the political arena and put it in the C.O.C. and C.D.C. which is the agreed machinery for discussion of security problems. If this advice is unheeded it will make a nonsense of the agreement for defence cooperation.
7. If Singapore takes a unilateral decision British, who of course organise naval security, will be seriously embarrassed. Their position and ours could be further complicated if Indonesians send larger craft to escort small Indonesian barter boats. As Head has pointed out, complications could affect British defence arrangements with Singapore and Malaysia.
8. I suggested to Head that Malaysia’s best course might be to make an announcement expressing wish to cooperate towards Singapore’s prosperity but pointing out that resumption of barter trade with Indonesia could affect the security of both Singapore and Malaysia. The statement could go on to say that the proposal should be discussed by technical experts in the combined machinery that had been established to see whether it was practicable. Head agreed but said the Tunku would not like it because it involved acceptance of the principle of trading with the enemy. (However, Tunku may find it difficult to maintain this objection in the light of limited barter trading on west coast of Malaysia and the more specific arrangements in Tawau.)8
9. Later last night I spoke along lines of paragraph 8 with Razak. He said he had much the same idea but was inclined to be non-committal mainly I believe because of the Tunku who has been inflamed by recent statements by Lee Kuan Yew9 and feels strongly about Singapore.
10. Malaysian Cabinet will consider the issue at a special meeting today and I shall endeavour to see Tunku or Razak as soon as possible afterwards.10
[NAA: A1945, 248/10/22]
1 22 October. It reported British advice that Singapore was ‘firmly determined’ to allow Indonesian barter trade at Pulau Senang and that Malaysia intended to maintain a blockade by force. British efforts were being directed towards getting the issue ‘out of the political forum’ and back to the combined defence machinery where it could be considered ‘in the light of practical security problems’.
2 See footnote 1, Document 302.
3 Commodore Allen Dollard, RAN, Chief of the Malaysian Naval Staff.
4 Vice-Admiral Sir Frank Twiss, RN, Commander Far East Fleet.
5 Paul Cotton, First Secretary.
6 Air Marshal Sir John Grandy had succeeded Begg as CINC(FE).
7 That is, John Rob (see footnote 3, Document 333).
8 See editorial note, Barter Trade.
9 For example, Lee had claimed that Singapore had withdrawn from Malaysia in order to preserve the whole and not have an India–Pakistan type of situation; that the PAP’s challenge had been too much for UMNO and that UMNO elements continued to stir up racial trouble in Singapore; that Kuala Lumpur wanted to take advantage of Singapore and give nothing in return; and that Singapore, with its higher standard of living, would introduce measures to control the inflow of people from Malaysia. See also Lee’s Hokkien interview (footnote 2, Document 330).
10 Razak told Critchley after the meeting that Cabinet had heeded the Malaysian Navy’s advice that proposals to resume barter trade should be ‘strongly resisted’, owing to the risks such trade would pose to security, and decided that Lee ‘had to be shown that he could not get away with’ forcing Malaysia’s hand by providing the press with details of his proposals.