Kuala Lumpur, 10 November 1965
2382. Top Secret Immediate
Barter Trade
Head discussed with Wade and Parkinson this morning Singapore’s barter trading proposals and the effect of continuing disagreement between Malaysia and Singapore.
2. Head was gloomy. He had now reached the conclusion that Lee’s main political objective was to undermine the Malaysian Government through any means at his disposal. On the other hand the Malaysian Government was equally setting out to hamper and damage Lee and the Singapore Government and whether consciously or unconsciously this was becoming for them also a major object of policy. In these circumstances Head sees little chance of agreement between Malaysia and Singapore on barter trading. He expected that this disagreement would come to a head at the Combined Operations Committee stage on 19th November (see Singapore’s 1074 for time table of defence machinery consideration).1 When the C.D.C. considers it, Head expects the Malaysians to reject Singapore plan and at that stage Goh presumably would reserve his position and return to Singapore. The possibility would then be that Lee would announce unilateral action and he expects that the Tunku would then attempt to direct the Malaysian Navy to interdict by force Singapore’s operations.
3. Head believes (and implied that he had already put this to London) that at some stage following disagreement at the C.O.C. meeting, it may be necessary to use the ultimate threat to the Malaysians i.e. to inform them that any attempt to use the Malaysian Navy offensively to enter Singapore’s territorial waters would result in Britain, Australia and New Zealand being forced to recall immediately all their seconded naval officers (including Dollard, Malaysian CNS). He recognized that the damage this would do to subsequent relationships with Malaysia would be irreparable but saw no alternative.
4. After some discussion Head said he thought it might be possible to soften the ultimatum by putting it on a legal rather than a policy basis i.e. to say to the Malaysians that action in Singapore waters would be illegal and seconded officers would be unable to take part.
5. Head considered that the timing of any such advice to the Malaysians was vital. It should be reserved until the moment it was absolutely clear that no agreement could be reached, that Singapore intended to go ahead and Malaysia to act in reply. Yet if advice was left too late i.e. when public political positions had been adopted by Lee and the Tunku, the damage to our position with the Malaysians would be the greater. Similarly, if Lee received any inkling of such an intention, his hand in the bargaining would be immeasurably strengthened.
6. Head felt that his best hope of success might be immediately following C.D.C. meeting to talk to Razak and Goh together.
7. Both Wade and Head believe that there is a real possibility (increased by any move by Singapore to forestall Malaysian naval action by cutting pipelines, fuel supply etc. to the naval base or by our pulling out seconded officers) of the Malaysians marching across the causeway. Razak has recently said as much to Head. This would mean imposition of colonial rule by Malaysia on Singapore with disastrous consequences for ourselves since we would be undoubtedly accused of collusion however much we tried to keep out of it.
8. I think Head may be seeing things too starkly. As of last week neither Tunku nor Razak appeared to believe that Singapore would force a showdown. If the position deteriorates there are also alternative pressures Malaysia could apply although these, such as a threat to cut Singapore’s water supply, would give us no comfort.
9. In any case I doubt the wisdom of remaining passive until the last minute. Tunku and Razak could be warned discreetly of the serious problems that would arise and the difficulties that could arise for us over seconded officers if any attempt were made to use force against Singapore.
10. Glad your urgent comments. I shall be spending the weekend with the Tunku and Razak. We have not spoken to Dollard and it could put him in a difficult position to do so at this stage.
[NAA: A1945, 248/10/22]
1 Not published.