Canberra, 11 November 1965
1609. 1375. Secret Immediate
Barter Trade
Your telegram 2382.1
1. We share your feeling that Lord Head might be seeing things too starkly, despite the mutual animosity which embitters relations between the Malaysian and Singapore leaders and their apparent intention to make things as hard as possible for each other. We believe that the two sides have too much to lose to risk an outright collision now.
2. Since relations are clearly bad, however, and since the barter-trade issue could well bring the Tunku and Lee to a position of deadlock, you should take the opportunity of your weekend with the Tunku and Razak2 to impress upon them the need for moderation in their dealings generally with Singapore and in the barter-trade issue in particular. We feel that it would be dangerous to delay too long before attempting to influence the course of events in the present dispute. Our experience over separations suggests that in this kind of situation it is possible for the point of no-retum to be reached sooner than expected without our knowing and, therefore, having an opportunity to apply our influence.
3. While there has been provocation on both sides and particularly from Lee in this case, you could make the general point that it is important, and in the interests both of themselves and of their friends, that both leaders exercise restraint in the difficult period of the aftermath of separation and seek positively to develop habits and machinery of consultation and co-operation.
4. On the specific issue of barter-trade, Malaysian leaders are understandably angry about Lee’s public and provocative announcement of his intention to resume the trade but the fact is that the Singaporeans have agreed to carry the matter into the defence machinery and both sides should now make every effort to reach a settlement. We hope the Malaysians will reflect carefully on the findings of the security experts and, if these findings are not adverse, will be willing to consider trading arrangements on at least a trial basis. They must recognize also that Singapore has a strong case, both because of the trade already taking place through Malaysian ports and because of the greater economic importance of barter-trade for Singapore. We feel, therefore, that they would be well advised not to set themselves on a collision course with Singapore on this particular issue.
5. You could also stress the point that the barter-trade issue is not simply an issue between Singapore and Malaysia. Any suggestion that force might be used by Malaysia in Singapore waters would present serious problems for us and the British.
6. For Singapore. We would like Pritchett to urge moderation and restraint on Singapore’s leaders, referring particularly to the need to give serious consideration to the findings of the security experts and to the problems raised if policy is announced publicly and then has to be examined in inter-governmental machinery.
[NAA: A1945, 248/10/22]
1 Document 340.
2 See paragraph 10, Document 340.