Kuala Lumpur, 18 November 1965
2446. Secret Priority
Barter Trade
Tunku saw me this morning (November 18) when he confirmed his discussion with Head as reported in our 2436.1 Tunku said he was not prepared to allow barter trading and would use the Malaysian Navy to attack Indonesian ships if Singapore went ahead. He had asked Head to let him know urgently if he intended to withdraw seconded officers because he would then have to try to make other arrangements.
2. I queried the basis on which Malaysia could interfere in Singapore waters but the Tunku claimed that the defence agreement gave the Royal Malaysian Navy the right to patrol Singapore. I also drew attention to Malaysia’s acceptance of barter trade with Indonesia at Tawau. The Tunku said this was required by agreement with the Sabah Government and that it was not threatening Malaysia’s security as barter trade with Singapore would do.2 He added that without prompting from the government Commodore Dollard had expressed objections on security grounds to the resumption of barter trade with Singapore.
3. I asked the Tunku whether it would not be better to allow a cooling-off period so that security experts could consider the problem in more detail. The Tunku agreed and said he was sending a reply on these lines to a message from Goh Keng Swee. Goh Keng Swee’s message had emphasised economic difficulties and unemployment in Singapore but the Tunku thought that economic hardships had to be borne when a country was at war.
4. The Tunku also said he was sending Ghazali to Bangkok with a message (presumably to Sukendro). Ghazali would point out that the resumption of barter trade would facilitate Chinese communist contacts between Indonesia and Singapore at a critical time and would seek Indonesian assistance in ensuring that this trade was not effectively resumed.
5. Throughout the discussion the Tunku was strongly critical of Head and the British generally. This should be borne in mind when considering whether Australia should be associated with a message from Mr. Wilson.3
[NAA: A1945, 248/10/22]
1 18 November, reporting discussions between the Tunku and Lord Head, and between Razak and Wade, which had included the barter trade issue and relations with Singapore. The Tunku had said that the issue was ‘a matter of high policy’ and that he was not prepared to allow it to be decided by the joint defence machinery, while Razak had been ‘strongly critical’ of a British assessment that some trade could be permitted through Pulau Senang ‘without unacceptable consequences’. Critchley also advised that Head had arranged for Australia and New Zealand to attend the COC meeting on 19 November, at which it was proposed to discuss a draft message from Wilson to the Tunku and Lee that would either attempt to persuade a settlement of the matter, or would point out the consequences of either leader taking action over it. Head forewarned that there might be a request for Wilson’s message to speak also on behalf of the Australian and New Zealand prime ministers, rather than have three separate messages.
2 Tawau was one of Malaysia’s most easterly points.
3 Hasluck agreed with Critchley’s doubts about a message from Wilson on behalf of the three governments (see footnote 1). The view in Canberra was that prime ministerial level messages ‘should be reserved for cases of great necessity’ and that the Australian Government wanted ‘to retain a separate identity and voice of [its] own’. At the COC meeting on 19 November, it was agreed that ‘separate but co-ordinated messages from the Prime Ministers or Ministers’ should be sent to the Tunku and Lee.