Singapore, 16 December 1965
1252. Confidential
Representatives of Malaysia and Singapore yesterday agreed to an alternative proposal for barter trade of stationing two two-hundred tons ships off Singapore (a scheme previously rejected by C.I.S.C. as less secure than Pulau Senang).1 The chances are that Pulau Senang will now drop out of picture and Bogaars is hopeful of persuading Goh not to press for the total of 4 ships Singapore has been seeking.2 We understand trade will start tomorrow.
2. The origin of the compromise is uncertain, but it is part of a general change for the better that has occurred in Singapore/Kuala Lumpur relations over the last week. The other notable features at this end are the restraint in statements by the Singapore Head of State in opening Parliament and by Lee in moving the vote of thanks.3 Lim Kim San’s appeal for economic co-operation when presenting his budget: and the agreement yesterday between Lim Kim San and Lim Swee Aun to establish a joint committee to promote economic cooperation and the normalisation of trade relations.
3. Presumably the agreements on barter trade and on economic co-operation are linked, but an important factor in the change of wind has been the insistence on moderation and the need for co-operation by such people in the Singapore cabinet as Goh Keng Swee, Lim Kim San and Barker. They succeeded in toning down Lee’s parliamentary drafts.
4. Other possible factors in promoting a reasonable attitude here are anticipation in Singapore of the removal of Tan Siew Sin and the need to get on side with Kuala Lumpur in preparation for dealings with Indonesia. There are strong rumours on this latter subject, including that agreement has been reached with Djakarta for the resumption of full trade in January. I shall ask Rajaratnam about this when I see him tomorrow.4
[NAA: A1838, 3006/4/9 part 30]
1 On 13 December, Kuala Lumpur had advised that Goh was expected in Kuala Lumpur the following day to discuss the barter trading proposal with Razak.
2 See footnote I, Document 350.
3 The first sitting of the Parliament of Singapore had opened on 8 December.
4 During the parliamentary sitting, Rajaratnam announced that Singapore no longer insisted on recognition of Singapore’s independence as a pre-condition to talks with Indonesia.