London, 7 January 1969
Secret
After some discussion of Rhodesia (which is recorded separately) the Prime Minister invited Mr. Gorton to describe the present situation of Australia and the future development of Australian policies.
The Development of Australia
Mr. Gorton said that Australia, which expected by the year 2000 to have a population of 30 million, would need not only to exploit her great natural resources to the maximum advantage but also to develop a sophisticated industrial base of her own. The Prime Minister referred to the importance of computers and to the successful development of the British computer industry under the present Government. He thought Australia would need to develop her own computer industry rather than depend on the United States. Mr. Gorton said this might be so. But there were various areas of sophisticated industry in which Australia needed to develop her own capability.
The Prime Minister referred to the Australian attitude to overseas investment. Mr. Gorton said that Australia of course needed and encouraged investment from overseas. But she was no longer a puppy lying on its back and begging for investment. It needed to be controlled and subject to certain conditions so as to ensure that, while it brought a fair return to the investor, it was not made on terms disadvantageous to Australian interests. For example, much foreign investment in Australian industry had been on the basis of debenture capital raised in Australia, with the result that when debentures were repaid, the firm or industry was in wholly foreign ownership. (As in the case of the takeover of Holden Cars by General Motors.) In future it would be a requirement that debenture capital should not be raised in this way by an overseas company without a simultaneous equity issue in Australia. Mr. Gorton said that he recognised the need in Australia for technical and managerial skills from abroad: and he welcomed the injection of these into inefficient companies which often resulted from the injection of foreign capital. But he could not accept that efficient and competitive Australian companies should simply be gobbled up by foreigners. The Prime Minister agreed: and said that the British Government had been obliged to deal with similar problems (e.g. in relation to Rootes and Chrysler).2
Mr. Gorton said that Australia’s greatest single development problem was the shortage of water. For the large cities along the coastline, a likely long-term solution might be the use of desalinated sea-water. ( The Prime Minister commented that Britain had much to offer Australia in this field.) Possibly, the existing supplies might then largely suffice for the rest of the country. But, as industrial development proceeded and population grew, he believed the problem of inadequate water supply could become increasingly serious.
Australian Foreign Policy
(a) The Commonwealth
Mr. Gorton said that he believed most Australians were disinterested in the Commonwealth as such. They were far from disinterested in Britain, to which the attitude of Australians would long—he believed for always—be unique in quality. The same was to some extent true of the other ‘old’ Commonwealth countries. But in regard to the ‘new’ Commonwealth Australia’s attitude was essentially bilateral and regional. She would no doubt develop quite close relations on a basis of national interest with e.g. Singapore, Malaysia and India: and their common Commonwealth connection would help this process. But for the Africans—the ‘petty princedoms’—and others, Australia would have little time or interest. Certainly, so far as aid was concerned, such effort as Australia could make would be concentrated on South-East Asia.
(b) Relations with Britain
Mr. Gorton said that, apart from the close and continuing ties of affinity between Australia and Britain to which he had referred, he thought that Australia would come increasingly to treat her relations with Britain in the same way as those she had with any foreign country, such as France or the United States. This was the logical consequence of the growing difference in their interests and activities. The Prime Minister demurred. He suggested that these differences were more apparent than real, the result of the geographical separation of the two countries. When the chips were down, they were bound to find themselves at one. Mr. Gorton asked what this expression meant. In practice British and Australian interests were different—this was perfectly natural—and inevitably the reactions and assessments of the two countries in their different situations tended to be different. There would be occasions when British interests and assessments were closer to those of their N.A.T.O. allies, than to those of Australia. The same was true in reverse. This was why he maintained his view that, in terrns of foreign policy, it was rational for Australia to regard Britain as a foreign country. The Foreign and Commonwealth Secretary said that he agreed with the Prime Minister’s view about the geographical reason for the problem raised by Mr. Gorton. As he himself had made clear in Canberra, it would be unthinkable that, if Australia were attacked, Britain would not go to her aid as Australia had helped Britain in 1914 and 1939.3 The Prime Minister agreed. As he understood it, Mr. Gorton was saying that there was no longer a ‘special relationship’ between Britain and Australia ( Mr. Hasluck demurred at this) but that we should continue to work together in the closest consultation and association. Mr. Gorton did not dissent.
(c) Vietnam
Mr. Gorton cited Vietnam as an example of a problem where the British and Australian assessment and involvement differed widely, because of their differing interests to which he referred. The Prime Minister said that, while it was true that Australia had decided to play a direct part in Vietnam, the British Government had, at times subject to very great pressures, pursued a consistently similar approach to Vietnam. Britain’s role as co-Chairman with the Soviet Union gave her a special part to play in relation to Vietnam. He recalled the remarkable defence of the Government’s Vietnam policy by the Foreign Secretary at a ‘teach in’ in Oxford when the Government only had a majority of three in the House of Commons. The part played by the British Government had been as difficult to maintain as that of the Australian Government.
Mr. Gorton did not pursue this. But he commented that the Australian Government was apprehensive of an American ‘sell out’ over Vietnam at the Paris talks. He was not suggesting that there should never be a Communist Government in Saigon if that were the wish of the Vietnamese people. But if the United States sold out their Vietnamese allies, the consequences for South East Asia could be disastrous. He knew that his fears in this respect were shared by the Prime Minister of Singapore, who viewed the prospect with much concern.
(d) Defence of South-East Asia
Mr. Gorton said that Australia recognised that it was in her interest to station troops in South-East Asia. Indeed, as Australia’s population grew over the years, the size of this force could also be expected to grow. But they would face a number of difficulties in regard to the stationing of their troops. In particular they were determined that Australian troops should not be used ‘to do the locals’ police work for them’. The Prime Minister referred to the possible resumption of Five-Power defence talks. The British Government were willing to take part in these at the time most convenient to their partners. He believed it had been suggested that the talks should resume in February. This seemed too early for their effective preparation. But he knew that the Defence Secretary would wish to fall in with his Commonwealth colleagues’ view in the matter. Mr. Gorton said that it seemed to them that March or April would be the best time for the talks. Mr. Hasluck said that June had been suggested. But this was too late. Mr. Gorton said that he believed a meeting in March would suit The Tunku’s electoral purposes. If that were the best time, he would see no harm in helping The Tunku electorally. The meeting should most properly be in Canberra. The Prime Minister said that he thought this would be agreeable to the British Government. Mr. Gorton said that it was arguable that Wellington should be chosen. But since Australia was the only country likely to be making any sizeable contribution (he spoke rather contemptuously of the probable New Zealand effort) he thought Canberra was the right place.
The Prime Minister said that there had been somewhat surprising press reports of an Australian plan for a Five-Power Force. Mr. Gorton said that he had no idea where this idea had originated. He would have been delighted if such a Force could have been created. But since he realised that it could not, he had not prepared any such plan and had made this abundantly clear when questioned by the press.
Mr. Gorton said that there was considerable uncertainty in the minds of the Australian Government and, he knew, in those of the Malaysian and Singapore Governments, about the British Government’s intentions for the use of their ‘general capability’ in South-East Asia after the withdrawal of British forces by the end of 1971. It was not clear in what circumstances Britain would be willing to contribute and of what kind of capability her contribution would consist. As he understood it, the British Government would in any case be obliged to consult their N.A.T.O. allies before making any contribution. The Prime Minister said that we had never so far experienced difficulty in N.A.T.O. over essential withdrawals of this kind. It was clear that if Australia was faced with mortal peril Britain would go to her assistance—again on the 1914 and 1939 analogy. We are not earmarking any troops specially for this purpose but would draw on our general capability, depending on the needs of the situation. Moreover, the time taken for a British force to reach the area would be infinitely shorter than at the time of the last two great wars because of our air transport capability. The Prime Minister added that amongst the considerations in the Government’s mind when reaching their defence decisions had been the feeling that, until countries such as Singapore and Malaysia were faced with the reality of a British decision to withdraw, they would be unwilling to make any effective defence effort themselves. In the British Government’s view it was unreasonable to expect that Britain should provide substantial manpower to help their allies in South-East Asia. Our contribution could most usefully be made in the field of sophisticated elements of the armed forces with which it was more difficult for the smaller countries to equip themselves. Moreover, as Mr. Gorton knew, we intended to continue with a regular programme of training, acclimatisation, etc. of our troops in the area.
Mr. Gorton acknowledged this; but continued to argue that there was a need for greater clarity about the nature of and circumstances attendant upon any British contribution.
At a later stage, Mr. Gorton raised the question of British manning of the radar equipment at the main service airfields in Malaysia and Singapore. He regarded it as essential that the high standard should be maintained there: and commented that, even if Australia had to pay, it would be worth it in order to ensure that their ‘planes were helped to fly safely.
The Prime Minister said that he hoped Mr. Gorton would discuss all these matters fully with the Defence Secretary while he was in London.
(e) Indonesia
In reply to a question, Mr. Gorton said that Australia’s relations with Indonesia were good. The political situation there was reasonably satisfactory but the economic situation was in chaos, with corruption on a mammoth scale. As a result, the essential foreign investment was increasingly discouraged. He had discussed this problem at length with General Soeharto and had pointed out to him in particular that corruption would never be checked until senior officials, administrators, etc., were paid adequate salaries. Soeharto had professed to accept this and had said he would try to rectify it. But there was no evidence that this was being done; and Nasution4 (who, with his wife, were very old friends of the Gortons) had told him that no action whatever has been taken. Mr. Hasluck commented that it was pathetic to see the failure of the Indonesians to develop their country, which was potentially of great wealth. Mr. Gorton said that the economic chaos was beginning to have certain political consequences. There was a marked resurgence of Communism, especially in eastern Java. If this continued it must be recognised that there was increasing danger of a further coup. On the whole it was more likely that this would be right wing than left wing. Australia would not welcome such a development but could no doubt live with a more right wing regime. He said that Indonesia was so hopelessly inefficient in all important respects that he would regard no Indonesian regime as posing a serious threat to Australia except a Communist regime under Chinese influence. He regarded this as unlikely. But given the economic instability of the country and its generally precarious state, it could obviously not be excluded. United States policy towards Indonesia was now considerably more sensible and realistic than in the past. The Americans were also encouraging the Japanese to play a more active part in aid for Indonesia—and indeed for South-East Asia as a whole. What Indonesia really needed was a Lee Kuan Yew.
(f) Singapore
This led to a short exchange about the situation in Singapore. The Prime Minister said that Mr. Lee had always been afraid of Indonesia, an uncomfortably large neighbour. But he believed that these apprehensions had now diminished. Mr. Gorton agreed. The Prime Minister said that Lee was also concerned at the possibility, after the Tunku’s regime ended, of a less balanced regime emerging in Malaysia, possibly dominated by younger and more activist Malays. Nevertheless it was encouraging to note the extent to which Malaysia and Singapore were now co-operating in defence matters. Mr. Gorton assented rather half-heartedly. There was co-operation up to a point: but there were still considerable tensions between the two Governments and each tended to speak with considerable contempt of the other.
The Prime Minister said that it would be very grave for Singapore if Mr. Lee disappeared rrom the scene. Mr. Gorton agreed but said that there were in fact certain potentially good successors—if not Mr. Goh certainly Mr. Lim.5
(g) The Philippines
The Prime Minister referred to the dispute between Malaysia and the Philippines over Sabah. He said that the British Government had come under considerable pressure from the Tunku to give more active military support; but were not prepared to commit themselves unconditionally. Mr. Gorton assented vigorously. The Australian Government had also refused to make any commitment in advance to defend Malaysia against the Philippines. ‘Let them do it themselves.’
1 The meeting was held at 10 Downing Street. Gorton was accompanied by Hasluck, Downer, C.L.S. Hewitt (Secretary, Prime Minister’s Department) and Plimsoll. For the UK Stewart, Burke Trend (Cabinet Secretary),
2 The Rootes car company in the UK became Chrysler UK in 1970.
3 See Document 59.
4 General Abdul Harris Nasution, twice Indonesian Army Chief of Staff and Minister of Defence and People’s Security, 1959–66.
5 Lim Kin San, Minister for National Development, Singapore, 1963–65; Minister for Finance, 1965–67; Minister of Interior and Defence, 1967–70.
[UKNA: FCO 24/384/1]