London, 31 December 1965
Top Secret
Washington Talks
You will wish to have from me an account of my talks in Washington with the President and members of his Administration, particularly as regards our current Defence Review.
2. The talks could hardly have been more friendly, more open and more generally satisfactory and the Americans clearly welcomed the opportunity for a frank exchange of views. On Rhodesia they said that we could count on their full support and, as you know, they at once agreed to give full backing to the oil embargo and to provide help for the Zambian airlift. As they put it, the essential problem is to find means of over-throwing the regime without cutting off coal and power supplies to Zambia.
3. As regards Viet Nam, I said that I thought that the most useful role which Britain could play was to pursue vigorously and by every means in her power the possibility of opening negotiations. The President replied emphatically that he would welcome any negotiations and would be glad of any British initiative. He saw us as having a special position as co-Chairman, and was well satisfied with our present public position and private role.
4. As to our Defence Review I said that we had not come to final decisions. We wished in any case to have more detailed talks in January with them and also with you and New Zealand as to the Far East. But we had made sufficient progress to enable us to reach provisional conclusions and thus to be able to give some preliminary views to our Allies.
5. As I had explained a year ago, it is essential that the total cost of our defence effort, both in financial terms and in terms of the burden on economic and manpower resources generally, should by 1970 be brought down to a figure within the economic capacity of the nation. Our Defence Review has confirmed our impression that we must reduce the burden and contract our commitments to some extent in order to meet the limits of a £2,000 million defence budget. But I made it clear that it is our intention to have a realistic and effective defence effort; that we intend to maintain our world role; and that throughout our Defence Review we had been concerned to maintain and to reemphasize the concept of inter-dependence with the United States and our other principal Allies.
6. I then outlined to the President our present thinking on the Defence Review and told him that I would like to know their reactions, particularly on the question of priorities, when I saw McNamara and Ball the following day. Our provisional thinking so far could be summarized as follows:–
(1) Europe
We felt that it would be necessary for our force commitments to N.A.T.O. to be maintained at approximately their present level, subject to the existing provision for the withdrawal of forces from Europe to meet crisis situations. At the same time, as Jim Callaghan had pointed out in N.A.T.O. last week, we are in terms of foreign exchange bearing a totally excessive proportion of the European burden, on top of our defence burdens outside Europe, and I was glad that McNamara had taken the opportunity of the N.A.T.O. meeting to draw the attention of the other European countries to the problems which we and other nations face in Asia and Africa. McNamara told me the next day that he believed that the United States could materially help us with the problems of foreign exchange costs in Europe. They were prepared to press the Germans for considerably more effective offset arrangements.
(2) The Mediterranean
We contemplate some scaling down of our forces in this area. Although the Gibraltar commitment would be maintained, Malta would be gradually run down; we wished to withdraw from our Libyan commitment and we hoped that the United States might be willing to take over the greater part of this; and we were likely to concentrate on a single base in Cyprus—Akrotiri. A base in Cyprus was necessary as a staging post and for the maintenance of our nuclear commitment in support of C.E.N.T.O.
(3) Middle East
We would expect to secure some significant overall savings in this area by leaving our base in Aden. We could not expect to retain it in the face of political developments, and in terms of cost effectiveness it was a negative asset owing to the relatively large resources required for maintaining local security and safeguarding the base itself. We should, however, continue to maintain our commitments in the Persian Gulf, where some strengthening of our forces would be needed as a result of the departure from the Aden base. We must be prepared to maintain our defence commitment to Kuwait and it is important for us to underpin Iran—a weakening of our position in the Gulf could lead to the dissolution of C.E.N.T.O. and possibly a re-orientation of Iran towards Russia. We are convinced that it had been right to secure in cooperation with the United States provision for new island facilities in the Indian Ocean.
(4) In the Far East considerable difficulties arise. We must assume that confrontation would be ended well before 1970, and our planning was based on this assumption. Thereafter it should be our aim to re-establish normal relations with Indonesia and to bring them into a position in which they could form a link in a system designed to contain Chinese expansion. At the same time relations between Malaysia and Singapore were likely to make our dependence on defence facilities in their countries increasingly hazardous, and it was still our judgement that we could not expect to hold them indefinitely. We had no intention of withdrawing precipitately, but we were convinced that we should now begin planning an alternative posture in the Far East area as a whole, and that it was urgent to start making preparations for substitute facilities, preferably in Australia. This might be based on the concept of some form of quadripartite arrangement to which we, the United States, Australia and New Zealand would contribute. We should need to put a limit on our own total liabilities in the area, and a careful burden-sharing exercise would therefore be needed in this context. We hoped that our partners would be prepared to carry the new capital expenditure which would be involved. I said that a possibility which we had ourselves not considered in detail but which might be worth looking at was to transfer our Polaris submarines East of Suez as part of our contribution to the defence of that area, provided that they were ‘internationalised’ by one means or another as we had proposed that they should be in a European context.
(5) The Caribbean
Soon after the independence of British Guiana we should hope to withdraw our forces from the Caribbean area, except for one frigate and perhaps a small detachment in British Honduras.
(6) The South Atlantic
We also propose to withdraw our Naval presence from this area. But we should hope to retain the Simonstown facilities.1
7. I said that there was one general consideration which we should like the United States to have in mind in considering priorities—that was the need to contain expansion of the Chinese influence in Africa as well as in Asia.
8. In my subsequent talk with McNamara and Ball they expressed great interest in the idea of our Polaris submarines being deployed as part of a collective defence arrangement in the Far East, and thought that it was well worth considering more closely. They raised the question of its relationship with the whole problem of India’s nuclear intentions and guarantees for non-nuclear countries. I made it clear that it was at present only a very preliminary thought in our minds and that we had not yet examined it ourselves. We would be in touch with them further.
9. As regards priorities, McNamara said that, on present thinking they would give a higher priority to the maintenance of a British strength in Asia and the Far East than in Europe. They would wish to reflect further on this and on the problem of the Singapore base in preparation for later and more detailed discussions with us. What they were concerned about was not our presence in Singapore for its own sake but how far its retention or abandonment would affect our ability to carry out an effective defence role in the Far East in the future.
10. I agreed that the question of our withdrawal from Singapore raised delicate problems of timing. It would have to be handled step by step in relation to the prospects of ending confrontation and the development of a new pattern of relationship between the countries in the area, including the Philippines. I felt very conscious of the potential instability of Malaysia and Singapore and the possibility that the Borneo States might break away and then ask for our assistance in resisting Indonesian pressure. This would put us in an extremely difficult position. But we must clearly hold on to Singapore for a time while planning for an alternative. We should, as McNamara had suggested, consider whether Japan might play a role in any new collective arrangements.
11. You will understand that I can at this stage only give you and the Americans a very broad picture of the way our thoughts are turning as regards the Defence Review. We still have some essential work to complete on it. Our plan is to have full discussions with the Americans in Washington at the end of January and we would then propose that Denis Healey should go straight on from there to discuss these matters in detail with you and New Zealand. I hope that arrangements on these lines will be acceptable to you, and we will be in touch as soon as we have a firm time-table to propose.
12. I am sending a similar message to Holyoake. We are of course treating all these very delicate and vital issues arising from the Defence Review as matters of very special secrecy.
1 The 1955 Simonstown Agreement afforded the UK naval facilities in South Africa. It lasted until June 1975.
[NAA: A1945, 287/3/21]