London, 13 June 1967
Secret
Far East Defence
[ matter omitted ]2
Far East Defence
Mr. Holt said that Australia’s concern at the proposed British policy for the mid-70s was not primarily a matter of Australian military security. This was protected by the ANZUS Treaty (and, to some extent, even through SEATO). Moreover, the significance of Australian–U.S. relations was increasing all the time; even in the field of investment, the Americans must now be something near the British figure of about £1,000 millions. Moreover, there was a remarkable growth of American interest and investment in Asia generally; and this was equally true of Australia, whose exports East of Suez now represented 50 percent of their total exports, with Japan as a major factor. This year, for the first time, Japan had displaced the United Kingdom as Australia’s largest export market. Admittedly, the money value of Australia’s exports to Britain had increased, even though the percentage had fallen: they hoped that this situation would continue, subject to any consequence that might flow from eventual British membership of the E.E.C.
Mr. Holt said that Australia’s real concern was at the long-term implications for the future security pattern of the region. Taking an arc round the mainland from Japan, through Korea, Taiwan, the Philippines, Thailand, round into Malaysia and Singapore, and including Australia and New Zealand, they were bound to note that the only part of the arc where there was no American military commitment was in Malaysia and Singapore. The United States Government had always regarded this as a Commonwealth—and indeed primarily a British —responsibility. In their talks with the President and with Messrs Rusk and McNamara he and the Prime Minister, he knew, had both been told in the strongest terms of the great difficulties the Administration would face with Congress and American opinion generally if they were left in due course as the only non-Asian power established on the Asian mainland. This was also, he believed, the view of many of the Asian Governments themselves. Mr. Holt thought that the Defence Secretary had probably derived a misleading impression from his talks in Singapore and Malaysia, especially the latter. The Tunku was a calm and urbane character who perhaps took a slightly complacent view. But Tun Razak3 undoubtedly felt strongly about what Mr. Healey had said to him. The Prime Minister commented that Tun Razak’s view had indeed been made very clear to us. Mr. Holt said that the same was true of the Prime Minister of Singapore. At the time Mr. Healey had spoken to him, Mr. Lee had been apprehensive lest public discussion in Singapore of this matter should lead inter alia to a fall-off in foreign investment there. But he had privately expressed to the Australian Government his serious apprehension at British plans.
Mr. Holt said that the Australian Government understood and sympathised with Britain’s problem. As he had made clear on arrival in London, his purpose was not to ‘twist the British arm’ but to find ways of meeting the legitimate concern felt by the Australian Government, and, he knew, those ofNew Zealand and the United States. They accepted that there must be a big reduction in British forces in the area. But they hoped that even in the reduction up to the 1969/70 period some flexibility could be retained in relation to the Commonwealth Brigade. The Prime Minister said that the same point had been made to him by Mr. Marshall.4 Mr. Holt said that the people of the area attached much importance to a continuing British presence. The Australian Government had told the United States Government that they believed that British thinking in the long term was more in line with American ideas for the period after the end of the Vietnam war. But he had not found this view accepted in Washington, where it was argued that any American departure, for example, from Korea, even after the end of the war in Vietnam, would create a crisis in U.S./Korean relations. The United States Government had substantial defence facilities in Taiwan, the Philippines, Guam and Okinawa; and they were building up facilities in Thailand on a scale designed to prevent them finding themselves caught in a Vietnam situation there. He therefore considered that a continuing U.S. presence on the mainland could be assumed for the foreseeable future. Only if Thailand at some point found themselves the only mainland country still with a U.S. presence might this situation change. But this was unlikely. In any case, the Australian Government thought it vital to the security of the whole area that the United States Government should have sufficient political and public support internally to be able to maintain their military commitments and presence in Asia. The Australian and New Zealand presence in Vietnam was marginal but, as he had found in the United States, it was immensely appreciated there because the Americans like ‘to have the support of a friendly voice’. Similarly, the continuing British presence, however small, would have a disproportionate value in this context. As to the Commonwealth Brigade, he was not versed in the technical arguments; but he hoped that Her Majesty’s Government could keep enough flexibility in planning to maintain the possibility of continuing the Brigade, even if substantial modifications in supply or logistics might be required.
Mr. Holt said that as Australia (and New Zealand) grew in strength and in population, they accepted that they must play an increasing part; as regards the shorter-term aspects they had always accepted that Britain would wish substantially to reduce her forces after the end of conformity with this purpose. But the longer-term aspect was more difficult and disturbing. They naturally accepted that plans could and should be made to meet all eventualities. But to take definite decisions now seemed to contradict all the lessons of contemporary history and in particular that of the unpredictability of events—of which the Middle East had just furnished the most recent example.5 He accepted that the Vietnam problem might prove relatively short term. The bombing must be hurting North Vietnam: it sufficed to imagine the consequences in Australia if all their power and industrial plants were being progressively eliminated. The communist mentality, as they knew, accepted abrupt changes in policy if a regime recognised that a given policy was unsuccessful. He saw that Her Majesty’s Government had a political problem at home and that it could seem advantageous to handle this by announcing firm decisions as soon as possible. But those who were pressing for this now would only press for something else two months later if they received satisfaction. The Prime Minister said that there was some force in this; many of those in Britain who were most ‘dove-like’ in relation to Vietnam were ‘hawk-like’ about the Middle East: and the use of napalm in Vietnam was apparently judged more reprehensible than its use in Syria. But Mr. Holt was mistaken in thinking that the Government’s policy resulted from political pressures. It was more soundly based than that.
Mr. Holt said that, nevertheless, an early announcement of the policy would set off a chain of consequences. Their hope was that, although they themselves might have a clear idea of British thinking, this could be presented publicly in vaguer terms. Could it not, for example, be related to the need for substantial reductions, the desirability of flexibility in dispositions and consequently to plan for a variety of possible options—it might even be said that one of these might well have to be a complete withdrawal from the mainland; but that no final decision had been taken and that the Government would be keeping the position under constant review. A public British position on these lines would be very helpful to the Australian Government; after the Vietnam war was over, Australia and others might be able to do considerably more themselves. The Prime Minister said that he recognised that Vietnam dominated the situation at present. Mr. Holt said that any unequivocal statement now that Britain would be off the continent of Asia by the mid-1970s would have a shattering effect on Commonwealth relations in the area, on Australia and New Zealand in particular and generally throughout the Far East. The Australian Government could not understand the need to make such an announcement at this point. They believed it would also be damaging to Anglo-American relations—indeed his understanding was the U.S. administration had told H.M.G. they would prefer British defence cuts to be made in Europe than East of Suez.
The Prime Minister said that we had been willing to make further cuts in Europe. But this also raised great difficulties with the U.S., as had emerged from our tripartite talks about the German offset problem. They had expressed great concern lest substantial British cuts should strengthen the isolationist pressures in the U.S. and the continuing demand for cuts in U.S. forces in Europe. On the general issue the Prime Minister repeated that British policy was not related to political or party pressures. So far as the latter was concerned there was considerable diversity of demand and purpose on the part of those urging total withdrawal. But, as he had made clear after the Labour Party Conference the previous year, the Government’s intention was to govern. There were, however, strong and legitimate pressures on the Government drastically to reduce overseas expenditure. First, there were the very powerful economic arguments resulting from the essential need to keep our balance of payments in surplus.
The figures for the first quarter of 1967 being published that day would reveal such a surplus. But excessively tough measures had been required by the Government, including measures of deflation which had resulted in a certain degree of unemployment. When comparisons were made between the amount of deflation required for only £50 million of import saving and overseas expenditure of about £500 million, it was clear that very convincing justification of this overseas expenditure was needed. The economic argument, however, though strong, was not necessarily conclusive. In this respect there was a certain analogy with our position in relation to the E.E.C. where the economic arguments for joining could be held to be finely balanced, but the political arguments for doing so were decisive. But, in the present case the decisions involved derived from our whole concept of what our general defence posture should be.
The Prime Minister said he wished to emphasise that no final decisions had yet been taken.
The Government had made it clear that they intended first to consult their Commonwealth partners and the U.S.; and Ministers had carried out a further review of the matter before his visit to Washington, and in the knowledge that he would thereafter be seeing Mr. Holt, Mr. Marshall and, in due course, the Prime Ministers of Singapore and Malaysia. They were prepared to say that Britain would retain a military capability in the area; this meant in practice that we should retain certain commitments and accepted (as was always our intention) that Britain should not be isolated or cut off from the area. The Prime Minister recognised that this would not satisfy Mr. Holt’s desiderata of a continuing British presence in Singapore or on the Commonwealth Brigade. He would be asking the Defence Secretary to develop our arguments at greater length in the forthcoming plenary session; and Mr. Healey would be able to do this more effectively and in greater detail than he himself had done. But one of the main problems was that of how to arrange a small but effective deployment of forces without a vast and very costly infrastructure. The Australians in Vietnam did not have this problem since they could depend on American infrastructure. But the problem would present itself in serious form if there were any question of our trying to keep only small forces in Singapore. Mr. Holt asked whether the cost of doing this could not be broken down and shared with some of the other Commonwealth countries, including Australia. Had any studies been made of the possibility of sharing the burden in this way with Malaysia and other interested countries. The Prime Minister said that a further difficulty was that Asian countries, if they felt they could rely on the protection of a Western power, were reluctant to make any real effort to defend themselves. Japan was an interesting example of this in her relationship with the U.S. Mr. Holt agreed in principle. But he argued that part of any understanding reached with Malaysia and Singapore for a continuing British presence there could be that they themselves should make a greater effort.
The two Prime Ministers then invited their colleagues to join them for the plenary meeting at 11.30a.m.
1 Palliser and Bunting were also present.
2 Record of discussion on Rhodesia not published.
3 Malaysian Defence Minister.
4 J.R. Marshall, Deputy Prime Minister and Minister of Overseas Trade, New Zealand.
5 A reference to the Six–Day War between Israel and three Arab states, Egypt, Syria and Jordan.
[UKNA: FCO 46/56]