MINUTE, CRITCHLEY TO HASLUCK

Canberra, 4 August 1967

Secret

British Attitudes to Defence in South East Asia

The present British Government is inclined to discount the threat of China and is anxious to avoid and to shed S.E.A.T.O. commitments.

2. The Government wants to avoid involvement

1. in Viet Nam
2. in Thailand
3. in insurgency operations in South East Asia, even if the insurgents are encouraged and supported from outside the country concerned.

3. The British have announced their intention to withdraw their Gurkha Battalion from Brunei next year and have warned that Brunei should not necessarily expect British help to deal with an internal security threat.

4. Present British plans are to withdraw land forces and bases as early as practicable. The British military capacity for use in the Far East is to be essentially a mobile force so that Britain will be able to exercise flexibility in responding to situations in the area.

5. Nevertheless, there would be support (which would include the present Defence Minister, Mr. Healey) for Britain retaining a limited defence role in the South of South East Asia. Relevant considerations are:

1. Continuing responsibilities under the Malaysian Defence Agreement.
2. Socialist affinities with Lee Kuan Yew in Singapore.
3. The contribution that Britain can make at small cost to stability in the region.
4. The contribution that can be made to stability by maintaining a creditable deterrent to Indonesia.

Possibly, the most important consideration of all is Britain’s financial interest in the region.

1. The Far East (Hong Kong, Malaysia, Singapore and Brunei) is the grouping with the largest holdings of sterling reserves. Excluding investments in local government in Britain, the reserves total £Stg. 750M at present.
2. British investments in Malaysia alone total about £Stg.500M.—£Stg.600M.
3. Favourable trade balance with Malaysia alone is in the region of £Stg.50M a year.

With invisibles (shipping, banking and insurance) Britain should be earning hundreds of millions of £Stg. in foreign exchange a year in the Far East.

6. Britain might be prepared to contribute to a Commonwealth defence force in the South of South East Asia if it did not have S.E.A.T.O. commitments. This could be attractive if it enabled Britain to maintain leadership and influence in South East Asia and Australasia (Australia and New Zealand are still worth a lot to Britain). Inclusion of Malaysia and Singapore forces would weaken ideological objections to white faces in Asia and the British Government would be attracted by opportunities to promote defence co-operation between Malaysia and Singapore.

7. In the long run, defence arrangements would have to take into account co-operation with Thailand and Indonesia but present British Government attitudes would probably not favour such an extension.

8. An early decision by Britain to participate in such a Commonwealth force is highly unlikely. But the prospect of transforming the Commonwealth Brigade into a five power force could slow down British plans to dismantle their logistic support system. It might also help in efforts to persuade Britain:

(a) to continue logistic support over a transitional period for Commonwealth defence forces in the region;

(b) to help Malaysia and Singapore with material, money, training and secondments so that they can take over a greater logistic role themselves;

(c) to retain defence communications with South East Asia: in particular, to have British forces train with Commonwealth forces in the region and use facilities such as the Air Base at Butterworth and the Naval Base in Singapore, even though they would not be under British control. The British might even be prepared to make some contribution towards maintaining Butterworth.

9. British co-operation along the foregoing lines could be sought in a high level Five Power Conference early in 1968. It would be important to hold the Conference before the British begin to dismantle their logistic support for the Commonwealth Brigade next March/April.

1 Hasluck had requested a note on UK attitudes to defence and on ‘what might be feasible in seeking their co–operation’.

[NAA:A1838, TS691/1 PART 12]