Canberra, 25 August 1967
Top Secret
Submission No. 441—Possible Increased Australian Military Contribution to Viet Nam
Submission No. 443—Australian Defence Policy—Implications of British Withdrawal from Malaysia and Singapore
Submission No. 408 and 442—Continuation of Defence Aid for Malaysia and Singapore
Summary record
The Committee had before it Submission 441 (Possible Increased Australian Military Contribution to Viet Nam); Submission 443 (Australian Defence Policy—Implications of British Withdrawal from Malaysia and Singapore); and Submissions 408 and 442 (Continuation of Defence Aid for Malaysia and Singapore).1
It approached its discussions on the basis that early decisions were required on Australia’s future commitments to Viet Nam and that it was also necessary to bring under review the Malaysian/Singapore situation even though final decisions in relation to developments in this area might be a little way off.
Viet Nam
There was a disposition in the Committee to favour approval of some of the items in the schedule appended to Submission 441. The Committee found no difficulty about the first five items though it did not at this point take a decision in relation to any of them. The first three items in the schedule—the tank squadron, the helicopters and pilots, and the engineer group would need an early decision; likewise, the fifth item relating to HMAS Supply which the United States Navy had indicated would be a welcome contribution towards the fleet’s supply problems.
As regards the tank squadron, the Army assessment was that this would be effective in providing increased fire power and mobility and thus increasing Viet Cong casualties and in helping to reduce Australian casualties from booby traps, etc; employment by the Viet Cong of more sophisticated weapons might tend to neutralise their advantages. The tanks would be mainly for use in the dry season, i.e. some nine months of the year.
Reference was made to the comments in Submission 441 about the idea of New Zealand participating in some joint contribution with Australia. It was noted that these comments had not been meant to convey that such a joint contribution was unworkable. Although there were certain problems, New Zealand units could be effectively incorporated in the task force.
The Committee acknowledged that United States involvement in Asia is of overwhelming importance to Australia in terms of national policy on alliances and forward strategy. The Australian contribution is not decisive in military terms; its significance is more political and the decision as to a greater contribution is more a political decision.2
Malaysia/Singapore
Accepting that consideration of any additional commitment in Viet Nam must also comprehend the future position in Malaysia and Singapore, the Committee focussed its discussion on the inter–relationship of decisions with regard to the two areas, the timing of these decisions and the context of consultations with allies in which they would need to be placed.
It was put to the Committee that the position taken in Submission 443 implied Australia making no change in forward strategy in the short term, i.e. prior to 1970: a decision does not have to be taken now about the strategy to be pursued after 1970. When a Viet Nam settlement is reached, strategy will be influenced by what the United States does, but in any case, it is out of the question for Australia to be in Malaysia and Singapore after 1970 without United States support.
Certain criticisms were made of the position taken in Submission 443, particularly at paragraph 35. The view was expressed that the paper went too far in arguing that decisions about Malaysia/ Singapore do not need to be made at this point. Perhaps they could not be made in final form but it was going too far to say that they should be deferred. It was possible that Australia could influence the British as to the manner of their withdrawal from the area and decisions on this were needed now. There was the question of what Australia can do and what she can get the British to do in helping to build up local forces in Malaysia and Singapore. If Australia was to stay in Malaysia and Singapore we would need some legal basis for doing so. Clarification was also needed on what the position would be regarding the availability of Australian forces in Malaysia and Singapore for purposes of SEATO planning and what applicability ANZUS would have if Australian forces were engaged in hostilities there.
The Committee saw the need to seek to clarify these matters in consultation with our allies. There was, in the first place, need for close discussions with the United States since the United States’ alliance was crucial to Australian security and United States support was necessary for whatever strategy Australia decided upon. If Australia was to extend herself in Malaysia and Singapore, she needed to know what the United States would do in support. Since the United States is underwriting the security of South East Asia, they cannot leave the Malaysia-Singapore area uncovered, but equally they are unlikely to put in troops simply to fill a gap caused by the British withdrawal. But it is only if Australia is in the area with the assurance of United States’ backing that her presence there will have any military significance.
There was the question whether since continued British underwriting in the area is important for Australia, we might engage in early talks with the British to see what they were prepared positively to do. There were some indications that the British may be sliding away from commitments under their new policy toward South East Asia. Even if there were the slightest chance of influencing the British, this should be seized but, at the same time, it would be counter productive to embark upon early talks with the British if this were to produce a rebuff. Of course Australia would only be seeking to hold the British to what they had already promised, and not asking them to do more.
The Committee noted that early talks with New Zealand were called for and that the Prime Minister had already had approaches from Mr. Holyoake to enquire what Australia proposed to do in Viet Nam and in Malaysia/Singapore.
Reference was made to the holding of five-power talks. The Committee felt that the proposal by the Tunku for these talks might be premature but nevertheless Australia should give the idea endorsement and not opposition. Five-power talks ought to be welcomed as an opportunity to confirm the positive elements of the British position in South East Asia but there could be a danger if the talks were conceived as an attempt simply to discover what the British position was. The worst possible outcome would be if the British refused to commit themselves and the Malaysians committed themselves only to local defence.
As to possible timetable, the Committee accepted that there must be early talks with the United States and with New Zealand to find out what they could do as regards Malaysia Singapore. The thinking of the Committee was that five-power talks should be held before April—possibly in January. There was the possibility of a summit meeting of the Viet Nam allies, perhaps in November.
It was suggested that Australia’s approach at this point might be to start from the basis that we try to maintain a presence in Malaysia and Singapore and assess what practical problems would flow from that. This would mean that we would be looking to maintain a credible force in the area as far ahead as possible and looking for British and United States support in this policy.
The military assessment was that a credible military presence in the area, not including British or United States forces, but assuming British and United States support, would require a two battalion task force, i.e., from Australia and New Zealand, with Australia supplying logistic support. This view assumed a continued United States presence in Viet Nam. There would be political advantages in having an integrated force, i.e., embracing local forces, but this would raise complications about Australian forces having a SEATO role. If it were possible to be in Malaysia/Singapore with a SEATO role, this would have more than military value as it would give a legal basis for action and would bring in the Philippines and Thailand. It would also put the President of the United States into a better position for action vis-a-vis Congress. It was noted that the building up of an effective self defence force in Malaysia and Singapore involved the building up of ground forces for security and counter insurgency—no Naval or Air Forces were required except to support counter insurgency measures.
There was reference to the problems of financing our defence expenditure and our reliance on satisfactory export earnings. On present commitments defence expenditure in 1968/69 would rise to at least $1250m.
The Committee did not look at Submission 442 on defence aid to Malaysia and Singapore in detail—although it noted that the broad policy aspects covered in the Submission had already been accepted by Cabinet.
The devaluation of Sterling and the end of Britain’s world role
On 18 November 1967, the UK Treasury announced a 14.3 per cent devaluation of Sterling from $2.80 to $2.40. Sterling had been under renewed pressure since the Six-Day War in the Middle East in June 1967. A partial oil embargo against both Britain and the US for their support of Israel, and the closure of the Suez Canal which in turn led to a worldwide shortage of shipping, especially oil tankers, dealt a serious blow to the balance of payments. The Biafran rebellion in Eastern Nigeria (May–June 1967) made the situation worse because Biafra supplied ten per cent of Britain’s oil. A year-long freeze on prices and wages in Britain was lifted on 1 July. Both had been held in check but so too had industrial expansion. Unemployment stood at just under 500,000, the highest figure since 1940, and the June trade figures showed a fall in exports and a trade gap of £39 million. James Callaghan, the Chancellor of the Exchequer, told the House of Commons in July that devaluation was not the answer. On 29 November he changed places with Roy Jenkins at the Home Office.
Cabinet considered the impact of devaluation on defence policy at a meeting on 4 January 1968. Jenkins informed his colleagues that for devaluation to be a success, action was required to reduce the annual rate of demand by about £1,000 million, either by tax increases or reductions in public expenditure and preferably the latter. The Chancellor proposed a parliamentaty statement on 16 January to the effect that, first, withdrawal from East of Suez would be completed by the end of the financial year 1970–71 instead of the mid-1970s; and, second, that expenditure on defence personnel and equipment would be reduced by restructuring and significant reductions in the purchase of foreign aircraft. By implication, the order for fifty American F–111 fighter aircraft would be cancelled. Two decisions were required on the UK’s defence commitments: whether the final withdrawal from Singapore and Malaysia should be 31 March 1971 or the same date in 1972, and whether the date for withdrawal from the Persian Gulf should be brought forward.
Both the Foreign and Commonwealth Secretaries argued in favour of a 1972 withdrawal. Brown was less hawkish on this issue. Supported by George Thomson, who replaced Bowden as Secretary of State at the Commonwealth Office in August 1967, the Foreign Secretary maintained that the decision to withdraw from East of Suez predated devaluation, the only difference being, in the case of the Gulf, that no date had yet been announced. In justification of 1972 it was said the extra year would make all the difference in minimising the risks of disorder in Singapore, where at least 60,000 local inhabitants faced unemployment as a result of the closure of the base. Also for consideration was the safety of what were now some 35,000 servicemen and 12,000 dependants in Singapore and Malaysia, and the fact that all governments affected needed as much time as Britain could give them to make alternative defence arrangements. In the Gulf direct British interests were involved because of oil. While accepting that British forces were too small to defend Gulf oil supplies and that the oil producing states needed to sell their oil, Brown still believed Soviet intervention and local disorders might endanger the oil installations. He wanted to avoid an announcement about the Gulf on the grounds that if it became known the British were departing, there might be a repeat of the Aden situation with Britain under local pressure to leave sooner than intended.
Brown and Thomson lost the argument. Other ministers argued a withdrawal by 1971 still left over three years for preparations: in practice, an extra year would make little difference. The decision would be unpopular with allies but this was only to be expected; and the perceived threat to Gulf oil was perhaps more imagined than real. Above all the issue was one of credibility. Advocates of the earlier date maintained that so far reductions in British defence expenditure had been too little and come too late. Now there was an opportunity to make a final break and to demonstrate that Britain’s defence role would be concentrated on Europe. Britain’s standing in the world ‘depended on the soundness of our economy and not on a world-wide military presence’. There would be no ‘special capability’ for use in Southeast Asia after withdrawal, but if necessary Britain’s European capability would be available for overseas deployment.1
No announcement about withdrawal was to be made until those most affected had been informed. Brown was despatched to Washington, Thomson to Singapore and Malaysia and then on to Australia and New Zealand, and Goronwy Roberts, Minister of State at the Foreign Office, back to the Gulf where as recently as November 1967 he had informed the Gulf rulers that Britain intended to remain to protect them. All three faced unenviable tasks. Brown described his encounter with Rusk in Washington as ‘bloody unpleasant’. The US Secretary of State found it difficult to believe ‘free aspirins and false teeth’ were more important than Britain’s world role. He described the UK’s withdrawal as ‘a catastrophic loss to human society’.2 President Johnson made an eleventh-hour appeal to Wilson for a change of mind, claiming that American capability and political resolve would be ‘gravely weakened if we have to man the ramparts all alone’. Wilson replied in kind, emphasising that the equally unpalatable measures taken on the home front ‘strike at the very root of principles to which many of us have been dedicated since we first went into politics’.3 In Southeast Asia, Lee Kuan Yew threatened economic retaliation against the UK and insisted on visiting London, which he did. The Malaysians said that in looking henceforth to protect their own position, Britain’s remaining interests in Malaysia might suffer. None of the governments expressed faith in a British out-of-area capability based in Europe, especially now Britain s carrier force was to be phased out. These local reactions persuaded the government to allow another nine months, and the date for the final withdrawal was put back to the end of 1971. Concern about the proposals was not confined to the governments most affected. In the UK, the service chiefs were apprehensive that cuts in the armed forces would damage both existing morale and the prospects for future recruitment. 4
1 Of these, only submission no. 443 is published in this volume, at Document 86.
2 The Australian task force in Vietnam containing two battalions plus supporting units was augmented by a further battalion in October 1967. Some 50,000 Australians served in Vietnam during the course of the war.
1 UKNA: CAB 128/43, Cabinet Conclusions, CC 1(68)3, ‘Public Expenditure: Post-Devaluation Measures’, 4 January 1968; also ESAC, Part I, Document 28.
2 UKNA: CAB 129/135, C(68)22, telegram, Brown (in Washington) to Cabinet colleagues, 12 January 1968; also ESAC, Part I, Document 31.
3 UKNA: PREM 13/1999, message, Johnson to Wilson, 11 January 1968, and Wilson to Johnson, 15 January 1968; also ESAC, Part I, Documents 29 and 33.
4 UKNA: PREM 13/1999, record of meeting, Wilson, Healey and service chiefs, 12 January 1968; also ESAC, Part I, Document 30.
[NAA: A5842 VOLUME 14]