135 Record of Discussions on South-East Asia

CANBERRA, [14 November 1949] [1]

SUMMARY RECORD OF DISCUSSIONS BETWEEN REPRESENTATIVES OF THE DEPARTMENT OF EXTERNAL AFFAIRS, COMMERCE AND AGRICULTURE AND DEFENCE, AND AUSTRALIAN REPRESENTATIVES IN SOUTH EAST ASIA, 14TH NOVEMBER 1949

Following meetings between representatives of the Governments of United Kingdom, Australia and New Zealand to discuss Japan, China and South East Asia, a meeting took place on Monday, 14th November, between representatives of the Department of External Affairs (including Australian representatives in South East Asia) and the Departments of Defence, and Commerce and Agriculture, to consider future Australian policy towards South East Asia, and in particular to discuss means by which Australia might extend assistance to countries in the region.

Present at the meeting were- Dr. J.W. Burton ) Dr. W.A. Wynes ) Sir Frederic Eggleston ) Department of External Affairs.

L.R. McIntyre ) A.H. Tange ) C.T. Moodie ) E.E. Ward ) Brigadier H. Rourke Department of Defence.

W.R. Carney Department of Commerce and Agriculture.

F.K. Officer Australian Ambassador to China.

P. Shaw Head of Australian Mission in Japan.

J.K. Waller Australian Consul General, Manila.

C. Eaton Australian Consul General, Batavia.

F.H. Stuart Political Secretary to the Australian Commissioner, Singapore.

A.J. Eastman Australian Consul General, Bangkok.

Sir Frederic Eggleston questioned whether the Australian Government is sufficiently well informed of the facts of the situation in South East Asia to be able to pursue a consistent and progressive policy in the area. He instanced the Australian immigration policy as something in which the Government's actions had been technically and legally correct, but carried to unnecessary lengths. [2] In addition, owing to the Australian press, the Government's policy had been misrepresented in Asian countries. The net result was the creation of a situation vis-a- vis Asian countries which could not be ignored. In New Guinea the Government had espoused a policy which was difficult to carry out [3]; in addition Australian representatives had not made the best of their case in debates on trusteeship in the United Nations. The Australian people, including the press and business and commercial quarters were not educated to a South East Asia policy.

Furthermore, we have not determined to the extent to which we are going to commit ourselves militarily. What are we prepared to do, for example, about Hong Kong and Malaya, particularly in the event that the United Kingdom may not be capable of defending Malaya? Brigadier Rourke said that from the defence point of view anything done to prevent the spread of Communism in South East Asia is in Australia's interests. He emphasised that the Defence Departments are concerned essentially with the position that is likely to exist at the outbreak of a conflict. South East Asia at the present time is an economic and political problem. It is clear that the United Kingdom cannot do anything much in the military field in South East Asia, which may ultimately become an Australian commitment. But the Defence Department does not want to become involved in military commitments in South East Asia until it is satisfied that the major battle is won and it believes, on its present information, that the major battle will take place elsewhere. The long-range problem in South East Asia is thus an External Affairs problem, and it is separate from the military problem. Thus the smaller the military commitment in South East Asia the better. If the situation in Burma and Indo-China were to deteriorate the Defence Department might have to revise its views.

But on present reckoning the defence view is that the main battle will be won or lost in Europe and the Middle East where a crisis could arise very quickly. A crisis will take longer to develop in South East Asia, where we would hope to command sea and air superiority (which we did not have against Japan).

Mr. Carney described the South East Asian market as Australia's natural market. He pointed out however that the Government cannot do much to influence the flow of trade to particular markets, except through Government-to-Government contracts. The Government can only facilitate trade activity. Wartime Government controls over trade have tapered off, but the Department of Commerce and Agriculture has not yet returned in full to the promotion of trade through the Trade Commissioner service. In addition, there is a need for education of Australia's commercial and business interests on the importance of markets in South East Asia. A really substantial increase of trade with South East Asia can come only from increased production and output in Australia. There can be no substantial diversion of trade from established markets elsewhere. As things are going, however, Australian secondary industries must find new external markets within the next year or so if they are to continue to produce economically. The Department of Commerce and Agriculture prefers trade to be conducted through private channels rather than by Government purchasers. This need not, however, rule out the possibility of future Government-to- Government contracts with, say, the Government of Indonesia. The Department of Commerce and Agriculture would not, however, be well equipped to handle such contracts, which could be better handled by the Department of Supply.

Mr. Officer drew attention to the danger of over-simplification;

to the tendency, for example, to regard China as the future enemy and plan on that basis. China is not an enemy in the military sense. It will be the centre of subversive movement; but as such it will not be a military problem. There was also a danger of too much emphasis on a long-range programme. The range is short; Indo- China, for instance, represents an immediate problem. The nature of these short-term problems emphasised the importance of knowing and being able to maintain contact with leading personalities in the various countries concerned. In this connection a knowledge of languages was important, since many of the new leaders in Asia were unable to speak English. He observed in passing that in his opinion many of the activities of the United Nations at the present time were conceived too much on long-term at the expense of short-term considerations.

Brigadier Rourke emphasised again that in the Defence view the security of Australia was safeguarded at the present time by the fact that, unlike in the last war, we could now expect to maintain our sea communications open. There was, however, no incompatibility between this opinion and the importance of immediate attention to language training. He went on to discuss the suggestion that the Service Departments might make available some of their Intelligence Officers for temporary secondment to Australian Government posts in South East Asia for the purpose of helping to collect intelligence and learning languages. He foresaw practical difficulties here.

Dr. Burton pointed out that Australia's manpower and financial resources were limited, and that it might be better therefore to concentrate our effort in one area rather than spread it thinly over the entire region. It might be desirable, for instance, to concentrate on Indonesia.

Brigadier Rourke questioned whether, from the Defence point of view, service intelligence from Indonesia was a matter of high priority. Were we likely to have to fight in Indonesia? Dr. Burton suggested that we would not have to fight in Indonesia if we were to help the Indonesians build up their defences by assisting in the training of their officers.

Brigadier Rourke agreed that we might well be able to do as we were now doing in respect of Pakistan in offering training facilities, and that we might in addition encourage them to look to us for help in the way of equipment and supplies.

Dr. Burton asked whether there was general agreement in the proposition that Australian technical and other assistance should be concentrated on Indonesia.

Brigadier Rourke, in reverting to the matter of collecting intelligence and other information, suggested that this task might best be done by the Joint Intelligence Bureau.

Mr. Carney agreed that Indonesia was a natural point on which to concentrate. From the trade point of view the first task was to get back to the pre-war position. At present there was no surplus meat available for Indonesia, but there were other goods.

Dr. Burton asked whether there would be any difficulty in increasing supplies of meat, dairy products, etc. to Indonesia if the United Kingdom were to agree to a reduced quota.

Mr. Carney expressed the opinion that the United Kingdom would be unlikely to agree, especially as its present fixed quota was less than it had been getting before the war. He pointed out that the problem was one of production and supply in Australia, and this applied more particularly to other supplies that the Indonesians could be expected to need, such as steel, cement and agricultural machinery. Meat and butter were in fact not important; they were luxuries so far as Indonesia was concerned. On the other hand wheat and flour were available, and it was agreed that the Indonesians could not get along without substantial flour imports.

Sir Frederic Eggleston expressed the opinion that food was the great requirement in South East Asia at the present time.

Mr. Tange pointed out that Australia's capacity to give economic assistance, in the form of funds, industrial equipment, etc. was limited, and that the most fruitful way of assisting Indonesia and the rest of South East Asia might be by something other than outright economic assistance. We could perhaps do more in the way of technical assistance, and especially by offering training facilities for technicians. What was first wanted was a survey of needs.

Dr. Burton mentioned that the Department had for some time been interested in the possible development of Portuguese Timor, and asked what was the Defence view of the strategic importance of Timor.

Brigadier Rourke said that militarily speaking Timor was not regarded as important. The Services were more interested in Cocos Islands and Morotai as possible defence bases. Defence was likewise not interested in Indonesian bases, provided that these are not used by any other power. If it came to a matter of an agreement with the Portuguese Government over Timor, the Defence view would be that no base rights should be given to any power, but that if any power sought to use Timor bases Australia should have the right to do so also.

Mr. Shaw gave a brief outline of the present situation in Japan, and in particular the position of BCOF. [4] The United States authorities considered that the occupation of Japan by substantial forces should continue. They at present attached considerable importance to the strategic value of Japan. From a military point of view the United States authorities had no particular regard for BCOF; they were not counting on any support from BCOF as a fighting force in a crisis. They regarded BCOF simply as a symbol of Allied support for United States policy in Japan, and the presence of BCOF was sometimes useful to MacArthur when he was faced with unpalatable directions from Washington. The problem of BCOF, therefore, and the question whether it should remain in Japan, is not a military but a political one. As regards the impact of BCOF on the Japanese, the difference in attitude towards United States forces and BCOF respectively is that the American troops are a symbol of what America has brought and is still bringing to Japan by way of relief and other forms of aid, whereas BCOF has brought no economic aid or other material benefit with it.

Dr. Burton observed that we might have to review our attitude towards Japan, which was now becoming inconsistent with the rest of our policy towards South East Asia.

Mr. Shaw agreed that Australia has a bad reputation in Japan, and added that the Americans are not above encouraging the impression in Japan that Australia is harsh and vindictive.

Mr. Ward pointed out that Japan is the only country with an export surplus in things that many Asian countries need. Japanese exports, for example, are likely to exercise considerable influence in Indonesia. It is possible therefore that if we maintain our present attitude towards Japan our relations with the countries of South East Asia may be impaired. Japan and Indonesia have complementary economies. The Indians, too, have been courting the Japanese and have been bringing in technical experts from Japan.

Brigadier Rourke expressed the belief that the army might ask for the return of BCOF if there is no peace treaty with Japan in the reasonably near future.

1 The document itself is undated.

2 A reference to the expulsion from Australia of a number of Asia.

persons during 1948-49 3 Presumably in reference to the entry of Chinese to Papua-New Guinea. See Document 165.

4 British Commonwealth Occupation Force.

[AA:A1838/283, 381/3/1/2, i]