137 Shedden to Burton

Memorandum,

TOP SECRET

MELBOURNE, 21 December 1949

EVENTS AND TRENDS IN SOUTH EAST ASIA

I would refer to your memorandum 381/3/1/1 of 30th November, 1949 [1], relating to discussions held recently in Canberra with overseas representatives of your Department and the Defence views on certain matters of policy in South East Asia.

2. With regard to the question raised in paragraph 2 of your memorandum under reference, it is considered that the view expressed in the letter of 22nd April 1949 from the Minister for Defence to the effect that:

'(h)To meet our strategic requirements, it is necessary that appropriate political and economic measures should be taken to arrest the spread of, and ultimately eliminate, communism, throughout South-East Asian countries'

still holds and that the propositions stated in paragraphs 3 (a) and (b) of your memorandum under reference are in accord therewith.

3. The detailed comments of the Defence Committee on paragraph 3 (a) to (f) of your memorandum are given in the attached schedule.

It is desired to observe generally that the security of Indonesia is of importance to the United Kingdom, New Zealand and Australian Governments, which are at present engaged in defence planning for an area which includes Indonesia. Furthermore, there has been a recent military agreement between the Dutch and Indonesian Governments. Accordingly, it would be necessary for these other governments to be consulted before any discussion was initiated, by Australia, with Indonesia on the subject of helping that Government to strengthen its defences, as proposed in paragraph 3 (e) of your memorandum of 30th November, 1949.

Attachment [2]

OBSERVATIONS BY THE DEFENCE COMMITTEE

(a) The Committee was in agreement with views expressed. It had no comment to make from the military aspect.

(b) Agreement in principle was expressed with this proposal but the views of the Committee in respect to military representation that may be involved, are embodied in the observations regarding proposition (d).

(c) Australian security will be affected most by developments in French Indo-China, Siam and Malaya, which are more important strategically than Indonesia. It is most desirable that a stable government, friendly to Australia, should control Indonesia. It is noted, however, that it is impossible, because of the limited resources available, to develop a really effective economic and financial programme of assistance throughout the whole area. While it is recognised that Australian opportunities may be greatest in Indonesia, it would be most desirable for an effective programme of economic, financial and military aid to be formulated for the whole area in conjunction with the United Kingdom, New Zealand, France, Holland and Indonesia, and, if possible, the United States of America.

(d) The Committee considered that Service attaches are required in French Indo-China, Siam and Indonesia. The function of these attaches would be the collection of military intelligence and they, therefore, should be posted as Naval, Military or Air Attaches at suitable diplomatic or consular Posts.

From the strategic aspect the collection of military intelligence in French Indo-China and Siam has higher priority than in Indonesia. Whether the attaches, in the first instance, should be sent to Indonesia, will be governed by the available sources of information in the other South-East Asian countries referred to, and in Indonesia.

The Committee recalled the undermentioned view of the Defence Committee (Minute No.57/1949) and considers that it still holds:-

'It is considered that the provision of Service Attaches, Defence Representatives or possibly military intelligence staffs for various countries in South-East Asia, would need detailed consideration when the proposed increase in Consular Staffs had been decided. Factors relating to the importance of military information likely to be gained, the availability of officers with suitable military experience, qualifications and status and the existing sources of information would need to be reviewed with each proposed appointment.'

(e) The Committee was of the opinion that the question of offering assistance of this nature to Indonesia would require discussion, in the first instance, because of British Commonwealth Defence considerations, with the United Kingdom and New Zealand Governments, and as long as the Dutch-Indonesian military agreement remains effective, no action should be taken without the agreement of the Dutch Government.

Subject to the agreement of the Governments directly concerned, it was felt that Australia should first examine the question of what assistance is required and can in fact be made available, taking into consideration the view previously expressed that, from the strategic aspect, it would be desirable to consider similar assistance to French Indo-China and Siam.

(f) The Committee was of the opinion that existing policy in regard to export of weapons and warlike stores requires review, not only in respect to Indonesia, but also to other South-East Asian countries. In respect to Indonesia, however, it was felt that the question should be examined in consultation with the United Kingdom and New Zealand Governments, and subsequently with the Netherlands Government, in view of the recent Dutch-Indonesian military agreement.

1 Document 136.

2 This schedule has been edited to remove repetition of proposition shown in the External Affairs memorandum (Document 136).

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