In paragraph 15 of my Despatch No. 1/49  I referred to the need for more than a defensive stand against the advance of Communism in South-east Asia, and urged that the British territories in that area should commence without delay steps to put an end to the conditions in which Communism thrives.
2. There seems to be little doubt that there will be in the not far distant future a Communist or Communist-dominated Government in CHINA. This will create a new situation in South-east Asia and give probably, a great impetus to Communist movements in that area. This will be the more so because of the large Chinese communities in INDO-CHINA, SIAM, BURMA and MALAYA and, though not quite so large, in INDONESIA.
3. For this reason, though it might appear to be somewhat outside our competence, the situation has been the subject of discussion with my United States, United Kingdom and Indian colleagues, and we have set out our views in a joint memorandum (Annex 'A' herewith).
1. The possibility of a Communist dominated Government in China has created a new situation in South-east Asia. The immediate effect of the Communist victories in China has been to change the pace of events in the adjacent regions, reducing to the minimum the margin of time available for a peaceful transformation of the economy of these countries. The problem arising from the juxtaposition of a Communist controlled China with the semi- colonial economy of the South-east Asian countries may be stated as follows.
2. Till now the dominant issue in all the countries of South-east Asia was the recovery of freedom. This was essentially a political issue and with the independence of India and Burma, the principle may well be said to have been established, though the last chapter in this phase of history still remains to be written in Indo-China and Indonesia. But it is accepted even by the Dutch and the French that their colonies will soon have to gain independence.
3. The achievement of independence does not however solve the problem which these countries have to face, which is one of transforming the typically, 'oriental' civilisations of these areas held together by anachronistic social bonds and based on a starvation economy into modem communities, organised on principles of social justice and economic freedom. In short, these countries have to compress into a short period of time, the whole process of a century of European evolution, the technology of mid-twentieth century to societies which are still living in the pre-industrial revolution era but with new and destructive ideas sweeping their minds. The resulting condition is essentially revolutionary both in its process and in its consequences, for it is seeking to force developments and not allowing the slow process of evolution to work.
4. If it is accepted that the situation is revolutionary in its content, then the question immediately follows as to how it can be brought under control and guided into proper channels, for if we do not bring it under control, the Communists with their easy solution of 'Land to the Tiller' and 'Power to the Worker' will step in and take charge.
5. In the circumstances of South-east Asia, the Communist solution has an immense appeal. The situation has been foreseen by the Communist thinkers who recognise that the transition from feudalism to communism is in a way easier, as the resistance offered will be by classes which have ceased to be socially useful and represent no productive principles in society-the landlords and those who depend on them. In other words, the anti-communist element furnished elsewhere in the world by the middle class is completely lacking. That is one of the reasons why Communism is more aggressive in Asia and seems to be less actively resisted by the masses.
6. Any idea that the South-east Asian countries could be persuaded to resist the inroads of Communism by arming its opponents and encouraging the reactionary elements to band together in defence of 'the four freedoms' or the new slogan of free competition is foredoomed to failure for the simple reason that an economic and social revolution is already in being throughout the whole area.
7. How then are we to act? Clearly by accepting the revolutionary content of the situation and providing a solution to the major issues which the revolution is seeking to solve. If the same objectives can be gained with greater safety in a reasonably short time, through a non-Communist solution, then there is every reason to think that Communism can be resisted in this area.
8. It might of course be argued that the alternative to the Communist revolution is really what is being done in India-the attainment of the same objectives by parliamentary methods-that is a revolution controlled by parliament and effectuated through legislation. But the circumstances of South-east Asia do not seem to warrant any hope of successful action along these lines, primarily because there is no established principle of obedience in these countries and secondly because leadership requires an effectuating machinery-a highly trained efficient and loyal service-which notoriously does not exist in these countries.
9. What then is the alternative? The ultimate solution seems clear: a confederation of South-east Asia with a planned and integrated economy, creating out of the small units in this region a viable State following a progressive economic and social policy.
In the immediate future such a solution would perhaps be impracticable, if only for the reason that the States which are struggling to acquire their independence like Indo-China, and the States which have only recently acquired independence like Burma, will not even consider anything which may limit their political independence. But the situation created by the existence of a Communist colossus in the North may possibly prove sufficiently dynamic to bring about a change in their attitude, very much in the same manner as the Western European States which are so intensely nationalist have come together in similar circumstances.
10. While this should be the objective, towards which our activities should be directed, it is obvious that since this solution is not capable of immediate realisation, we should have a short-term policy which could be put into effect with the least possible delay. A permanent Consultative Council of the States of this area which will work out common policies and provide for an integrated economy capable of resisting the pressure of Communist economic doctrines would seem to be the answer. But in order to bring into existence such a Consultative Council, it is necessary as a first step that Indo-China and Indonesia should acquire their political freedom and Malaya should have a constitutional set-up which will enable her at least to participate in economic policies.
11. Such a Consultative Council when brought into being should have before it an economic and social programme which realistically deals with the special problems of their backward societies. Such a programme will have to provide (a) for the liquidation of unproductive systems of landowning and for a reorganisation of agriculture with aid of the most modem technology for the purpose of increasing production;
(b) for the absorption into industries of large masses of people now living on land without contributing to the increase of national production;
(c) for the integration of the economy of the region so as to avoid wasteful interregional competition;
(d) for large-scale medical and sanitary facilities which will eliminate the enervating effects of the climatic conditions of the 'monsoon belt', and (e) for a common system of education which will provide a background for democratic development:
in short, a programme of planned economy.
12. The first step, which should be taken now is to utilise to the best advantage the time available before a settlement is arrived at in Indonesia and Indo-China and work out a programme for this region. This can only be done after a careful analysis of the prevailing social and economic conditions. Such a survey should cover not merely the present morphology of these societies, but should be primarily directed towards the shape they should assume in the future: that is, it must formulate the principles on which the New Society in South-East Asia should be fashioned.
13. An enquiry of this nature conducted by a group of what are called in America social engineers' would provide us with an alternative programme which may blunt the appeal of Communism and tame and regulate the revolutionary process in Southeast Asia.
14. The powers most immediately and directly interested in doing so are U.S.A., U.K., Australia and India, and if the enquiry is entrusted to a small Committee of four or five high level political and economic thinkers from these countries, who have some experience of practical problems, men of the calibre of Lord Hailey who did the African Survey, then a workable and forward looking programme would be available for approval by the Governments concerned.
15. It seems likely, however, that the Governments of South-cast Asia, even when working through their own permanent consultative council would not be able to take full advantage of the programme without material assistance and technical advice. It might therefore be advisable to form some kind of advisory committee parallel to the permanent consultative council and working in close collaboration with it, composed not only of the four Powers mentioned above but also of France and the Netherlands whose continuing economic interest in South-east Asia must be considerable. This Committee would be responsible for determining, when invited to do so by the permanent consultative Council and in concert with that body, the amount and the kind of assistance required and its procurement.