NAA: A1209, 1965/6595 PART 3

Canberra, 1–2 February 1966

Top Secret

Defence Consultations

Tuesday, 1 February 1966, commencing at ll a.m.

The Prime Minister welcomed Mr. Healey and Mr. Eyre and the members of their delegations and said that he and his colleagues were looking forward to the talks, which were amongst the most critical he could recall in the defence field. He and his colleagues saw the talks as, in a sense, provisional, leading to further consultation between the various Governments. Australia was gratified to know that the British Government intended to maintain a contribution in the Far East. It wished to be further informed of the views of Britain and the United States on this matter. There had already been useful preliminary discussions with officials from Britain and New Zealand, and in his meetings with Mr. Eyre, he had found a substantial identity of view between New Zealand and Australia. It is vital to Australian and New Zealand security to retain a United States presence in the area. They saw a continued British presence in the area and on the mainland of Asia as basic to this.

The Prime Minister invited Mr. Healey to elaborate on the British proposition. At a later stage in the meetings he would take an opportunity to comment on Australia's effort. Australia had a record of long and close co-operation with Britain in the defence field and was approaching the immediate problems, and the wider problems of world order, with a recognition of the common interests and principles. He looked forward to positive and constructive discussion on this occasion.

Mr. Healey thanked the Prime Minister for the warmth of the reception he had been given. He regretted that time would not permit him to visit New Zealand. He said he wished, at the outset, to put the record straight on a few issues. He had not come with any cut and dried solutions, but wanted to put forward for discussion some provisional conclusions reached by the Defence Overseas Policy Committee of the British Cabinet.² The British Cabinet itself had not yet considered these conclusions. Thus, the present meetings constituted consultations in a real sense. He wanted to make it clear that there was no chance of the British Cabinet approving the proposals unless Australia was in agreement. As he would explain, the Americans had already indicated substantial agreement.

Mr. Healey said that the United States Administration had been very complimentary about the techniques employed in arriving at a reduction of 16% in the 1969/70 defence budget with only a 4% reduction in capability. It has also given very general agreement to the priorities decided upon by the Defence Overseas Policy Committee and, in particular, was gratified at the large force which Britain proposed to deploy in the Far East in the 1970s. It viewed a continued British presence in the Far East as a pre-condition to continuation of an American presence. On the deployment of forces, the Americans held the same view as Australia, namely, that British forces should remain as far north as possible. The only disagreement was about the facts of the situation and what the risks were. The United States was itself keen to develop quadripartite defence arrangements for the Far East in the 1970s, but was reserving its position on the nature of such arrangements and wanted to hear the views of Australia and New Zealand first.

Australia's reactions to the conclusions he would put were critical not only for Britain but also for the United States. Britain agreed entirely with Sir Robert Menzies' recent letter to Mr. Wilson.³ His object in the present discussions was not to reach finality now on all the problems involved, but to seek Australia's agreement to the broad approach. Britain believed in quadripartite discussions. He hoped in the present talks to reach an understanding on points of view so that working groups could get down to examine details in conjunction with the United States.

The Defence Overseas Policy Committee had provisionally concluded that in the 1970s about 40% of their forces overseas would be in the Far East. In cost terms this would represent about £200 million out of a total overseas expenditure of £500 million or 10% of the total Defence Budget of £2,000 million. The £200 million represented direct costs only and did not include support costs such as training or unattributable costs or reinforcement capabilities. The maintenance of these forces would be conditional on their being part of a quadripartite defence effort. The Americans agreed with this. The British and American view was that no unilateral commitments would be undertaken in the 1970s, as they have been by Britain in Indonesia and the United States in Vietnam in the 1960s.

Mr. Healey said he had been called on to save about £400 million on the 1969/70 Defence Budget. A further objective was to save approximately one third of the total foreign exchange costs of the Defence Programme, which were particularly high in Britain's case. And he also had to reduce the overstretch on Service manpower, which was far from adequate for all commitments. One of the problems was the widespread 'penny packet' nature of many of these commitments. Although playing an important part in enabling conflicts to be nipped in the bud, as in East Africa,⁴ these small contingents made it more difficult to sustain the forces required for major commitments, such as the 50,000 men now committed in Malaysia. Greater strains were imposed on serving members. All this had forced a thoroughgoing review of the whole British defence role.

It had been possible for Britain to save £220 million of the intended saving of £400 million by various economies, e.g. the purchase of American aircraft. They had then costed their commitments at present prices and, having deducted £180 million, had endeavoured to produce a structure of forces to meet these commitments within the ceiling of £2,000 million. However, the exercise had produced a budget figure of £2120 million. Having reviewed the commitments, they had managed to reduce the budget figure to £2,050 million. He felt there was a good chance of persuading the economic ministers in Cabinet that this gap could be closed by one means or another. But here Australia's reactions were of critical importance.

The largest cuts had been made in naval expenditure–primarily by a decision not to build a new aircraft carrier but to concentrate on smaller warships, with a component of highly sophisticated missile ships, and more nuclear-powered submarines in the hunter-killer role. Nevertheless, it would continue to be possible to keep the existing fleet air arm–with one carrier on station East of Suez–running into the 1970s, and perhaps as late as 1975. But this involved the development in the interim of land bases, from which land based aircraft could protect the fleet at sea. The building up of the Air Force would be designed to provide one third of the total force in the form of transport aircraft. Included in the new Air Force would be 50 F111s, half equipped for reconnaissance. V. bombers would be retained in a tactical strike–reconnaissance role until, hopefully, an Anglo-French variable wing aircraft might become available by about 1975. A nuclear capability would be retained in aircraft and Polaris submarines. Mr. Healey confirmed that the British were greatly impressed with the F111A. He had had to accept fewer F111 As both for reasons of foreign exchange and because of the prospect of the Anglo-French replacement.

The planned British capability would permit the honouring of a range of commitments, and would also be a powerful deterrent against a sophisticated enemy. However, it was basic that Britain would not be able alone to carry on war against a sophisticated opponent, e.g. Indonesia, in the 1970s if the deterrent failed. This was, in fact, largely true already. Nor would the forces available permit large-scale prolonged counter-insurgency operations. If the countries facing an insurgency situation were not able to provide the necessary ground forces, Britain should not be expected to provide them, though it could provide sophisticated support. Politically, the British people could be persuaded to contribute to allied operations in the 1970s, but not to undertake operations alone in distant parts against an opponent who had sophisticated strength.

Their contribution to NATO is seen by Britain as being made primarily for political purposes, since the possible threat in Europe is not an imminent military one at present. It is proposed to reduce the NATO commitment for nuclear air forces and naval power and to maintain the same level of ground forces, provided further assistance can be obtained from the Germans toward foreign exchange costs. This met with United States agreement. The British forces in Germany also acted as a reserve to draw on for use elsewhere in the world if required. Outside Europe, Britain was dropping her South Atlantic and Caribbean commitments and reducing forces in the Mediterranean and the Middle East, again with the United States in agreement.

In the Far East they did not intend to reduce their commitments until peace is established, that is until confrontation ends and the Vietnam conflict is resolved. The British were going to try to get the Hong Kong authorities to contribute more to the costs of the British forces in Hong Kong.

The British are planning to expend about £200 million in the Far East in 1969–70–the £186 million already mentioned being increased by the retention of a carrier which, it is now proposed, will still be operating in the area. The £200 million made no allowance for new capital facilities.

There is considerable political opposition in Britain to remaining in strength in the Far East. It was essential for the British Government to be able to demonstrate co-operation with other Governments if its revised proposals were to gain acceptance.

Mr. Healey concluded his general survey by reaffirming that they saw the role of British forces in the Far East as contributing to a collective force against Chinese Communist expansion, a force which might eventually include Asian countries. They would wish to keep their own forces as far north as possible, for as long as possible, though they were less optimistic than Australia about this. SEATO was the existing institutional arrangement. It was not yet clear either to the British or to the Americans what form the new co-operative defence arrangements should take. It would be undesirable to have them seen as a 'white men's club', or to add a new set of initials to the existing list.

He was at this point seeking no firm detailed commitments from Australia and New Zealand, but simply an indication that they were satisfied with the approach and agreed to examine details. If the proposals were to be accepted by the British Cabinet and the British people, he must be able to say that the United States and Australia, and New Zealand, whose co-operation was necessary in practice, supported the approach.

The Prime Minister said he was grateful to Mr. Healey for his masterly presentation of the problem and looked forward to coming to grips with it. He said that there was a feeling in Australia that the Australian effort and problems had not always been appreciated as fully as they should be and he wished Mr. Healey to carry away with him a more complete appreciation of Australia's total problem. Apart from the substantial contributions made by Australian forces in two world wars, and the casualties suffered in those wars, Australia had a long tradition of serving alongside British forces. Australia had been first after the United States to offer forces in Korea, and was an early contributor in Vietnam. Australia was faced with the problem that the British emphasised the importance of increased commitments in Malaysia, while the United States was exercising considerable pressure for increased effort in Vietnam.

When to these defence problems are added those arising from the fact that Australia is a large, relatively undeveloped and unpopulated country, it becomes apparent that the normal comparisons about the size of the Defence Budget in relation to the Gross National Product are not an altogether appropriate measure. Australia has, for example, to develop its transport facilities over wide areas, e.g. for the extraction of iron ore. Its population increase of 2% a year (compared with 2.1% for New Zealand, 0.8% for Britain and 1.3% for the United States) requires the allocation of far greater resources for home building and facilities such as hospitals and schools, than is the case in the United States or Britain. The United States would need to build half a million more homes each year than at present if their population were increasing as fast as Australia's, and the British upward of 170,000 more homes each year. Over the four years to 1964, the number of people in the age group 5–15 years increased by 8% in Australia, whereas it fell by 2% in Britain. The allocation of 28–29% of Australian Gross National Product to investment was only surpassed by Japan. It was noteworthy that, while consumption in Britain represented some 76% of Gross National Product, it was 4–5% less in Australia on comparable figures. None of these expenditures were without dividends in the long term–the Australia of today, with almost 11 ½ million people, made a far greater contribution to peace and stability in the area than the Australia of 1945, with about 7½ million people. Before so very long, the population would have reached 20 million. Australia was also making relatively large contributions in other fields, e.g. its contribution of $85 million to the Asian Development Bank compared with $200 million by the United States and $30 million by Britain.

All this was not to say that Australia would not be helpful and constructive in its approach to the British problems, but only to mention that there was an aspect to which insufficient attention seemed as yet to have been given.

The Prime Minister said that some problems could arise if nothing were to be said for a considerable period after the discussions had concluded. He suggested that it might be possible to work out the minimum of what could safely be stated in public, while not going further on essential matters. Mr. Healey agreed, but emphasised the extremely confidential nature of much of what he had been saying about British plans.

Tuesday, 1 February 1966, commencing at 2.30 p.m.

The Prime Minister said that he felt Mr. Healey would welcome further information about the problems Australia faced in relation to the level of its defence effort. The information which the Treasurer would give should be seen as an endeavour to approach constructively the problem under consideration.

Mr McMahon⁵ expressed his pleasure that the British Government intended to continue to play a world role in the defence field. To indicate more fully the extent of Australia's efforts and problems, he felt it would be useful to mention some relevant figures. Using market value computations of gross national product, he said that annual British expenditure on defence represents about 6% compared with an Australian percentage rising towards 4%. Australia was experiencing chronic deficits on current account–estimated at £495m. for this year compared with £Stg. 171m. for Britain, whose current account position seemed to be improving. He emphasised the implications of the population, consumption and investment figures given by the Prime Minister, and the uncertainties created by Australia's heavy dependence on private capital inflow. He mentioned Australia's rising defence budget, and said that Australia's oversea commitments for defence purposes totalled £530m. at 1 st July, 1965 and that its direct payments overseas on defence are estimated at £94m. in 1965/66–representing some 4½ of total debits against the balance of payments on current account, compared with some 3% for comparable British expenditures.

Mr. Healey thanked the Prime Minister and the Treasurer for the facts, and commented that some of them were new to him. He observed, however, that the arguments flowing from these figures were very similar to those he heard in the Cabinet Room at home in relation to the British defence effort. The real question was one of priorities at a given moment in time. While he had no disagreement with Australia taking migrants and capital, the present was an opportunity for Australia to commit two powerful allies to the defence of Australia for another generation.

The Prime Minister said that Australia was not asking Britain to spend more than she proposed. However, Australia for her part would be facing up to what more she could contribute for the immediate future in Vietnam. He suggested that attention be given to the question of strategic concept. Australia sees the United States' presence in Asia as vital to Australia and New Zealand, and also for the future of the rest of the world. What Mr. Healey had said about United States doubts confirmed Australia's fears that a withdrawal by the British from Singapore might lead to an American withdrawal from the mainland of Asia. Furthermore, it seemed questionable whether the end of confrontation really meant a peaceful and constructive Indonesia. Australia would feel no sense of security simply with the end of confrontation. In the meantime, Australia had an equivocal position in which, while helping Britain in confrontation, we endeavour to remain friendly with Indonesia. Do Malaysia and Singapore really, in their hearts, want Britain to go? The Australian assessment is that a British presence is vital not only in the Malaysian area but in the region generally.

Mr. Healey agreed that fundamental questions were the role of Western forces in Asia in the 1970s and from where this force should be exercised. While no one could pretend to foresee the future, the worst possibility was that the United States would suffer a humiliating defeat and be forced out of Vietnam. This would be followed by a general sauve-qui-peut among the countries of the region, British withdrawal from Singapore would follow, and only minimal forward defence would remain. A second possibility was that the United States might secure a neutralised South Vietnam and withdrawal of U.S. forces from that country, accompanied by a general neutralised area in South East Asia, on the basis that it would be made clear to China that any attempt to take military advantage of the withdrawal, or of political or other changes in the area, would be met by Western military force, much as has happened in relation to Russia and Cuba. A third possibility, though less likely than the second alternative, was that other Asian countries, e.g. Japan and Indonesia, might decide to join militarily with the West to meet the threat of Chinese expansion. Britain sees the continuation of confrontation as a wasteful distraction from the main issue. Indonesia would be far better acting as a counterpoise to China in Asia, and it would be worth paying a high price to achieve her neutrality or, preferably, support.

The British Government wanted to retain its forces as far north as possible, for as long as possible. The real question is how one assessed the facts and the risks. As to the facts, the British saw no point in staying in Singapore if this meant being tied to local military tasks rather than to the containment of China, or if the condition of tenure was such as to preclude use of the forces, e.g. for SEATO purposes. Singapore would become untenable if local labour would not co-operate, or if continued presence was against the publicly expressed will of the independent local Government. In answer to a question by the Prime Minister, Mr. Healey said that the United States were in agreement, and wished Britain to remain in the area.

Many different evaluations have been made of the risks of remaining in Singapore without alternative locations for deployment. In response to the Prime Minister, Mr. Healey agreed that the British view of the future of the bases in Singapore and Malaysia was more pessimistic than that of the United States, or Australia and New Zealand. He said that the main risks were that real trouble between Singapore and Malaysia could lead to a situation in which it could be difficult to keep the base operable; that a change in the Singapore Government might occur, e.g. in 1968, or its policy might change; and that conceivably British withdrawal from Singapore might become necessary to achieve an end of confrontation under strict conditions as part of a satisfactory settlement with Indonesia. He thought that a British withdrawal from Singapore under such circumstances might be acceptable, but only if we were absolutely certain that Indonesia would remain friendly with the West. He personally was sceptical whether one could do a deal with Sukarno any more than with Nasser.

Mr. Healey said that, if the pessimists were right, then the situation could arise in which there would be no alternative bases for the British forces to use in the Singapore region, if they were compelled to withdraw from Singapore itself. In this context, the possibility of establishing bases in Australia should be seen as a form of insurance. The insurance would be not only in terms of making it unnecessary for British forces to return home if they had to withdraw from Singapore, but also as an encouragement to Malaysia and Singapore to remain willing to have the bases. Once the British forces went home, it would be difficult to get them back to the region again. The whole argument inside Britain on 'East of Suez' would then be on a different basis.

Mr. Healey expressed doubts about the practical possibility of building in Australia in the next three years the alternative facilities that would be needed. He said what was required was a careful exploration of the facilities involved, over what period and at what cost. It might be useful to let officials, in the near future, and without commitment, sort out the basic facts. The Prime Minister said he would not like to explore alternatives until an examination, in which the United States was joined, had been made of the practicability of staying in Singapore. He was not unreceptive to the line of argument Mr. Healey had been putting. Australia's assessment, after full enquiry and discussion, was that the British presence in Singapore had a cohesive and moderating influence. In these circumstances, Australia had been reluctant to agree too readily to talk about the possibility of bases in Australia. The Australian feeling was that the discussions about bases would take place following quadripartite talks.

Mr. Hasluck suggested that it would be desirable to give some consideration to the assessment made by the different Governments of likely developments in Asia before any discussion was given to the establishment of bases alternative to Singapore in Australia. Apart from the agreement in general terms that China constituted a threat to the stability of Asia, and the world as a whole, the facts did not seem to be commonly agreed. He would find problems in Mr. Healey's analysis of the future in terms of a neutralised Asia. Mr. Healey said he would like to discuss these problems, but emphasised that it is difficult to be dogmatic, and commented that the Americans have been unable to arrive at any agreed view about the future in Asia. The point of planning together, as in NATO, is that the strategy will be able to deal with various contingencies, even if there is no detailed agreement as to the most likely developments. Mr Hasluck said that the Australian assessment is that China can only be contained by engaging at least some states in Asia in resistance. Neutralisation and withdrawal of Western arms would lose them to Chinese domination and leave open only one option for us apart from acquiescing in Chinese actions–nuclear war striking at the source of the aggression. He saw some trend towards alignment against China by such countries as India. Mr. Healey questioned whether India was aligning itself with the West, and commented that experience in SEATO shows how hard it is to get Asian agreement to meet a common objective, even one as central as the containment of China.

Mr. Eyre welcomed the opportunity to discuss questions of such importance, and conveyed the regret of his Prime Minister that he was unable to attend. He would need to report to his colleagues on return, and would therefore like to settle a joint statement before the meetings ended. He said that New Zealand approached the discussion on the basis that it would be a preliminary exchange of views prior to the publication of the British Defence Review and that the New Zealand Government was itself about to produce a White Paper on Defence. New Zealand saw the main problem now and in the long term as being the containment of China. South East Asia was a patchwork of small states which could not develop a military power to cope with China alone. Apart from the United States' presence in the area, the Commonwealth contribution based on Singapore had been a major active factor in promoting stability in the area. If the countries of South East Asia could not be brought to a state of stable government and strength before any withdrawal from Singapore, the effect would be to hasten the fulfilment of China's aspirations. It was accordingly New Zealand's very strong view that Britain, Australia and New Zealand should remain in the Singapore/Malaysia bases as long as possible, and without setting any specific time limit. This was essential to Britain's playing a part in the containment of Communist China, and to New Zealand's concept of forward defence. There would be very considerable difficulties in implementing current and future SEATO plans if the bases were denied.

Mr. Eyre said that time appeared to be a critical element. There seemed to be no way of hastening the ending of confrontation, and the New Zealand view was that it would be unwise to base planning on the assumption that it would be over by any particular date, such as 1970. The possibility that the Singapore/Malaysia bases would cease to be available was a hazard that had been faced from the beginning, and the New Zealand contention was that the point had not been reached where withdrawal was necessary, and might well never be reached. In this context, to attempt to fix a specific date for the reduction or withdrawal of British forces seemed to be approaching the problem from the wrong end. There seemed a reasonable prospect that the bases would remain available for some period after confrontation and that, even if there were a request for the Commonwealth forces to leave, a gradual phasing out process could be arranged. This possibility should be taken into account in any planning for the future deployment of our resources. It might be that time would work to our advantage, given the probability of a growing awareness of the menace of Chinese Communist aggression, a recognition of the further unpredictable intentions of Indonesia, and a possible preference by Singapore for a British presence if the dispute between Singapore and Malaysia became acute.

On the military side, New Zealand saw no justification for abandonment of the bases early or late, although there might be financial and political arguments. Bases in Australia would not be any substitute for the facilities at present enjoyed in Singapore and Malaysia, and withdrawal should be regarded as a policy of last resort. If a re-deployment was forced on Britain as a result of its review of its defence capability, New Zealand would urge the importance of maintaining adequate ground forces, as these were valuable in coping with the sort of activities–infiltration and subversion–that had become characteristic of the region and constituted the most obvious threat in the future. New Zealand had its own financial problems resulting from its high population growth, its shortage of overseas funds, and the vulnerability of its exports, in addition to the problems of internal development faced by a young country. If the situation required it, however, New Zealand would be ready within its means to take steps to make a larger contribution to the defence of South East Asia, and would be willing to examine the problem and to enter into quadripartite discussions at an early date.

Mr. Healey said that the comments made by Mr. Eyre had been very much to the point. Unless confrontation was ended by 1970, the £2,000 million defence budget would not be achieved. Furthermore, continued confrontation was likely to sap the British will to remain in the area. In response to questions from the Prime Minister, Mr. Healey agreed that the question of withdrawal from Singapore was not 'when', but 'if and when'. He also said that the British did not necessarily assume that the ending of confrontation would produce a new situation; what they wanted to achieve was a situation in which the British would not remain solely responsible for keeping Indonesia in order.

Mr. McEwen asked whether the thought was that alternative bases in Australia should be constructed and left empty or whether their existence would inevitably bring British forces to them. Mr. Healey said that the discussions he had suggested between officials would not be designed to commit anyone to concrete action. He hoped that over the next few days, the British High Commission might agree with Australia and New Zealand on terms of reference for the officials, including any provisos that needed to be written in about continued use of the bases in Singapore for as long as practicable. He did not have the answers on the practical implications of the proposals, including the relation of alternative bases for British forces to existing and planned facilities for the Australian services. Perhaps only minor additions would be needed for the Air Force. For the Navy, withdrawal would involve a major decision, which they would be reluctant to take on a contingency basis, and the same might be said for the Army. He wanted the facts to help the British Government to avoid misinformed decisions.

Mr. McEwen asked for further clarification on the point Mr. Healey had made earlier about the possibility that, if Britain were to leave the Far East, the United States would not remain on the Asian mainland. Mr. Healey said that the United States' basic worry was that they might find themselves alone. They would like to see a settlement in Vietnam under which U.S. forces could safely be withdrawn, e.g. to the Philippines. They did not wish their position meanwhile to be prejudiced by a British withdrawal from Singapore, even if confrontation ended. Mr. Stewart and he had therefore given their undertaking in Washington last week that Britain would only reduce its forces in Singapore to a new level after cessation of the Vietnam War, assuming that confrontation had by then come to an end. This had not yet been confirmed by the British Cabinet. Mr. McEwen said that, if there were to be talks at the official level, he would want to know in what contingency the British would withdraw from Singapore before he would agree. Was the contingency the cessation of confrontation, or was the policy of the United States the main determinant?

The Prime Minister said that it was common ground that Britain should remain in Singapore as long as practicable. If this were so, then Australia would not run away from the proposition that there should be some insurance to meet the needs arising for a forced withdrawal. It would be essential to make sure that the United States did not feel that any examination of this represented a withdrawal by Britain from its responsibilities in the area.

Mr. McEwen said that, while he could accept the British view that they should leave Singapore if it became untenable, he felt uncertain about the possibility of Britain leaving as a result of a bargain with Indonesia. In what circumstances might the British Government agree to go, as distinct from being compelled to leave? Mr. Healey said that he was disposed to discount the possibility of a bargain with the Indonesians but, in any event, the quadripartite arrangements which he hoped would eventuate, and which would carry obligations as well as rights, would put the British Government in a position in which it would not be free to exercise its discretion to withdraw without the agreement of its partners. Mr. McEwen said that Australia would wish to have a direct voice in the determination of future policies and not simply fit in with Britain and America. Its destiny was at stake much more than Britain's or America's. He asked what shape Mr. Healey thought quadripartite arrangements might take. Mr Healey said that he was in no position to say, but commented that hitherto the British and American presences in the Far East had been disorganised and disparate. This was not a satisfactory position for the 1970s. The present consultations were a first step towards collective arrangements.

Wednesday, 2 February 1966, commencing at 11 a.m.

The Prime Minister said that he hoped it would now be possible to tighten up some of the threads of the discussions which took place on the previous day, and invited Mr. Healey to spell out with greater definition what in substance he was proposing, and what the British Government was intending to do. Certain overall policies had become clear, such as that Britain was intending to maintain a global defence role, and a substantial effort in the Far East. While it was also now clear that the British would stay in the Singapore base as long as practicable, their intentions still seemed to need clarification at some points: for example what was the continuing role of the British forces, what possible arrangements with Singapore&Ndash;Malaysia were being contemplated, and what lay behind the British references to an alternative posture? There were also the questions of the nature of the talks Mr. Healey would be having in the next few days with the Tunku and Mr. Lee, and when and where quadripartite talks would take place.

Mr. Healey said that he would describe briefly the forces to be maintained in the Far East in the longer term, and their capability, role and deployment. He would then take up the other points raised by the Prime Minister.

As to the strength of the forces in the Far East, they would represent 40% of the forces outside Europe in the 1970s. The Navy would have one or two attack carriers, with cruisers to follow, two commando vessels, 14 destroyers or frigates and 6 nuclear powered attack submarines, involving a total manpower of 3,600 shore-based uniformed personnel and 3,250 civilians. The Army would have one commando and 7 army units–involving about 14,000 men. The Air Force would have 135–160 aircraft involving 2 squadrons of strike aircraft, 5 squadrons of fighter ground attack craft, and 3 squadrons of maritime aircraft and medium and short range transports. These would involve some 9,500–11,000 men. Thus the total British personnel involved in the Far East would be about 30,000.

This force would provide good strike power, and some air defence in depth. It would also give some maritime and Army strength, and some amphibious capability. By 1970, with the Hercules and VC 10 transport aircraft fully available, it would be possible to move a battalion into the area in 2 ½ days and a brigade in 6 days, provided heavy equipment had been stockpiled previously. This force would permit continuation of tasks in relation to the remaining colonies stretching from Africa to Fiji; assistance in the defence of Australia and New Guinea; and a contribution to the defence of the Asian mainland, including SEATO commitments, e.g. under Plan 4.⁶ These latter commitments would be undertaken only in co-operation with others, and whether or not the forces would be available to meet Chinese-inspired subversion as distinct from direct attack would depend upon the political situation and attitude of the countries concerned.

In amplification of comments made on the previous day, Mr. Healey said that, once confrontation ended, the British thought the local forces being built up in Singapore and Malaysia should be capable of withstanding any renewed Indonesian infiltration; but British Air Force strike capability would be available as a deterrent. The level of British forces in Malaysia would be reduced to the long term planned level when fighting had ceased in Borneo. While the forces as a whole would not leave Singapore until the war in Vietnam was over, there would be reductions to the long term level once confrontation was at an end, though these would be made as discreetly as possible. Forces could not be transferred from Borneo to Singapore for the simple practical reason that sufficient accommodation did not exist in Singapore for the additional numbers. If confrontation was not over by 1970, the whole basis of the planning on which the present defence review was proceeding would have been destroyed, and the Government of the day would have to make a fresh decision about its commitments. But the British have as a major objective to bring confrontation to an end by 1970, one way or the other.

Mr. Healey said that he would speak frankly to the Tunku and Mr. Lee. Britain would be willing to continue with its bases in the two countries, provided occupancy was without unduly restricting conditions. The existing agreement did not cover British occupancy of the Singapore base but did cover the Malaysian bases. The British were waiting for the Singapore Government to make proposals in connection with the Singapore base.

Mr Healey said that he would like to be able to take home with him some idea of what facilities it would be possible to count on in Australia in the event of a forced withdrawal from Singapore. This would include an assessment of when they would be available, and at what cost. Without some indications, it would be difficult for him to discuss persuasively with his Cabinet colleagues his proposals for British forces in the Far East. There would be no commitment on policy.

The Prime Minister said that Australia could not give an undertaking about specific bases, as it had had no opportunity to give detailed attention to the problem. Mr. Healey said that what he wanted was some idea of the nature of the physical problems Australia saw in the provision of bases in Australia, if any decision were made to prepare such bases. He would also like to be able to take home some idea whether Australia was prepared to commit itself in principle to four-power arrangements.

The Prime Minister said that the Australian difficulty was that it saw a consideration of the question of establishing bases in Australia as arising from quadripartite talks. This made it difficult to give Mr. Healey what he was asking for. He could say that Australia was adopting a helpful and constructive attitude and would be glad to join in four-power talks, but he could not say that Australia had agreed to even contingency planning for the construction of bases as an alternative for Singapore.

Mr. Healey said that he was not seeking commitment even in principle, but advice on practical possibilities. He wanted a frank assessment of Australian thinking, and not to deal at arm's length with the problems. Discussions in the United States had been extremely frank, but had all been on a no commitment basis. The Prime Minister said that he did not want to hold back any information from the British, and to a large extent Australian Ministers themselves were only now aware of what was being considered by the British. Australia would want to make decisions as part of an agreed programme, and this could follow only from quadripartite discussions. Otherwise, Australia tended to discuss Malaysia with Britain, and Vietnam with the United States, without the benefit of an overall strategic concept. Mr. Healey agreed with this, and said that the British themselves would certainly not want to move without the Americans.

The Prime Minister said that Australian Ministers were still uneasy about Singapore, because it seemed that the British might be lukewarm in their determination to remain after confrontation had ended and the war in Vietnam had ceased. Singapore was tremendously important to Australia's concept of defence in depth. Would the British be saying publicly that they would be staying in Singapore? Mr. Healey said that, although he had not yet consulted with his colleagues, he thought that the White Paper on Defence would state the Government's intention to remain in Singapore, without making reference to fears entertained about durability of tenure. The reservations which would find expression in the Paper would probably be related to the willingness of the local governments to continue to have bases on their territory.

In reply to a question by Mr. Hasluck, Mr. Healey said that the British experience was that there tended to come a time when the military, economic and political cost of staying in a base was greater than the value in remaining. This was happening now in Aden.

Mr. McEwen asked Mr. Healey whether the British would automatically withdraw from their bases in Malaysia if they had to withdraw from Singapore, or vice versa. Mr. Healey said that this was not necessarily so, though it could not be said how long a presence in one without the other could endure. It might be more practicable to hold Singapore without Malaysia than the other way about. Mr. McEwen then said that British withdrawal under duress was understood. But what concerned him and his colleagues was whether–putting it very frankly–the British would like to go, or intended to go, regardless of duress. If this was the British attitude, a totally new situation would have arisen, as far as Australia was concerned. In these circumstances, Australia would not wish to facilitate a British withdrawal, and would feel a need to turn to the United States. Would the British, in their public statements, say that they wished to stay in Singapore&Ndash;Malaysia as long as practicable?

Mr. Healey said that he could not at this stage tie himself to a firm answer, as there were differing views among his Cabinet colleagues. For himself, he would take the view that so long as the British retained forces relevant to the containment of China, it would be a mistake to leave the bases. Therefore, speaking for himself, he would say that Britain does not intend to go out nor expect to go out. In public, the Government's position would probably be that it believed it had a continuing role in the area and intended to stay. But it had at the same time to avoid placing itself in a position where it was at the mercy of the local Government. Mr. McEwen asked whether he could say that the British were in Malaysia not merely for historical reasons, or to meet Treaty obligations, but to play a part in the containment of China. Mr. Healey replied that the inclusion of a reference to China would represent a major change in policy. The British presence in Singapore–Malaysia arises from Commonwealth and colonial commitments and the support of SEATO. In relation to Chinese expansion, the SEATO treaty was very vague. A reference to the containment of China could imply a commitment to all out war against China. However, he had noted the importance of this element in Australian thinking, and to Australia's ultimate decisions.

In reply to a further question from Mr. McEwen about Britain's position when the confrontation issue ceased to be critical, Mr. Healey said that all he could do would be talk in terms of her possible position on various hypotheses. The Americans had pursued a similar line of questioning when he had been in Washington during the previous week but, when he had asked them similar questions about Vietnam, they had been unable to give answers. However, if Britain were to decide to maintain its defence capability in the Far East as long and as strongly as possible, Australia's position in the quadripartite discussions would be strong. If, on the other hand, his colleagues were not satisfied with the kind of response which he had received in Canberra, the British would remain free to act unilaterally, and Australia's position in the discussions would be considerably weaker.

Mr. McEwen referred to the historic relationship between Britain and Australia. It must not be assumed that Australia would not respond to Britain's need, but Australia wanted as much protection as she could get. Mr. Healey said he had given a detailed account of British thinking and wished to have a corresponding account of Australian thinking.

Mr. McMahon said that Australian Ministers were indebted to Mr. Healey for his frankness. They wanted to get a meeting of minds to see how the best possible collective effort could be made in this area. In the meanwhile, there could not be an Australian commitment, and Mr. Healey had said he was not seeking such a commitment. It was also vitally important to avoid in any way affronting the United States. The next step seemed to be to evolve a quadripartite agreed strategic concept. This would provide a firm basis of agreed aims on which discussions could be held.

Mr. Healey accepted fully that any decisions on major issues would have to be quadripartite. He recognised that in a sense the question of bases in Australia was only one element in the problem for Britain and the United States, but that for Australia it was the central problem. He would certainly take back with him a clear appreciation of Australia's problems and attitudes on this matter. In the meanwhile, he would like to obtain, before he left, Australia's agreement to quadripartite political discussions with a view to obtaining agreement by the end of the year to strategic concepts and general principles and possibly to procedures by which these would be implemented.

The Prime Minister said that Australia would not disagree with the proposals for quadripartite official and political talks as outlined by Mr. Healey. Australia's views about the importance of maintaining four-power discussion and of retaining the Singapore base were, he hoped, now fully appreciated. He was agreeable to Mr. Healey's suggestion that, meanwhile, the Service Chiefs of the three countries might meet, entirely without commitment, to exchange information. Mr. Healey said that these talks should make it possible for both parties to prepare more realistically for the quadripartite talks. He took the point made earlier by Mr. McEwen that if physical preparation of facilities went beyond a certain point, pressure to use them might become irresistible. The Prime Minister assured Mr. Healey that nothing was being withheld from him about Australian thinking on the establishment of bases in Australia. Cabinet had itself not given any consideration to the matter.

Mr Healey suggested that Sir Henry Hardman,⁷ Sir John Bunting and Mr. Mclntosh⁸ should attempt to formulate what had been agreed to in the discussions about the move towards quadripartite talks. In response to the Prime Minister, he agreed that they might also attempt to draft a short communique which could be issued at the end of the talks.

Mr. Eyre asked whether the trend of the discussions was not precipitating consideration of alternative bases in Australia only, when other locations might also be feasible. For example, it might be possible to consider the use of the Philippines. Mr. Healey doubted whether this could be decided upon in the next few days, and thought it might be best at this stage to confine the issues to Australia. It would be necessary to consult the United States about the Philippines, and the immediate purpose of the exercise seemed to be to have the three Chiefs of Staff discuss on an information basis what was available about Australian installations.

Wednesday, 2 February 1966, commencing at 3.45 p.m.

The Prime Minister said that, following the arrangements discussed earlier in the day, a draft agreed minute and a draft statement for the press had been prepared. He asked whether there were any amendments to the text of the two documents as circulated.

There was some discussion of the texts, and agreement was reached on their final form. Copy of the texts is attached.

The Prime Minister asked Mr. Healey about the possibilities to which he had made reference of a heavy strike against Indonesia in certain circumstances. Were not the risks of adverse world opinion very great, having in mind the extent of Indonesia's operations? Mr. Healey said that operations would not be stepped up without due warning, and that there would be great care taken of public opinion. But the British were in a position where they could not afford to have confrontation run on indefinitely. They would nevertheless consult with Australia and the other governments concerned well in advance of any decision, as they did on other matters related to Indonesia.

Mr. Hasluck said that the Australian Government would be concerned if any initiative to end confrontation involved conceding to Indonesia all that it was seeking. Mr. Healey said that this was not primarily a question which, as Secretary of State for Defence, he could answer. However, it was not impossible to envisage circumstances in which an overture could be made to the Indonesians, e.g. perhaps on the death of Sukarno. He readily agreed that it would not be satisfactory to bring about a situation where the only guarantee for observance of an agreement to end confrontation depended upon the good faith of the Indonesians. At the same time, Britain could hardly face retaining 50,000 men permanently in the area, and could not refuse genuine negotiations. He said that it was often not realised how much strain the continuation of confrontation imposed on Britain. Men had to be posted overseas before their due time, and the result tended to be poor re-engagement rates and the development of a vicious circle as manpower became still shorter. Britain had to reduce the level of committed operational forces wherever possible.

The Prime Minister said that he and his colleagues admired the way in which Mr. Healey had put his point of view and felt that the discussions had been both valuable and stimulating. They felt better equipped to carry on together and to look forward to future quadripartite talks. He asked Mr. Healey to convey his good wishes and thanks to Mr. Harold Wilson. Mr. Healey said that he had learned much while he had been in Australia, and was clear in his own mind on the central views held by the Australian Government. It had been helpful to have Mr. Eyre present, and he hoped that it would be possible to visit Wellington when he was next in the area.

Mr. Eyre wished to associate himself with what the Prime Minister had said. It would be most helpful if, on another occasion, Mr. Healey could meet with his colleagues in New Zealand. The Prime Minister said that he and his colleagues had appreciated the New Zealand understanding of Australia's position, and that it had been encouraging to find so much similarity in the views of the Australian and New Zealand Ministers.

Agreed minute

In the light of Mr. Healey's statement that the British Government proposed to continue its global defence role and maintain its military presence in the Far East, it was agreed that further talks by Ministers should be sought on a quadripartite basis bringing in the United States. The primary objective of the talks would be to secure agreement on the strategic concept and aims for allied co-operation in the area in the face of the threats from Communist China and elsewhere; and, arising from this, on the future co-ordination of military activities of the four powers in the area.

Meanwhile, military representatives of the countries at the present talks should meet together, without commitment, to examine what might be involved, physically and in terms of costs and timing, in any proposal to base British forces on Australia–that is to say, to obtain an idea of the physical possibilities and limitations so that any further examination by Ministers may proceed on the basis of a better assessment of the practical realities.

Statement issued following the conclusion of defence consultations in Canberra

Consultations in the light of the British defence review have been taking place in Canberra during the last two days between Australian Ministers, Mr. Dean Eyre, New Zealand Minister for Defence and Mr. Denis Healey, British Defence Minister.

The British Government's provisional conclusions were explained by Mr. Healey. They provided the basis for a full, and helpful, discussion in which Australian and New Zealand Ministers explained their attitudes towards the future problems of allied defence policy in this area of the world.

Mr. Healey, who had also had discussions in Washington with United States Ministers, will be returning to London after a short visit to Singapore and Malaysia, to report to his colleagues.

Arrangements have been made for consultation to continue as required through appropriate channels.

1 Four sessions were held over the two days. Australia was represented by Holt, McEwen, McMahon, Hasluck, Fairhall, Hulme (Postmaster-General, 1963&Ndash;72) and Gorton. New Zealand was represented by Dean Eyre, the Minister for Defence. Officials from the three countries were also present. The UK record of these talks is at PREM 13/899. The UK record is more substantive, especially on the details–weapons systems as well as commitments–of the UK defence review. The thrust of the discussion in both versions is substantially the same.

2 That is, the Cabinet Defence and Oversea Policy Committee.

3 See Document 48.

4 The governments of Tanganyika, Uganda and Kenya called on the assistance of British troops in dealing with military mutinies early in 1964.

5 The UK record of the talks attributes the following to McMahon at the beginning of his comments about Australia's finances: 'He suggested that an approach that rightly irritated Australians (and it was one that he had personally noted in both the United Kingdom and the United States) was the allegation that Australia devoted an unduly small proportion of its GNP to defence.'

6 See Document 6, note 5.

7 Permanent Under-Secretary, UK Ministry of Defence, 1963&Ndash;66.

8 Secretary, New Zealand Department of External Affairs, 1943&Ndash;66.