CANBERRA, 13 November 1949

SECRET

AUSTRALIA AND SOUTH-EAST ASIA

The important changes that are taking place throughout Asia are
bound to have fundamental consequences for Australia, and call for
a thorough re-examination of Australia's relationships with Asia
and with the rest of the world. In particular, the existing
pattern of Australia's international, political and economic
relations, and even domestic policies, will inevitably have to be
reviewed in the context of future security.

In September 1948 an appreciation [2] was prepared in the
Department of External Affairs on Australia's position in relation
to current developments in China and South-East Asia.

This appreciation was based upon the principle that should armed
conflict or large scale disorder occur in any part of the South-
East Asia area, Australian national security would be directly
threatened, and that it was Australia's first and over-riding
responsibility to take measures to guard against this. Australia's
predominant political interest and defence preoccupation must
therefore be in the South-East Asia area.

The appreciation examined conditions in the countries of South-
East Asia and the position of China and India in relation to them,
with particular attention to the potential threat to their
internal security arising from the existence of large Chinese
minority populations. It then outlined certain practical policies
which might be followed by the Australian Government with the
object of fostering friendly relations with the Governments and
peoples of South-East Asia and of promoting political and economic
stability in the area. In other words, the changed circumstances
in which Australia now finds itself, particularly in the field of
security, have faced us with a situation in which deliberate
policy of re-orientation must be attempted towards South-East
Asia. In this way, it was suggested, foreign policy considerations
would have a major share in determining the commercial, defence
and other policies which should be pursued.

The appreciation was forwarded in October 1948 by the Prime
Minister, as Acting Minister for External Affairs, to the Minister
for Defence so that this active political programme might be
considered in a defence context.

In April 1949 the Minister for Defence indicated [3] that it was
his considered opinion as well as the opinion of the Defence
Committee that, to meet Australia's strategic requirements, it was
necessary that appropriate political and economic measures should
be taken to arrest the spread of, and ultimately eliminate,
Communism throughout South-East Asian countries. He also agreed
that every endeavour should be made by Australia and the western
powers to assist South-East Asian Governments to defeat this
threat and stressed the importance of India in this connection.

The Minister for Defence at the same time expressed the view that
any future major war would be global in character with the chief
conflicts taking place in Europe, the Middle East and the Far East
and that the fate of South-East Asia in such a war would be
decided by the result of those conflicts.

There was thus a considerable area of agreement in principle
between the two Departments most concerned on the importance of
Australia's developing a programme of political and economic
action in South-East Asia. In the view of this Department, the
urgency and importance of this is paramount; Australia cannot
afford to allow a political and military vacuum to be created in
South-East Asia pending the decision of a major conflict in other
theatres.

The important things to be faced are that Asia at its present
stage of transition is disorganised and potentially explosive and
that Australia is no longer in a position to assume that its
future security and progress are assured within the framework of
the British Commonwealth alone. It is outside the purpose of this
paper to discuss where any threat to Australia may be most likely
to come from, but it can be assumed that China represents a
decided danger point. China is unlikely to offer any direct threat
in the immediate future, but the large Chinese minorities
throughout South-East Asia provide a ready means for spreading
Communism and generally fermenting disorder.

Irrespective of the point from which a threat may come, our
principal aim should be to make of South-East Asia, an area of
weak states incapable in itself of threatening us, a buffer region
between us and the Asian mainland.

This will call for the formulation and application of a deliberate
policy of strengthening the countries of South-East Asia by every
means in our power. Our resources are limited and are likely to be
so for a long time to come. As a result we must restrict our
positive action in the area generally to the diplomatic and
general economic field, with perhaps some emphasis on collecting
accurate intelligence and assisting military planning. In
Indonesia on the other hand, our nearest neighbour and the most
populous of the countries of the region, we can make a
considerable effort to take advantage of the present highly
favourable position we occupy there for a forward programme of
political, commercial, economic, financial, and military
collaboration, with the ultimate object of bringing Indonesia into
the closest possible association with Australia. Some of the same
considerations apply to Portuguese Timor.

A policy of this kind, involving a substantial re-orientation of
Australian thought and practice, would demand some widening and
strengthening of Australian representation in the area. For
example, the existing consular posts at Batavia, Bangkok and
Manila should be raised to diplomatic missions, and consideration
given to the establishment when circumstances permit of similar
missions at Rangoon and Saigon. At the same time it is for
consideration whether subordinate consular posts should not be
established at key provincial centres, particularly in Indonesia,
for example Surabaya, Khota Tinngi and Macassar. This would
provide an opportunity for selected officers of the Services to be
attached to suitable posts in South-East Asia, with a view to
familiarising themselves with conditions there, undertaking study
of the local languages, and perhaps acting as sources of military
intelligence.

A comprehensive Australian policy to further Australian interests
in the light of this analysis might be formulated under the
following broad headings:

(i) Encouragement of international assistance to the area
particularly in consultation with the United States and United
Kingdom.

(ii) A planned Australian financial, commercial and industrial
policy to help meet the reconstruction and developmental needs of
the area and to remove any present causes of friction in
commercial policy, etc.

(iii) A contribution by Australia to fill transport needs: civil
aviation and shipping.

(iv) An expanded programme to furnish technical, administrative
and educational experts in all fields where they can be spared.

(v) The provision of facilities for training in Australia at all
levels, both under free Government fellowships and private
arrangements.

(vi) Collaboration between the administrations of Australia's
external territories and the administrations of contiguous
regions.

(vii) Development of Australian information services to the area
through information officers, radio, libraries, etc.

(viii) The encouragement of visits to Australia by members of
South-East Asian Governments or business communities to obtain
advice and material and goods, and ensuring that they are
adequately received and their requirements catered for.

(ix) Assistance in training Service personnel, especially by their
intake into Australian Service Colleges and training
establishments.

An elaboration of these points is contained in a separate paper
[4] which might be the basis for interdepartmental discussion.