Canberra, 11 February 1975

SECRET AUSTEO

Thank you for sending me a copy of your letter of 13th January to the Prime Minister about Portuguese Timor.¹ This subject bears very directly on our defence and strategic interests. I think it has serious implications not only for our policy but for the Government's domestic political position in these respects. Rather than commenting directly on the conclusions that you have put to the Prime Minister, may I therefore invite your attention to considerations that are giving me anxiety. I much appreciate your thought that a co-ordinated approach should be developed between our two Departments and to this end I suggest in this letter a line of policy to protect the interests with which I am more directly concerned. I believe developments now require that a clear statement of Australian views again be put to the Indonesian Government.

I do not consider that military-strategic considerations of themselves require us to express a preference whether Portuguese Timor should be independent or be part of the Indonesian state. Moreover, even were there a clear military preference, this would have to be weighed, on the one hand, against our national interest in the preservation of a co-operative relationship with Indonesia and, on the other, against political policy supporting the rights of the Portuguese Timorese to self-determination. Future military potentialities-such as strategic tension in Australian relations with Indonesia, or with some third power-are not such as to override our present policies as described above. While on balance there are possible stronger arguments for Indonesian control of the territory, if this were acceptably and securely achieved, the establishment there of an independent state would also be acceptable to Australia from the military-strategic point of view. In either case what will be important to Australia from the strategic point of view will be that the final settlement not develop into a 'running sore' in our neighbourhood that could complicate our relations with Indonesia and that could attract unwelcome attention from other powers.

What is of central concern to the defence interests, and I believe to our political interests as a Government, is, therefore, the manner in which Portuguese Timor moves either to independence or to Indonesian control. I attach for your information the latest JIO assessment of Indonesian attitudes. There are indications of significant development since you wrote to the Prime Minister. I am deeply disturbed by the present indications that the Indonesian Government is considering military action to seize Portuguese Timor, that influential elements in Jakarta favour this course and that, while a decision has not yet been reached, there are military preparations that would allow action at short notice.²

May I put to you some of the consequences as I see them for our Government position and policies if the Indonesians take immoderate action.

We could expect unfavourable reaction from a wide and influential range of Australian opinion, which would much limit our ability to maintain our present relationship with Indonesia. This reaction would come from those who are already, on various political grounds, critical of the present Indonesian regime; it would also come from those who saw, or presented, Indonesia's action as containing military threat to Australia. Years of effort to induce a sober and responsible approach for the development of a constructive relationship with Indonesia could be undone. There would be those very ready to declare that the strategic assessment and defence policy that we have put to the nation, of relative stability in our immediate strategic environment and a relative reduction in the resources allocated to our Defence effort, were discredited. There would be demands for a different posture to Indonesia and for an increase in our defence effort and defence expenditures.

A particular area of policy that would come under attack from all the critics would be our Indonesian program of defence aid and co-operation. This, as you know, is the only tangible activity supporting our relationship with Indonesia in the defence and strategic field: if we reduced it, the overall relationship would be damaged and reduced. We have important projects now in mid-course in Indonesia, and only two months ago I was in Jakarta discussing our next program, to which we are publicly committed, with General Panggabean.

Developments in Australia in the foregoing respects would produce reactions in Indonesia. I cannot share the view reported last year from Indonesia that, like India's seizure of Goa, Indonesian seizure of Portuguese Timor 'would attract little attention, even if it did, it would not be recalled with any emotion'. I fear that our relationship with Indonesia would be difficult to restore, the more so if we were forced by domestic opinion to make adjustments to our defence attitudes and defence co-operation program-and the latter would be particularly hard to sustain. In this situation, the difficulties and frictions that are bound to arise with Indonesia from time to time, as for example currently in respect of Indonesian fishermen in our north-western waters, and that are manageable within our present friendly relationship could become more difficult to manage, with further unfavourable effect on the relationship.

A further aspect concerns Papua New Guinea. At present there seems little awareness there of Portuguese Timor; but we cannot be confident that this would continue were Indonesia to take immoderate action in Timor. I would expect people in Papua New Guinea to think about the implications for their own relations with Indonesia and in this respect to look again at their defence relationship with Australia. This could well be at the very time that we are finalising a defence relationship with PNG that, at the wish of both parties, will now contain no Australian commitment to the security of PNG after independence. Such a commitment would, of course, have direct implications for the structure of the Defence Force and for the size of our defence expenditure.

These are some of the immediate matters that appear to me to arise directly from any Indonesian policy towards Portuguese Timor involving military action. As I say, they impact forcibly on the defence interest, both domestically and internationally. I do not believe that we could easily contain reactions such as I have indicated and that they would blow over after a time.

There is, moreover, a more fundamental consideration, affecting our perception of our strategic circumstances and our status as a regional power. Since our intervention on behalf of the Indonesians against the Dutch effort to regain control of the former Netherlands East Indies by military force,³ Australia has asserted an interest and status in the affairs of the neighbouring region. The abiding strategic importance for us of the archipelago to the north, extending from Aceh in Sumatra to the islands of the South West Pacific, requires this. We cannot be, or be perceived to be, indifferent to developments affecting the nature and distribution of political power there and, in my view, we cannot accept that any other nation has the right unilaterally to change things by military force.

This, however, is a prospect with which we are now faced in respect of Indonesia and Portuguese Timor. This territory lies only some 300 miles from our coast, and half that from our potential maritime resources zone, and commands important lines of our sea communications. However, it is not the strategic significance of these facts that I am arguing but the significance of unilateral action there by Indonesia for our future relations with Indonesia, and for the maintenance of our interests in the security of Papua New Guinea and the easterly territories of our northern archipelago from military pressure, attack or occupation by an external power. If Indonesia moved militarily against Portuguese Timor despite Australian representations against this, we would have to assess very closely whether we had to deal with a neighbouring state in which dominant elements were disposed to deal with neighbourhood problems by use of military force. The implications of such an assessment for our strategic outlook and for our defence posture and expenditures are obvious. In addition, we have to consider our credibility in the neighbourhood and the region at large as a power concerned with stability and security and able and ready to exercise worthwhile influence in these respects.

I do not believe that we have yet reached this point. But I am concerned that we could be moved towards it, and for no good reason. When all our assessment and policy point to a co-operative relationship with Indonesia, to a loose, uncommitted defence relationship with Papua New Guinea, and to the maintenance of the present modest rate of defence expenditure, we are in danger of finding ourselves in a deteriorating relationship with Indonesia, and under pressure to accept greater responsibility for PNG and a heightened rate of defence development and expenditure.

There appear to me two primary reasons for this. First, as I understand the Indonesian position, their consideration of military action is based on quite unrealistic assessments of the dangers to their interests from political developments in Portuguese Timor. As I understand it, the Indonesians are concerned with dangers of communist subversion, of stimulus to separatism in their eastern territories and of intervention and eventual lodgement in Timor by an unfriendly external power. Such prospects would be of direct concern to Australia also. However, as I see the situation, while all of these factors may be present or inherent in the situation, their strength and potential are far from justifying the Indonesians' present anxieties. Indeed, it seems to me that the principal factors stimulating the developments feared by Indonesia are the attitude and behaviour of Indonesia itself.

This must be of concern to us; for by opposing independence the Indonesians are attracting the opposition of the dominant forces in the developing political life of Portuguese Timor, possibly in Portugal itself, and there is the clear risk that the more extreme the position Indonesia takes the more extreme will be its opposition. This does indeed open up a prospect of instability in the territory, even after an Indonesian seizure, sufficient at any rate to interest Australian public opinion. It promises friction and instability between Indonesia and any independent state that may emerge. It adds to the risk of external attention and possibly involvement in some degree or other. These are not prospects we can accept with equanimity.

A second reason for the difficult situation in which we now find ourselves seems to be a misunderstanding by the Indonesians of Australia's position. Unless their present military preparations are being undertaken in conscious disregard of our representations, they seem to have heard only so much of what we have said to them as they wanted to hear, namely our acceptance of their interest in the future of Portuguese Timor and of its eventual absorption into the Indonesian state. The Indonesians do not appear to have a clear understanding of our opposition to the use of military force and the dangers of this for our relationship, or of our emphasis on the importance of an act of free choice by the people of Portuguese Timor.

If you agree with these comments, I suggest that, in the light of the latest intelligence, it is a matter of some urgency that we ensure that the Indonesians clearly understand our views in the two foregoing respects. I suggest further that, as well as trying to moderate the anxieties that now seem to motivate them, we might try to broaden the perspective of their thinking and promote a change of direction in their policy. To this end, while leaving them in no doubt that we could accept an eventual transfer of Portuguese Timor to Indonesia, we should emphasise again our view that our common interests require that this be by a process acceptable to the Timorese themselves. To this end we could suggest to them that it could be more rewarding for them to try to build relations with the political forces in Timor that are now attracting local support.

As part of our approach I suggest that we also might try to moderate Indonesian fears of an independent state in Timor. While my own view is that, could it be acceptably and securely achieved, the territory's ultimate absorption into Indonesia would appear the preferred outcome from our own point of view, I am not unduly disturbed by the prospect of a genuinely independent Timorese state. It would be poor and weak, but no more so than some of our South Pacific neighbours, and possibly with better prospects. If, as we might urge them to attempt, the Indonesians had managed to build friendly and influential relations with the Timorese during the years leading to determination of the issue, and had been at pains to avoid stimulating the developments they fear, there would seem to be a good enough prospect of reasonable stability in the territory and its relations with Indonesia. We could say that we should be ready to provide political and economic support to our important common interests with Indonesia in this situation.

The handling of these matters is, of course, very much your concern. I put them forward for your consideration, and for the discussion you invite between our two Departments, because of the fundamental significance of the Portuguese Timorese question for our strategic and defence interests that I have indicated earlier in this letter, and because I believe it most important that we make an early approach to the Indonesians. We must, I consider, make a determined effort to deflect them from any immoderate action; we must also ensure that they clearly understand the unfavourable response such action would arouse here and the pressures to which our Government policies for co-operation with them would be exposed. We cannot afford to have them take action and then be surprised and angered by our response.

As to our response should the Indonesians nevertheless move against Portuguese Timor, I might say finally that I do not envisage any immediate and drastic steps, such as physical opposition or sanctions or an international political campaign to restrain Indonesia. However, as I have mentioned, I am not sanguine that I could hold to our defence co-operation program and for the longer term, far from treating a strong Indonesian intervention in Timor as a passing incident, I would require that our assessments of Indonesia and the defence policies dependent on them be closely reviewed. There would also be the question of the Government's political handling of the likely public reactions that I have indicated.

I am passing a copy of this letter also to our colleague the Prime Minister.

[NAA: A10463, 801113/11/1, vii]

• 1 Document 71.
• 2 The assessment, dated 11 February, referred to Embassy reports that the Indonesians were increasingly leaning towards direct intervention.
• 3 See Documents on Australian Foreign Policy 1937-1949, Volumes XI, XIII and XV, Australia and Indonesia's Independence, for an extensive selection of documents on this issue.