Canberra, 19 January 1976

SECRET

Indonesia and Timor

At a meeting with the Prime Minister today at which Tange, Menadue, Griffith and myself were present, various policy options were discussed in regard to Indonesia and Timor.

2. The Prime Minister is particularly concerned that Indonesia may be in the process of a long drawn-out military failure in Timor. Lee (and also K. C. Lee)¹ strongly suggested to the Prime Minister that Soeharto's position was not secure in Indonesia; that Mrs Soeharto's graft has now reached the point where the other Generals felt they were not getting enough of their share; that the sheer inefficiency and cost of Timor was placing strains on Soeharto's regime and could bring him down.
3. Against this background the Prime Minister wants us to explore ways of persuading the Indonesians to switch from a military to a political operation in Timor. He says that the Minister and Renouf will be testing out this line in Jakarta today and tomorrow.²
4. In addition the Prime Minister has asked Tange to arrange a Defence Committee study of the strategic importance of Timor to Australia; the strategic effects of a long drawn-out and deteriorating situation in Timor in which outside assistance is sought and obtained i.e. supply of arms etc. He also said that he was concerned about Indonesian-American relations and that he was very disturbed to hear that the American Administration had made a secret decision to suspend military aid to Indonesia;³ he foresaw a great increase in Congressional attention to the moralities and events of the Timor situation. Tange's paper is to touch on all of this but we too need to consider our relationship with the Americans in regard to Indonesia and he would like consideration to be given urgently as to whether we should be seeking to involve the Americans more closely in the problem.
5. The general thrust of what the Prime Minister said is contrary to the Secretary's cable⁴ attached. He recognises that line of thought as being valid but now doubts whether it is a viable policy. He seems now to be much more concerned about developing lines of policy which are based on conscience but avoiding too much emphasis on self-determination.
6. As part of the Defence Committee consideration, the Prime Minister wants a JIG/Foreign Affairs assessment of not only the military situation and prospect in Timor but also of the internal position of the Soeharto regime.
7. Where all this leaves us in respect of the Minister's proposed draft Cabinet Submission I am not sure. I suggest you suspend further work on it until the Minister returns and talks to the Prime Minister and we in tum have a chance to discuss the issue again with the Minister.

[NAA: A11443,[14]]

• 1 Lee Kuan Yew, Prime Minister of Singapore, and Lee Khoon Choy, Minister of State, Prime Minister's Office, Singapore. Fraser visited Singapore after attending the funeral of Tun Abdul Razak in Kuala Lumpur.
• 2 After accompanying Fraser to the funeral of Tun Abdul Razak, Peacock visited Jakarta with Renouf on 19 and 20 January.
• 3 In Cablegram JA4355 (22 January) the Embassy in Jakarta reported seeking clarification of this issue when Dan met with Rives, United States Charge d'Affaires, who assured Dan that US military assistance to Indonesia had not been suspended. Rives added, however, that 'he had only just received confidential advice from the State Department that, as a deliberate United States Government policy, delivery to Indonesia of certain items of military hardware would be delayed ... The Pentagon and the State Department were concerned that if these items were used by the Indonesians in the Timor fighting, Congressional action could lead to pressure for the suspension of United States military assistance to Indonesia. In any case, if United States military equipment were used by the Indonesians this would contravene United States law'.
• 4 Document 401.