Canberra, 29 May 1963

Secret

Malaysia: Defence Aspects

Mr. Larmour called today to discuss Malaysia. He left telegrams with me describing the results of the recent talks between Razak and the British Government on Malaysia defence finance. He also left a telegram from the United Kingdom High Commissioner in Kuala Lumpur reporting that after his return Razak had a difficult time in the Malayan Cabinet. The Cabinet had concluded that the promises of financial support from Britain were insufficient and that the reduction in development to pay for extra defence costs would be politically unacceptable.

2. He said that Eastman had no doubt reported that the Malayans intended to approach Australia and he asked whether this approach had yet been made. He asked this question twice. He said that from his conversations with people in Canberra he had the impression that Australia would be willing to make a contribution to Malaysian defence costs. I did not demur from this conclusion, but said that while we had reports that there would be approaches to us no views had yet been formulated on the sort of response we should make. (We are currently supplying a Malayan order for �600,000 of rifles.)

3. I said that I had been giving some thought to the Americans being coaxed to make some economic contribution to Malaysia. It seemed to me that the absence of any American financial aid could be misinterpreted and that some economic aid from the United States would be a useful token of American political support. Did he know what London thought? Larmour then read to me an extract from minutes of a meeting between Sandys and Razak in which Sandys had said that Britain would be prepared to help Malaya in making approaches to friendly Governments, namely Australia, Canada and the United States.

4. Mr. Larmour then raised the question of our thinking on future association with the British–Malaysian defence agreement. I took the opportunity to explain to him something of the political complexity of the issues from our point of view. While our moral and strategic interests in Malaya were considerable and fully recognized, we had to be ever mindful of Indonesia in our diplomacy. The British Defence Agreement with Malaya had a historical significance which went back to the establishment of an independent Malaya. It was a natural association (whether the Indonesians liked it or not) and had not been drafted with particular regard to conflicts within the South East Asia region. The Indonesians understood that conflict between Indonesia and Malaysia would have serious military implications for Australia and that was really the main thing. For Australia, in the midst of crisis in Indonesia–Malayan relations, to take an open and public decision to become full parties to the British-Malayan Treaty could adversely affect our relations with Indonesia and for little real purpose. We felt that it would be more difficult for Indonesian leaders to enter into useful and constructive relationships with us if we presented arguments and propaganda to some elements in Indonesia to the effect that we were openly joining in the western encirclement of Indonesia. Such considerations, of course, were essentially matters of judgment and were affected by changing circumstances. The subject had not been thrashed out in detail and our disposition was to take no firm decisions for the time being.

[NAA: A1838, 3027/2/1 part 11]

1 Gordon Jockel, Assistant Secretary, South East Asia Branch, DBA.

2 Edward Larmour, Counsellor, British High Commission, Canberra.