NAA:Al838, TS677/3 PART 6

Canberra, 26 February 1963

Top Secret

Australia's Strategic Situation

The punch line in the Defence Committee's recent review is that the deterioration which has taken place in our strategic situation since 1958 and possible future trends in South-East Asia point to a clear requirement for a progressive expansion of the defence programme that will increase the level of Australian military capability and preparedness in pursuit of the basic objectives of ensuring the security of Australia and her island territories.

2. Recent events, particularly in regard to West New Guinea, have shown that the mere possession of a capacity to use force, whether or not force is used, can be decisive.

3. The Americans will live up to their obligations under ANZUS and SEATO if we are attacked. But we cannot assume that they will deploy armed forces on every occasion on which in our judgement our interests call for a forceful display. I am referring here to situations short of war, e.g., enforcement of our right to passage through waters to which Indonesia lays claim.

4. We can visualise the possibility of clashes of interest with Indonesia in the future. It would be folly to assume that the United States will automatically side with us merely because we are partners with them in ANZUS and SEATO. The Netherlands was a partner in NATO. Indonesia occupies a very special place in the eyes of the United States.

5. The United States is growing weary of its allies'assumption that it will indefinitely act as 'gendarmes' of the world. Its criticism of Australia's failure to do more will mount. (c.f. Tange's telegram 401 of 11th February from Washington–copy attached). ¹ The United States has nearly 12,000 men in Vietnam. Australia has 30.

6. Our lack of flexibility is demonstrated when we consider that:

(a) For every SEATO plan we declare the same forces.

(b) If any SEATO plan went into effect, we would have no capacity to meet any other serious military challenges of any kind anywhere.

(c) If we were asked to provide forces (as was foreshadowed recently in regard to Kashmir) on some peace-keeping operation, we could not comply except at the risk of impairing our ability to meet SEATO commitments.

(d) In the Defence Committee last week, it was said that the Army would have difficulty in producing an engineering unit of four officers and eighteen men to replace the Sabre squadron if it were withdrawn from Thailand.

(e) At ANZUS last May, when the Americans asked for assistance in Vietnam, Admiral Felt ² asked for two radar equipped patrol ships and paratroopers or engineering units, or a signals unit or units. We provided thirty men.

(f) If the Commonwealth Strategic Reserve ever went into action (i.e. on our part one battalion), a good slice of the Australian defence effort would be required to keep it going.

The Federation of Malaysia and confrontation

The 1963 Federation of Malaysia was a fragile structure created in inauspicious circumstances. Its fragility stemmed largely from the different interests of the states making up its constituent parts. For Lee Kuan Yew, Singapore's Prime Minister, federation was a means to achieve Singapore's independence from Britain, to outflank radicals in his own People's Action Party, and to pursue within a wider federal arena his own brand of multi-racial politics. He wanted a merger on what became known as the Ulster model, with Singapore preserving its own autonomy on such matters as labour and education policy and enjoying equal citizenship rights with the rest of Malaysia. Lee Kuan Yew drove a hard bargain, often resorting to brinkmanship to get his way. Tunku Abdul Rahman was a late convert to federation. As Malaya's Prime Minister, the Tunku had wanted to keep Singapore at arm's length across the causeway. Over time he allowed himself to be convinced that communism throughout the peninsula could best be kept in check if Singapore joined the federation and internal security in Singapore became a federal responsibility. The Tunku was acutely aware of the arithmetic in the ethnic make-up of the federation's population. Fearful of Singapore's overwhelming Chinese majority, he was suspicious of Lee Kuan Yew's multi-racial politics and his political ambitions on the mainland. As a defence against the numerical advantage the Chinese would enjoy in a wider federation, the Tunku insisted on bringing in the Borneo territories–North Borneo (Sabah from 1963) and Sarawak. Ideally he wanted them to join before Singapore. On this he encountered stiff opposition. While British officials in Borneo and the Colonial Office in London argued that the territories were backward and needed more time to prepare for federation, local politicians in the territories feared Malay domination. A Federation of Malaysia was inaugurated on 16 September 1963, and Singapore and the Borneo territories acceded simultaneously. Brunei was a distinct problem. It was a protected state, not a colony, and while Britain could decide the future of the Borneo territories because they were colonies, advice only could be offered to the Sultan of Brunei. Initially the Sultan accepted the Malaysia proposals, but his stance precipitated a revolt in Brunei in December 1962. It was quickly put down. The Sultan stood aside from federation, while retaining British guarantees for his internal and external security.

Regionally, Indonesia especially, and to a lesser the Philippines, had territorial claims against the Borneo territories. Indonesia was determined to mount a stern challenge to the very concept of Malaysia, seeing in the retention of a British base at Singapore and the extension to the federation of the 1957 Anglo-Malayan Defence Agreement a neo-colonial state in the making. President Sukarno's¹ militancy began with support for the Brunei rebels and he challenged the incorporation of Sabah and Sarawak into Malaysia. When the federation was established the British Embassy in Jakarta was sacked and the Malaysian Chancery damaged. Sukarno committed Indonesia to Ganjang Malaysia, a 'Crush Malaysia' campaign.

Britain had pursued the goal of Malaysia as the centrepiece of what was known in Whitehall as a 'Grand Design' for Britain's remaining colonial territories in Southeast Asia. It was intended to enable the UK to scale down military costs in the region while maintaining essential Western interests, at the same time satisfying the United Nations and international opinion that the colonial era was about to close. Confrontation threatened every one of these objectives. It deepened Britain's involvement, lessened the opportunity to begin withdrawing from all but the bare military essentials, and increased financial costs. In 1965, British forces in Borneo numbered about 20,000, of which 16,000 were ground troops.

In the build-up to the establishment of the Federation of Malaysia, Australia made diplomatic efforts to reconcile the contending parties. Australia's aim was to persuade Indonesia to accept Malaysia, and to encourage Malaya to recognise the importance of reconciliation with Indonesia. Australia believed it was a UK responsibility to allay Indonesian and Filipino concerns by demonstrating popular endorsement of the Malaysia proposals in the Borneo territories, and Canberra was not a little concerned that the racial composition of the proposed federation would give rise to a Communist Chinese–dominated state. But while wanting a political solution that would avert military hostilities, in August 1963 Australia made plain its support for Malaysia's territorial integrity by extending its association with the Anglo-Malayan Defence Agreement to the new agreement with Malaysia. Canberra's aim was to delay for as long as possible the deployment of combat troops. Kuala Lumpur received financial aid and military equipment, and Australia stepped up its efforts to find a political solution through the UN and the second Non-Aligned Conference which began in Cairo in October 1964. The first clashes between Australian and Indonesian forces occurred soon after in response to an Indonesian landing at Kula Sungei Kesang in West Malaysia. In January 1965, Australia agreed that a Special Air Service Squadron, and the battalion already stationed in Malaya, would serve on rotation in Borneo. As Australia deepened its military involvement, politically Indonesia seemed to be moving further to the left. Sukarno began speaking of a 'Djakarta&edash;Hanoi&edash;Peking&edash;Pyongyang axis'.

Meanwhile tension between Singapore and Malaysia led in August 1965 to Singapore parting company with the federation and becoming an independent state. Neither Britain nor Australia received advance warning. Australia was especially concerned: Menzies believed the move would give comfort to Indonesia and perhaps encourage Sukarno to still more dangerous courses. In London the split increased doubts about the long-term sustainability of the base at Singapore.

Confrontation did not formally end until August 1966 when the foreign ministers of Malaysia and Indonesia signed an agreement in Bangkok. Before then fears that a left-leaning Indonesia would align itself with Communist China had been averted by events in Indonesia which ultimately brought General Suharto to power and led to the suppression of the Indonesian Communist Party (PKJ). ²

Australia had overcome the challenge posed by the confrontation. In a region vital to its 'forward defence' strategy, Australia had contributed successfully to the defence of the territorial integrity of a Commonwealth partner, while avoiding a rupture in relations with Indonesia. But a new challenge lay ahead. With confrontation ended and Singapore separated from Malaysia, questions were now raised about Britain's willingness and ability to maintain a defence commitment in Southeast Asia. ³

1 See Document I 7.

2 Admiral Harry Felt, Commander in Chief of US forces in the Pacific.

1 Dr Achmed Sukano, President of the Republic of Indonesia, 1949–March 1967; Prime Minister and Armed Forces Supreme Commander, 1958–July 1966.

2 On the night of 30 September– 1 October 1965, a group of dissident army and air force officers attempted a coup against the Indonesian Army leadership. Six senior army generals were killed in the operation. The army under Major-General Suharto quickly put down the movement and assumed control in Jakarta. Although there is no firm evidence that the PKI inspired the coup, they quickly came out in support of it and were perceived to be responsible. There was a violent anti-PKI reaction which led to the massacre of hundreds of thousands of alleged communists and ethnic Chinese. On 14 October, Sukarno appointed Suharto Minister/Commander of the Army and over the next five months the army established itself as the major political force throughout Indonesia. Tensions emerged between Sukarno and the army leadership, especially over Sukarno's refusal to ban the PKI. Suharto replaced Sukarno in March 1966, when student agitation against continued economic deterioration served to break the apparent deadlock in the Indonesian leadership.

3 For official Australian documentation, see Moreen Dee, ed., Australia and the formation of Malaysia 1961–1966 (Documents on Australian Foreign Policy series, Department of Foreign Affairs and Trade, Canberra, 2005). British documents are in two volumes in the British Documents on the End of Empire series, both edited by A.J. Stockwell: Malaya (London, 1995) and Malaysia (London, 2004).