Mo 25/2/77
Present:
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copynos of Copy No 38 of 45
Meeting Held at Tun Razak's Residence on
Wednesday, 26 April, 1967
Mr. D. Healey
Sir Michael Walker
Mr. F. Cooper
Mr. J.0. Moreton
Mr. P.D. Nairne
Tun Razak
Dr. Lim Swee Aun
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Ps / Commonwealth See
Ризова
Tan Sri Muhammad Ghazali bin Shafie
Enche Kadir bin Shamsuddin
Mr Healey said he would like to start by comparing the situation now
with that on his last visit some nine months ago. He complimented the
Malaysians on being right about the ending of "confrontation" and on the
speed and efficiency with which their forces had taken over in Eastern
Malaysia. For his part matters had developed less well. Immediately on his return to the United Kingdom, he had found himself faced with a foreign exchange crisis and the urgent need to find the major contribution to saving £100m. in foreign exchange. Part of this contribution had been found by speeding up the redeployment of our forces that had been put into effect when "confrontation" ended. Some 10,000 British servicemen had returned to the United Kingdom though our forces in the Far East were still considerably in excess of those there before "confrontation" had started. In the past few months much work had been done on the United Kingdom's domestic economy. We had to get our economy right. The foreign exchange position was greatly improved but this had been done at the price of slowing down the domestic economy. The Government had therefore to make large reductions in planned Government expenditure and some of this must be found on defence.
2. Continuing, Mr. Healey said that decisions had not yet been taken ana the purpose of this visit was to consult with the Malaysians before decisions
were taken. This was not only in accordance with the terms of the Defence
Agreement but something that Britain would obviously wish to do in any event. The Foreign Secretary had spoken to the United States, Australia and New Zealand in Washington last week. We would like to put what he had to say in three broad time scales. First, in the next twelve months the United Kingdom proposed to make a further reduction of 10,000 in the Far East area as a whole. This figure included not only British servicomen but also Gurkhas and local employees. Exactly how this would be done was still being worked out and ne could not at this stage indicate in detail how this additional figure would be made up but he could say that so far as he could see the number of people affected in Malaysia would be relatively small. Second, over the next three to four years, up to 1970/71, Britain would like to reduce its Services,
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/again