SECRET
SEAD
+KK 04015
23 A3
LUNCH WITH SINGAPORE FOREIGN MINISTER
1.
Entir
Mr. Maries Mor Jouis
153)
Foreign Minister Dhanabalan gave a working lunch for Lord Belstead in Singapore on 18 April. The principal point of interest was a con- tinuation of their earlier talk about Brunei, which I have recorded separately. Three other points should be recorded.
Hong Kong
2.
lines with which we are
Mr Dhanabalan spoke at some length on already familiar from Lee Kuan Yew's conversation with the Governor of Hong Kong (Hong Kong telno 415). His main comment was that we should take a practical, pragmatic approach. It was of course inevitable that sovereignty over Hong Kong would have to be conceded. Against that, some administrative arrangements would have to be worked out whereby Hong Kong cound continue to thrive economically. The key problem for all concerned was to maintain the confidence of investors in and outside Hong Kong. There would be bound to be a drop in confi- dence, including an exodus of people and money, as soon as any arrangements involving a concession of sovereignty became known. Therefore, the sooner that HMG made this concession the better. this were to take place only in 1997, following a period of growing uncertainty, the whole basis of Hong Kong's prosperity might well have evaporated. If, however, it were done very soon, there would be plenty of time, following this dip in confidence, for the new arrange- ments to be seen to work, and for confidence in Hong Kong, on the new basis, to be established. Mr Donald and Lord Belstead spoke in familiar terms about the difficulties facing HMG, without going into any details or confidence.
Indonesia
3.
If
Mr Dhanabalan understood from the Indonesians that, following Mr Haydens recent visit, the Australians were not sticking to the Labour Party Manifesto commitment on a change in their relationship with Indonesia. The Indonesians had spoken bluntly to Hayden explaining that if they wished to pursue a normal relationship they would have to stop any interference in East Timor first. It had now been agreed that there would be some advance on family reunification between Australia and East Timor but that any further Australian political involvement would cease. Mr Dhanabalan expressed some doubts about prospects for the Indonesian economy, which should in principle dominate ASEAN. Indonesia was over-dependent on oil, and the recent fall in oil prices had hurt. They were over-exposed, and faced a major debt problem. The counter-purchase policy had been a policy of panic, and it would not be possible to continue this in the long term, because it simply made no sense. In tourism also, Indonesia had potential which had already started to develop (e.g. far more than anywhere in Africa). But this too had not taken off as it should. The Singapore economy depended to a very considerable extent on
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/Indonesia: