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the burden of defence expenditure remains compatible

with our limited economic strength.

4.

Preventing war is only part of the problem posed by

the Soviet Union. At one level the Soviet system is

adventurist and expansionist and immensely powerful: at

another it is suffering from over-extension abroad and

decay at home. This sets up strains which bring out

the obstinate and pugnacious nature of the Russian

character. One of Britain's joint tasks is therefore

to manage the Soviet Empire in its present phase.

Papers covering all these aspects are circulated

separately: they bring out what steps are the most

urgently required

ired]

5. In the Third World there are several areas where

regional conflicts touch British interests and

therefore merit British involvement. One example is

the Middle East

see separate paper

paper?

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6. Another is Southern Africa. The task here is to

contain and push back Soviet and other communist

influence, and to find ways of ensuring that Britain's

strategic and commercial interests in South Africa

itself are not damaged by South African domestic

policies and the adverse reactions to these. We need

to avoid having to choose between South Africa and

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