CONFIDENTIAL
NEW ZEALAND
3. Mr Guest said that Mr Bolger would head a caretaker government until final election results were known. First results indicated a hung Parliament. In any case the reform
process was likely to slow or stop. Since the smaller parties were as radical as Labour on nuclear issues there was unlikely to be any early improvement in bilateral relations. We should plan a naval visit to NZ in the next 6 months. hoped that the Prime Minister would take advantage of the next CHOGM in New Zealand to visit Australia too.
SOUTH PACIFIC
4.
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Mr Masefield said that the announcement of our likely withdrawal from the South Pacific Commission had been carefully prepared and generally well accepted by other SPC members. Some members had feared that they would have to pick up the tab for the UK but it now seemed likely that Japan would do this (despite fears about their record on logging and fisheries). The smaller states had foreseen UK withdrawal for some time but appreciated our continuing commitment to the region. To ensure an orderly run-down, our aid for the next 3 years should ideally remain at current levels (but this would need to be looked at in light of the PES settlement). The Foreign Secretary had been most forthcoming on this issue during his recent meeting with Mr Billy Hilly.
MALAYSIA
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5. Mr Hewitt said that, following the Prime Minister's visit, Dr Mahathir's mood had fluctuated: he had not been helpful at CHOGM. A deal on air services/defence sales was proving elusive. It was doubtful that the current package could secure enough compensation to meet BA's demands. the imminent Malaysian OPV contract went elsewhere than the UK (and 33 companies were bidding) it would be very difficult to bring off a deal. Whitehall officials were meeting again on 11 November to discuss the issue: it might then be helpful for the Minister to speak direct to Lord Caithness. Mr Goodlad asked whether Bosnia was affecting UK/Malaysian trade? Mr Hewitt said that there was no evidence of a boycott of British goods. But Malaysian companies had detected Mahathir's criticism of the UK and were perhaps going slow. Once Malaysian troops had been fully deployed to Bosnia, there might be greater realism. Mr Hewitt thought that the Agong's State visit would not cut any ice with Mahathir; but it would serve to show that our relations were not solely about trade. Anwar was likely to succeed Matathir in 1995/96. The Minister asked whether we anticipated an unhelpful PAC report on the Pergau dam which would stir up
CONFIDENTIAL