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AID TO MALAYSIA AND SINGAPORE
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(Previous Reference: OPD(67) 25th Meeting, Item 1)
The Committee considered a note by the Secretaries (OPD(67) 55),
to which was attached a report by the Defence Review Working Party on
aid to Malaysia and Singapore. They also had before them copies of a minute from the Financial Secretary to the Treasury to the Prime Minister
dated 14th July on the same subject.
THE FINANCIAL SECRETARY TO THE TREASURY said that, on behalf of the
Chancellor of the Exchequer, he had discussed with the Commonwealth
Secretary and the Minister of Overseas Development the report of the
Defence Review Working Party on the amounts and governing principles of
aid to be made available to Malaysia and Singapore. The report demon-
strated the extent to which Singapore's economy had been dependent on
the existence of the base there and showed that the economic damage caused
by the withdrawal of our forces would be extensive in Singapore and
important, though not nearly so significant, in Malaysia. There were
three main objectives for our policy: firstly, to ensure the orderly
withdrawal of our forces in accordance with our plans; secondly, in the
interests of political stability in the area to ensure the prospect of a
viable economy in Singapore and to avoid endangering the economy in
Malaysia; and, thirdly, to safeguard our own trading and investment
interests. To achieve these objectives would require substantial aid
over the next ten years of the order proposed by officials. He and his
colleagues had reached this conclusion with some reluctance as aid on the
scale proposed would substantially offset for some years to come the
balance of payments advantages from the defence savings, but the budgetary savings would nevertheless remain very large. The total figures proposed
would not be revealed to the two Governments at this stage and in negotia-
tion we should aim to secure agreement on lower figures. It would also be
an essential part of the operation that there should be matching obliga-
tions of co-operation and sound economic behaviour on the part of Malaysia
and Singapore.
The Commonwealth Secretary, the Minister of Overseas Development
and he himself therefore recommended acceptance of the conclusions and
recommendations of the report by the Defence Review Working Party,
summarised in paragraph 34 of that report. Authority should be given
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