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NEGOTIATIONS ON ECONOMIC AID FOR SINGAPORE AND MALAYSIA
(Previous Reference: OPD(67) 38th Meeting, Item 3)
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THE MINISTER OF OVERSEAS DEVELOPMENT recalled that at their meeting on 29th November (OPD(67) 38th Meeting, Item 3) the Committee had considered proposals in his memorandum (OPD(67) 88) on the second stage of
negotiations on economic aid for Singapore and Malaysia; the main
points in these proposals had been that we should be prepared to provide
aid of £30 million for Singapore and £25 million for Malaysia up to
1970-71, offering £5 million less than this in each case but being
prepared to increase the initial offers by this amount if necessary. In addition other forms of assistance had been proposed (including the promise of inducements to British firms) and provisional authority to
commit up to £12 million for Singapore and £5 million for Malaysia had
been requested. The Committee had invited him, in consultation with
the Chancellor of the Exchequer, the Defence Secretary and the
Commonwealth Secretary, to consider the problem of the timing of our
decision on aid in relation to the communication to Singapore and
Malaysia of our plan for the reduction of our forces up to 1971, and
had agreed to resume their discussion of the question before the end of
the year.
If as a result of the current review of public expenditure
there were to be a change in the timetable for our withdrawal from
Singapore and Malaysia, the proposals he had put forward in relation to
the period up to 1971 would need reconsideration. If our rundown were
to be accelerated our offer of aid would need to be larger; although
the result would be a greater net saving. An accelerated rundown night
well require changes in the types of aid to be offered, since it would
be more difficult to identify development projects which could
contribute to the local economies during the period of the rundown;
our aid would be more of a relief measure than a contribution to economic
development. The two Governments were entitled to know where they stood
on our offer of significant aid and they could be expected to be hostile
towards any suggestions for an accelerated withdrawal if we did not make
definite aid commitments of the size that he had proposed up to 1970-71.
THE DEFENCE SECRETARY said that, if substantial fresh cuts in the
defence budget were decided upon, a faster rundown of our forces
outside Europe would be necessary. This would require the formal
termination of defence obligations under existing agreements. The
termination of our defence agreement with Malaysia, which was of indefinite
duration, was a pre-condition of any reduction in our military capability
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