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CINCFE.1511/6130/18
(3)
UK EYES ONLY
We should offer generous aid particularly in the defence field to compensate for reductions and generous terms to employees becoming redundant,
(4)
Reassure the alaysian Government that our policy in Singapore will not produce an unstable situation in that country.
The coononic considerations were not so important as they were in Singapore. However, the Economic Teen should visit Malaysia to look into the type of sid nooded.
It is likely that defenco nid would be asked for. Looking beyond 1971, wo should assure the Kalaysian Government that we will be able to honour our defence agreement. If this was not possiblo, they should be told so as soon as possible. To delay might have dangerous consoquences. The British High Commissioner in Malaysia stressed the need for being honest with the Malaysions.
Malaysia's was mainly a defonce problem,
g. IR GIVEN, COUSELLOR, POLAD said that Suharto and his colleagues in the Indonesion New Order never thought much of confrontation as a noans of attaining national ends, and as long as they wore in power, and we were in Singapore and Halaysia, they were very unlikely to
Nevertheless they were try their hands at such adventures again. all dedicated Indonesian nationalists, brought up on years of concentrated propaganda about the largely imaginary past glories of their country, and inbued with the same ideas of the national destiny as Sukarno himself. They had said more than once that they rogard it as Indonesia's place to dominate this part of the world, and her natural task to replace us as the dominant militery power in the area as soon as they are strong enough and we are weak enough. In view of the size and resources of Indonesia, this may soon a reasonable outlook, but the country was in such economic chaos that those dreams could only distract its rulers from their immediate, and maybe insuperable, tasks. And if they wore ever realised, the chances are that the result would be to pull the rest of the area dorm into chaos with them. Tho prosent loaders of ialaysia, have a healthy scopticism about Indonesian intentions. If this continued, the Indonesians were likely, sooner or later, and probably sooner, to revert to their traditional methods of diplomacy and nount a subversive campaign against the alaysian Government; even before we left they might be tempted to exert militery pressure. Indonesians feared and distrusted the oversces Chinese who lived among then, because of their greater energy and commercial talent. At present they were going through one of their phases of being tough with the Chinese, squeezing them out of business, which reacts on Singapore's trade, as most of the local business was carried out on a fanily basis, especially in the field of credit. The Chinoso, however, appeared to bo fighting back. Similar problems could arise in Malaysia, where the national language question was available as a rallying cry for both sides in case of nood. If there were communal trouble in Malaysia it is possible that without the British presence the Indonesians might slezo the opportunity of coming in to help their lay brethren. They would then be difficult to get out. If our rundown in Singapore led, because of severe unemployment, to Ir Leo's replacement by sonoone loss anti-communist, both Indonesia and Malaysia would be tempted to try to suppress possible Communism in Singapore by force even the Tunku had mentioned this as a possibility, probably without realisation of the consequences.
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