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4. Brunei is a State where the régime is the Royal Family. This follows the pattern of centuries. The régime see party political activity as an alien concept. Yet the atmosphere is relaxed. Those charged to run things, proceed with remarkably few instructions. There is assumption that the integrity of the State, its order and prosperity, will be pursued. Visitors appear impressed that such apparently simple machinery of government can work. The population is only about 200,000. Valued tradition remains the buttress, and despite cars, television and so on, Joseph Conrad would recognise much of the setting. Vast oil wealth is the lubricant. The State welfare service is comprehensive. Proportionately, there are now more doctors than in Britain. Domestic inflation continues controlled by Government subsidy. For the consumer, essentials such as rice, petrol, sugar and so on, stand at 1971 prices. It would deny human nature—and suggest personal amnesia-if I said there were no discontent at all. Even so, there seems at present little significant internal threat. The local impact of the banned Partai Ra’ayat Brunei (People's Party), with headquarters in Kuala Lumpur, remains limited. But sudden change in the State's relationship with Britain, plus adverse external action, could introduce a new element.
5. Much would then depend on the Royal Brunei Malay Regiment. This is now an effective three-Service force of about 2,500 men. Effectiveness still depends however upon the British Loan Service element. The Department of Security and Intelligence is similarly effective. Brunei need not topple at the first adverse puff. The hazard is that anyone seeking the prize could think it would.
6. The State's published financial reserves are already very comfortably over £1,000 million. Indeed, present recurrent Brunei expenditure is now almost covered by the interest! The State's prospective wealth over the next four years' is of the order of £3-4,000 million. The fortune is largely managed by the Crown Agents, under an Investment Advisory Board including prominent City figures. Isa is Chairman, but the guiding hand is that of Mr. Jack Lee, the State Financial Officer. Since the death in July of Mr. Talog-Davies, the Attorney-General, Lee is the last expatriate among the six-man "Council of Ministers this level, there remain some British departmental heads, and numerous technical experts. These are like the Greek slaves in Rome-relied upon and well rewarded --but servants, not masters. As for the total British community, this numbers about 2,500.
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7. Brunei Shell produce the wealth, and are much trusted. Their oil production is close to a quarter of a million barrels a day. Brunei Liquid Natural Gas, also under the Shell banner, remains the biggest LNG operation in the world and annually contributes a further 6 million tons of exceptionally clean fuel for the Japanese market. Shell, who have profited considerably from Brunei stability, have increasingly moved into "participation" with the State. And Shell's Chairman has told me how much Shell hope that the change we aim for should not throw up local or regional disharmony.
External
8. The Brunei external dimension is where the shadow falls. Each year there is a UN prod. There has also been Malaysian pressure perhaps less than wholly disinterested. But the present Malaysian Prime Minister, Hussein Onn, has disassociated himself from the threat to Brunei set up in his predecessor's time. Indeed, during 1977, Hussein Onn and Sir Omar exchanged courtesies in London. Even so, Sir Omar, who respects Hussein Onn both personally, and
CONFIDENTIAL
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