TNAG-1256-FCO40-1589-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 8

NFIDENTIAL

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particular, the Chinese supported the maintenance of the status quo on the Korean peninsula.

9. There was some discussion on relations with ASEAN. The Japanese produced a notably pessimistic analysis on the Indonesian economy, which they described as heavily dependent on oil and gas exports and thus suspect in the medium term. Indonesia would in the future need far greater external financial assistance than anyone presently thought. The Japanese did not want to say much about the Philippines. They thought the present situation was a result of political rather than economic problems; though the latter existed they were manageable if political stability could be established. They were encouraging Japanese bankers and businessmen not to panic, and believed that although domestic pressure was building up, Marcos could remain in power for some time if he could retain the support of the military. ASEAN as a whole, the Japanese thought it a useful political grouping but less satisfactory as an economic unit; they openly confessed that they negotiated with ASEAN countries on economic matters bilaterally, as the latter had far more leverage as a group.

On

IC. The Japanese spoke at great length about the strategic importance of Burma and the need for the West to give it economic support. They were sceptical about the value of Australia's "dialogue" with Vietnam, which they described as the Soviet Union's "second prize" after Cuba, and one which would never be sacrificed.

INF

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The Japanese thought the Russians would concede nothing on INF until after NATO deployment. They might then suspend negotiations but would probably resume them later. Japan supported a global approach to INF, and thought any agreement should not sacrifice Asian security. They noted a growing realisation among Asian and Pacific countries of the implications of SS20 deployments in Siberia. This reaction should have been stronger and come sooner; perhaps the Australians, too, should have expressed their concern more loudly. The Australians replied that they fully shared Japan's views but had had few opportun- ities to make their views known.

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/The Pacific