CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 328

CONFIDENTIAL

Page 328

On the other hand it was argued that the proposals before the

Committee were strictly related to our interests and in particular to enabling us to withdrar our forces from the area in an orderly fashion. If we were to do this it was important that the present Government in Singapore should continue in power sinoe we might otherwise be faced with

disorders there and with the consequent need to reinforce our troops which

would be expensive. We were committed to announcing our plans for the

rundown of our forces up to 1971 straightaway and we must be able shortly

thereafter to inform the two Governments of our aid proposals for the

same period. These must, moreover, be such as to enable negotiations

to continue on a basis of mutual confidence and the amounts of aid that

were proposed represented the best estimate that could be made of the minimum necessary for this purpose. They would leave us not merely with a

large saving on the Defence Budget as a result of our rundown but would

also improve the balance of payments situation in the longer term. If we were to offer smaller amounts of aid than were proposed in OPD(67) 88

we should risk that, as in the case of Malta, the atmosphere in which

negotiations would take place would be hostile and would be even more

expensive in the long run.

The Committee then discussed the Singapore dockyard; although there

would be no redundancies there until 1971, it would be important that

the yard should, if possible, have been taken over by then and placed on a

commercial basis. For this purpose capital expenditure of perhaps

£14 million would probably be necessary on a new graving dock and we might have to consider contributing £10 million towards the cost of this;

an examination of the commercial prospects for this project was due to be

completed by February next year together with an appraisal by the

British shipbuilding firm, Swan Hunter.

THE PRIME MINISTER, summing up the discussion, said that it would be premature for the Committee to reach decisions on the proposals in OPD(67) 88

so soon after the devaluation of sterling, but it would be necessary to do

so before the end of the year in the light of the latest situation,

particularly as regards the attitude of Malaysia following devaluation.

Although there were dangers in attempting to discriminate too sharply

between Singapore and Malaysia in the terms on which aid was granted to

them, we should take account in this context of the very strong economic

position of Malaysia. In the meantime urgent consideration should be given to the problem of the timing of our decisions on aid to Singapore

and Malaysia in relation to the communication to them of the Medium Term

Plan for the rundown of our forces.

Page 328

-7-

CONFIDENTIAL

Page 328

CONFIDENTIAL