CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 61

the view that talks with the United Kingdom on the basis of our proposals

would serve no useful purpose, and the Malta Government would therefore

be making counter proposals regarding the basis on which discussions

should take place. There was, however, some reason to think that

Dr. Olivier's real position was less extreme than this public statement would suggest. We should, nevertheless, recognise the pressures upon him both from the leader of the Malta Opposition (Mr. Mintoff), who was using

the situation in an attempt to unseat Dr. Olivier's government, and from

the Malta General Workers Union. Union support was essential to Dr. Olivier if he was to take part in discussions with the United Kingdom

Government; fortunately the Union seemed to be taking a more moderate

line than Mr. Mintoff.

In discussion the following points were made

we

(a) The basis of our further discussions with Maltese Ministers

remained as agreed by the Committee at its previous discussion:

should offer to assist Malta in finding ways of meeting the economic

consequences of the rundown, such as the industrial commission, develop-

ment corporation, dry dock and free port; and we should insist on

nationalisation of the Malta Dockyard. If agreement were reached on

economic measures of this kind we should also offer some rephasing of the defence rundown within the present planned four-year period, up to a

maximum cost of a little over £3 million. We should in no circumstances

move from this position at the present stage; already there was an

indication that the Maltese believed that our offer of further

discussions was a sign of weakness on our part.

(b) The report by officials could have made more of the large Maltese reserves (equivalent to £250 per head of the population of Malta). We

should urge the Maltese to tap this source of wealth for their economic

development rather than to seek further subventions from the United

Kingdom.

(c) Any threat from Malta to withdraw her sterling balances from the

United Kingdom should be robustly resisted. Their withdrawal would not

seriously affect the strength of sterling and would bring no advantage to

the Maltese, but simply a loss of the interest which they at present

received.

(a) In addition to the costs of withdrawal listed in the report by officials we should have to pay compensation to our troops if they were

withdrawn at such short notice as to suffer financial loss.

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