Economic Aid for Portuguese Timor
Please refer to your memorandum of 23 April.1
- We have discussed the question of Australian aid for Portuguese Timor with the Foreign Ministry (Akosah, Asia and Pacific Directorate), BAKIN (Colonel Abbas) and the CSIS (Tjan), putting the points in your memorandum. Mr Joseph also discussed the question with General Adenan (Asia and Pacific Directorate) and Tjan on 21 May. While there were no actual objections, the prospect of Australian aid to Timor was not viewed enthusiastically.
- On the basis of these discussions we consider Indonesia would not object to the sort of aid you have in mind, provided it is given to the Government in Portugal and not its Administration in Dili. As you know, the Indonesians are anxious that our aid does not lend weight to arguments in favour of independence. We have stressed that Australia had no intention of seeking to influence political developments in Portuguese Timor, but, of course, we could not guarantee that the parties would not make political capital out of our aid.
- Indonesian comments suggest that they would not object to commodity aid. They also responded favourably to the idea of third country training in Indonesia and the possibility that part of any commodity aid could be untied for purchases in Indonesia and other ASEAN countries. Tjan, for instance, raised the possibility of purchasing Indonesian kerosene for Portuguese Timor. Another suggestion was that we might consider providing assistance in areas beneficial to both halves of Portuguese Timor; for instance a PAN/Timor2 malaria control program was mentioned.
- We were surprised that the Indonesians have apparently dropped their initial objections to budgetary assistance (JA7640 refers) and it is difficult to explain why. Part of the answer may lie in the change in Indonesia's tactics in Timor to more cooperative measures rather than the aggressive propaganda and so on prevalent when we first discussed the aid question with them. The change may also indicate that the Indonesians are now more confident that they will achieve their objective of integration, and are thus not as worried about the pro independence arguments. Another reason may be that, following on the talks between Mr Whitlam and President Soeharto in Townsville, the Indonesians are reassured that Australia does not want to interfere in Timorese politics and considers integration the most rational solution to Timor's future. In any case the point is that the Indonesian change of mind on this matter was most probably determined by developments in the Timor situation. Conceivably their attitude could change as dramatically again. We will, therefore, need to keep very closely in touch with them on the question and should be grateful if you would keep us fully informed on the matter.
- The request that our aid be given on a Government-to-Government basis to Lisbon would not, I would think, cause you any problems. One of your arguments for giving aid is that it might help to keep the Portuguese in Timor for a while. This objective would seem to be furthered by stressing that our aid to Timor would be channelled through the Portuguese Government.
- Nevertheless we will have to watch the procedures for giving our aid closely. Governor Pires told Mr Taylor in March that he did not want to approve foreign investment contracts because he could provide no guarantee that the terms would be fulfilled. He wanted some form of local approval (he mentioned a transitional government) as well as his own. Pires indicated that he saw foreign aid similarly (paragraph 20 of our Savingram JA8312 refers). Obviously if the approval of some local body purporting to represent the Timorese, especially a transitional government, were required for our aid the Indonesians could claim that we have acquiesced in procedures which supported the idea that Portuguese Timor was an independent entity.
- I would not want to make too much of this argument at this stage. Taylor did not pursue the question with the Governor who may have since changed his attitude or not reflected an official Portuguese policy. But i[t] is a point we will need to explore with the Portuguese.
- While I accept that the Government is virtually committed domestically to some form of aid program we should recognise that the provision of aid will result in closer Australian involvement in the Timor issue. As you know, I consider that at this stage Australian interests are best served by decreasing our involvement there.
- A copy of this memorandum has been sent to Lisbon.
R. A. WOOLCOTT
[NAA: A I 0463, 801/13/11/1, ix]