CANBERRA, [14 November 1949] [1]

SUMMARY RECORD OF DISCUSSIONS BETWEEN REPRESENTATIVES OF THE
DEPARTMENT OF EXTERNAL AFFAIRS, COMMERCE AND AGRICULTURE AND
DEFENCE, AND AUSTRALIAN REPRESENTATIVES IN SOUTH EAST ASIA, 14TH
NOVEMBER 1949

Following meetings between representatives of the Governments of
United
Kingdom, Australia and New Zealand to discuss Japan, China and
South East Asia, a meeting took place on Monday, 14th November,
between representatives of the Department of External Affairs
(including Australian representatives in South East Asia) and the
Departments of Defence, and Commerce and Agriculture, to consider
future Australian policy towards South East Asia, and in
particular to discuss means by which Australia might extend
assistance to countries in the region.

Present at the meeting were-
Dr. J.W. Burton )
Dr. W.A. Wynes )
Sir Frederic Eggleston ) Department of External Affairs.

L.R. McIntyre )
A.H. Tange )
C.T. Moodie )
E.E. Ward )
Brigadier H. Rourke Department of Defence.

W.R. Carney Department of Commerce and Agriculture.

F.K. Officer Australian Ambassador to China.

P. Shaw Head of Australian Mission in Japan.

J.K. Waller Australian Consul General, Manila.

C. Eaton Australian Consul General, Batavia.

F.H. Stuart Political Secretary to the Australian Commissioner,
Singapore.

A.J. Eastman Australian Consul General, Bangkok.

Sir Frederic Eggleston questioned whether the Australian
Government is sufficiently well informed of the facts of the
situation in South East Asia to be able to pursue a consistent and
progressive policy in the area. He instanced the Australian
immigration policy as something in which the Government's actions
had been technically and legally correct, but carried to
unnecessary lengths. [2] In addition, owing to the Australian
press, the Government's policy had been misrepresented in Asian
countries. The net result was the creation of a situation vis-a-
vis Asian countries which could not be ignored. In New Guinea the
Government had espoused a policy which was difficult to carry out
[3]; in addition Australian representatives had not made the best
of their case in debates on trusteeship in the United Nations. The
Australian people, including the press and business and commercial
quarters were not educated to a South East Asia policy.

Furthermore, we have not determined to the extent to which we are
going to commit ourselves militarily. What are we prepared to do,
for example, about Hong Kong and Malaya, particularly in the event
that the United Kingdom may not be capable of defending Malaya?
Brigadier Rourke said that from the defence point of view anything
done to prevent the spread of Communism in South East Asia is in
Australia's interests. He emphasised that the Defence Departments
are concerned essentially with the position that is likely to
exist at the outbreak of a conflict. South East Asia at the
present time is an economic and political problem. It is clear
that the United Kingdom cannot do anything much in the military
field in South East Asia, which may ultimately become an
Australian commitment. But the Defence Department does not want to
become involved in military commitments in South East Asia until
it is satisfied that the major battle is won and it believes, on
its present information, that the major battle will take place
elsewhere. The long-range problem in South East Asia is thus an
External Affairs problem, and it is separate from the military
problem. Thus the smaller the military commitment in South East
Asia the better. If the situation in Burma and Indo-China were to
deteriorate the Defence Department might have to revise its views.

But on present reckoning the defence view is that the main battle
will be won or lost in Europe and the Middle East where a crisis
could arise very quickly. A crisis will take longer to develop in
South East Asia, where we would hope to command sea and air
superiority (which we did not have against Japan).

Mr. Carney described the South East Asian market as Australia's
natural market. He pointed out however that the Government cannot
do much to influence the flow of trade to particular markets,
except through Government-to-Government contracts. The Government
can only facilitate trade activity. Wartime Government controls
over trade have tapered off, but the Department of Commerce and
Agriculture has not yet returned in full to the promotion of trade
through the Trade Commissioner service. In addition, there is a
need for education of Australia's commercial and business
interests on the importance of markets in South East Asia. A
really substantial increase of trade with South East Asia can come
only from increased production and output in Australia. There can
be no substantial diversion of trade from established markets
elsewhere. As things are going, however, Australian secondary
industries must find new external markets within the next year or
so if they are to continue to produce economically. The Department
of Commerce and Agriculture prefers trade to be conducted through
private channels rather than by Government purchasers. This need
not, however, rule out the possibility of future Government-to-
Government contracts with, say, the Government of Indonesia. The
Department of Commerce and Agriculture would not, however, be well
equipped to handle such contracts, which could be better handled
by the Department of Supply.

Mr. Officer drew attention to the danger of over-simplification;

to the tendency, for example, to regard China as the future enemy
and plan on that basis. China is not an enemy in the military
sense. It will be the centre of subversive movement; but as such
it will not be a military problem. There was also a danger of too
much emphasis on a long-range programme. The range is short; Indo-
China, for instance, represents an immediate problem. The nature
of these short-term problems emphasised the importance of knowing
and being able to maintain contact with
leading personalities in the various countries concerned. In this
connection a knowledge of languages was important, since many of
the new leaders in Asia were unable to speak English. He observed
in passing that in his opinion many of the activities of the
United Nations at the present time were conceived too much on
long-term at the expense of short-term considerations.

Brigadier Rourke emphasised again that in the Defence view the
security of Australia was safeguarded at the present time by the
fact that, unlike in the last war, we could now expect to maintain
our sea communications open. There was, however, no
incompatibility between this opinion and the importance of
immediate attention to language training. He went on to discuss
the suggestion that the Service Departments might make available
some of their Intelligence Officers for temporary secondment to
Australian Government posts in South East Asia for the purpose of
helping to collect intelligence and learning languages. He foresaw
practical difficulties here.

Dr. Burton pointed out that Australia's manpower and financial
resources were limited, and that it might be better therefore to
concentrate our effort in one area rather than spread it thinly
over the entire region. It might be desirable, for instance, to
concentrate on Indonesia.

Brigadier Rourke questioned whether, from the Defence point of
view, service intelligence from Indonesia was a matter of high
priority. Were we likely to have to fight in Indonesia?
Dr. Burton suggested that we would not have to fight in Indonesia
if we were to help the Indonesians build up their defences by
assisting in the training of their officers.

Brigadier Rourke agreed that we might well be able to do as we
were now doing in respect of Pakistan in offering training
facilities, and that we might in addition encourage them to look
to us for help in the way of equipment and supplies.

Dr. Burton asked whether there was general agreement in the
proposition that Australian technical and other assistance should
be concentrated on Indonesia.

Brigadier Rourke, in reverting to the matter of collecting
intelligence and other information, suggested that this task might
best be done by the Joint Intelligence Bureau.

Mr. Carney agreed that Indonesia was a natural point on which to
concentrate. From the trade point of view the first task was to
get back to the pre-war position. At present there was no surplus
meat available for Indonesia, but there were other goods.

Dr. Burton asked whether there would be any difficulty in
increasing supplies of meat, dairy products, etc. to Indonesia if
the United Kingdom were to agree to a reduced quota.

Mr. Carney expressed the opinion that the United Kingdom would be
unlikely to agree, especially as its present fixed quota was less
than it had been getting before the war. He pointed out that the
problem was one of production and supply in Australia, and this
applied more particularly to other supplies that the Indonesians
could be expected to need, such as steel, cement and agricultural
machinery. Meat and butter were in fact not important; they were
luxuries so far as Indonesia was concerned. On the other hand
wheat and flour were available, and it was agreed that the
Indonesians could not get along without substantial flour imports.

Sir Frederic Eggleston expressed the opinion that food was the
great requirement in South East Asia at the present time.

Mr. Tange pointed out that Australia's capacity to give economic
assistance, in the form of funds, industrial equipment, etc. was
limited, and that the most fruitful way of assisting Indonesia and
the rest of South East Asia might be by something other than
outright economic assistance. We could perhaps do more in the way
of technical assistance, and especially by offering training
facilities for technicians. What was first wanted was a survey of
needs.

Dr. Burton mentioned that the Department had for some time been
interested in the possible development of Portuguese Timor, and
asked what was the Defence view of the strategic importance of
Timor.

Brigadier Rourke said that militarily speaking Timor was not
regarded as important. The Services were more interested in Cocos
Islands and Morotai as possible defence bases. Defence was
likewise not interested in Indonesian bases, provided that these
are not used by any other power. If it came to a matter of an
agreement with the Portuguese Government over Timor, the Defence
view would be that no base rights should be given to any power,
but that if any power sought to use Timor bases Australia should
have the right to do so also.

Mr. Shaw gave a brief outline of the present situation in Japan,
and in particular the position of BCOF. [4] The United States
authorities considered that the occupation of Japan by substantial
forces should continue. They at present attached considerable
importance to the strategic value of Japan. From a military point
of view the United States authorities had no particular regard for
BCOF; they were not counting on any support from BCOF as a
fighting force in a crisis. They regarded BCOF simply as a symbol
of Allied support for United States policy in Japan, and the
presence of BCOF was sometimes useful to MacArthur when he was
faced with unpalatable directions from Washington. The problem of
BCOF, therefore, and the question whether it should remain in
Japan, is not a military but a political one. As regards the
impact of BCOF on the Japanese, the difference in attitude towards
United States forces and BCOF respectively is that the American
troops are a symbol of what America has brought and is still
bringing to Japan by way of relief and other forms of aid, whereas
BCOF has brought no economic aid or other material benefit with
it.

Dr. Burton observed that we might have to review our attitude
towards Japan, which was now becoming inconsistent with the rest
of our policy towards South East Asia.

Mr. Shaw agreed that Australia has a bad reputation in Japan, and
added that the Americans are not above encouraging the impression
in Japan that Australia is harsh and vindictive.

Mr. Ward pointed out that Japan is the only country with an export
surplus in things that many Asian countries need. Japanese
exports, for example, are likely to exercise considerable
influence in Indonesia. It is possible therefore that if we
maintain our present attitude towards Japan our relations with the
countries of South East Asia may be impaired. Japan and Indonesia
have complementary economies. The Indians, too, have been courting
the Japanese and have been bringing in technical experts from
Japan.

Brigadier Rourke expressed the belief that the army might ask for
the return of BCOF if there is no peace treaty with Japan in the
reasonably near future.