In paragraph 15 of my Despatch No. 1/49 [1] I referred to the need
for more than a defensive stand against the advance of Communism
in South-east Asia, and urged that the British territories in that
area should commence without delay steps to put an end to the
conditions in which Communism thrives.

2. There seems to be little doubt that there will be in the not
far distant future a Communist or Communist-dominated Government
in CHINA. This will create a new situation in South-east Asia and
give probably, a great impetus to Communist movements in that
area. This will be the more so because of the large Chinese
communities in INDO-CHINA, SIAM, BURMA and MALAYA and, though not
quite so large, in INDONESIA.

3. For this reason, though it might appear to be somewhat outside
our competence, the situation has been the subject of discussion
with my United States, United Kingdom and Indian colleagues, and
we have set out our views in a joint memorandum (Annex 'A'
herewith).

[matter omitted]

Annex

JOINT MEMORANDUM

1. The possibility of a Communist dominated Government in China
has created a new situation in South-east Asia. The immediate
effect of the Communist victories in China has been to change the
pace of events in the adjacent regions, reducing to the minimum
the margin of time available for a peaceful transformation of the
economy of these countries. The problem arising from the
juxtaposition of a Communist controlled China with the semi-
colonial economy of the South-east Asian countries may be stated
as follows.

2. Till now the dominant issue in all the countries of South-east
Asia was the recovery of freedom. This was essentially a political
issue and with the independence of India and Burma, the principle
may well be said to have been established, though the last chapter
in this phase of history still remains to be written in Indo-China
and Indonesia. But it is accepted even by the Dutch and the French
that their colonies will soon have to gain independence.

3. The achievement of independence does not however solve the
problem which these countries have to face, which is one of
transforming the typically, 'oriental' civilisations of these
areas held together by anachronistic social bonds and based on a
starvation economy into modem communities, organised on principles
of social justice and economic freedom. In short, these countries
have to compress into a short period of time, the whole process of
a century of European evolution, the technology of mid-twentieth
century to societies which are still living in the pre-industrial
revolution era but with new and destructive ideas sweeping their
minds. The resulting condition is essentially revolutionary both
in its process and in its consequences, for it is seeking to force
developments and not allowing the slow process of evolution to
work.

4. If it is accepted that the situation is revolutionary in its
content, then the question immediately follows as to how it can be
brought under control and guided into proper channels, for if we
do not bring it under control, the Communists with their easy
solution of 'Land to the Tiller' and 'Power to the Worker' will
step in and take charge.

5. In the circumstances of South-east Asia, the Communist solution
has an immense appeal. The situation has been foreseen by the
Communist thinkers who recognise that the transition from
feudalism to communism is in a way easier, as the resistance
offered will be by classes which have ceased to be socially useful
and represent no productive principles in society-the landlords
and those who depend on them. In other words, the anti-communist
element furnished elsewhere in the world by the middle class is
completely lacking. That is one of the reasons why Communism is
more aggressive in Asia and seems to be less actively resisted by
the masses.

6. Any idea that the South-east Asian countries could be persuaded
to resist the inroads of Communism by arming its opponents and
encouraging the reactionary elements to band together in defence
of 'the four freedoms' or the new slogan of free competition is
foredoomed to failure for the simple reason that an economic and
social revolution is already in being throughout the whole area.

7. How then are we to act? Clearly by accepting the revolutionary
content of the situation and providing a solution to the major
issues which the revolution is seeking to solve. If the same
objectives can be gained with greater safety in a reasonably short
time, through a non-Communist solution, then there is every reason
to think that Communism can be resisted in this area.

8. It might of course be argued that the alternative to the
Communist revolution is really what is being done in India-the
attainment of the same objectives by parliamentary methods-that is
a revolution controlled by parliament and effectuated through
legislation. But the circumstances of South-east Asia do not seem
to warrant any hope of successful action along these lines,
primarily because there is no established principle of obedience
in these countries and secondly because leadership requires an
effectuating machinery-a highly trained efficient and loyal
service-which notoriously does not exist in these countries.

9. What then is the alternative? The ultimate solution seems
clear: a confederation of South-east Asia with a planned and
integrated economy, creating out of the small units in this region
a viable State following a progressive economic and social policy.

In the immediate future such a solution would perhaps be
impracticable, if only for the reason that the States which are
struggling to acquire their independence like Indo-China, and the
States which have only recently acquired independence like Burma,
will not even consider anything which may limit their political
independence. But the situation created by the existence of a
Communist colossus in the North may possibly prove sufficiently
dynamic to bring about a change in their attitude, very much in
the same manner as the Western European States which are so
intensely nationalist have come together in similar circumstances.

10. While this should be the objective, towards which our
activities should be directed, it is obvious that since this
solution is not capable of immediate realisation, we should have a
short-term policy which could be put into effect with the least
possible delay. A permanent Consultative Council of the States of
this area which will work out common policies and provide for an
integrated economy capable of resisting the pressure of Communist
economic doctrines would seem to be the answer. But in order to
bring into existence such a Consultative Council, it is necessary
as a first step that Indo-China and Indonesia should acquire their
political freedom and Malaya should have a constitutional set-up
which will enable her at least to participate in economic
policies.

11. Such a Consultative Council when brought into being should
have before it an economic and social programme which
realistically deals with the special problems of their backward
societies. Such a programme will have to provide
(a) for the liquidation of unproductive systems of landowning and
for a reorganisation of agriculture with aid of the most modem
technology for the purpose of increasing production;

(b) for the absorption into industries of large masses of people
now living on land without contributing to the increase of
national production;

(c) for the integration of the economy of the region so as to
avoid wasteful interregional competition;

(d) for large-scale medical and sanitary facilities which will
eliminate the enervating effects of the climatic conditions of the
'monsoon belt', and
(e) for a common system of education which will provide a
background for democratic development:

in short, a programme of planned economy.

12. The first step, which should be taken now is to utilise to the
best advantage the time available before a settlement is arrived
at in Indonesia and Indo-China and work out a programme for this
region. This can only be done after a careful analysis of the
prevailing social and economic conditions. Such a survey should
cover not merely the present morphology of these societies, but
should be primarily directed towards the shape they should assume
in the future: that is, it must formulate the principles on which
the New Society in South-East Asia should be fashioned.

13. An enquiry of this nature conducted by a group of what are
called in America social engineers' would provide us with an
alternative programme which may blunt the appeal of Communism and
tame and regulate the revolutionary process in Southeast Asia.

14. The powers most immediately and directly interested in doing
so are U.S.A., U.K., Australia and India, and if the enquiry is
entrusted to a small Committee of four or five high level
political and economic thinkers from these countries, who have
some experience of practical problems, men of the calibre of Lord
Hailey who did the African Survey, then a workable and forward
looking programme would be available for approval by the
Governments concerned.

15. It seems likely, however, that the Governments of South-cast
Asia, even when working through their own permanent consultative
council would not be able to take full advantage of the programme
without material assistance and technical advice. It might
therefore be advisable to form some kind of advisory committee
parallel to the permanent consultative council and working in
close collaboration with it, composed not only of the four Powers
mentioned above but also of France and the Netherlands whose
continuing economic interest in South-east Asia must be
considerable. This Committee would be responsible for determining,
when invited to do so by the permanent consultative Council and in
concert with that body, the amount and the kind of assistance
required and its procurement.