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 You are in: Under Secretary for Public Diplomacy and Public Affairs > Bureau of Public Affairs > Bureau of Public Affairs: Office of the Historian > Foreign Relations of the United States > Johnson Administration > Volume XXVI
Foreign Relations 1964-1968, Volume XXVI, Indonesia; Malaysia-Singapore; Philippines  
Released by the Office of the Historian


Documents 277-293

 

277. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, December 10, 1966.

/1/Source: Johnson Library, National Security File, Country File, Malaysia, Vol. IV, Memos, 1965-1968. Secret. A note on the memorandum indicates that the President saw it.

SUBJECT
Helicopters for Malaysia

As you know, the Malaysians are interested in buying helicopters, and they want to buy them from us. This was the one item of serious business raised with you by the Tunku during your visit to Kuala Lumpur. You promised to look into the matter on your return to Washington./2/

/2/According to telegram 1895 from Kuala Lumpur, November 2, the Tunku raised the issue of helicopters with President Johnson privately during Johnson's visit to Malaysia. (National Archives and Records Administration, RG 59, Central Files 1964-66, DEF 12-5 MALAYSIA)

The deal would involve 15 helicopters. The Malaysians need them for their civic action and counter-guerrilla activities. The amount of the contract would be about $17.2 million, which would help in our balance of payments problem. The only competitors are an American company (Sikorsky) and a French company.

The attached memo from State (Katzenbach),/3/ in which Defense concurs, recommends that we offer the Malaysians terms of 5 1/2% interest and 7 years repayment. It suggests that we inform the Malaysians in a letter to Deputy Prime Minister Razak from Bill Bundy, and that you not communicate directly with the Tunku on this matter.

/3/Not printed; dated December 6.

I find the memorandum from State inadequate on several grounds.

First, it does not offer you the options that in fact exist for handling this matter.

Second, it is misleading in implying (paragraph c, page 2) that it would require $11 million to cover the difference between an offer of 5 1/2% and 3% on interest rates.

Third, it does not offer a judgement as to how the Malaysians may react except to say "we may have some protest and bad feeling."

Fourth, it does not offer a judgement on the likelihood of the Malaysians turning to the French for this contract if we offer the suggested terms.

I have asked Bill Jorden to staff this out further. He has done so, with State, Defense and the Bureau of the Budget.

The picture is as follows:

On options:

Guarantee of EXIM loan plus needed MAP credit would cost out as follows (all figures approximate):

(With a 15% down payment)

5-1/2% for 7 years--$3.8 million
4% for 7 years--$6.7 million
3% for 10 years--$10.4 million

(With a 10% down payment)

5-1/2% for 7 years--$3.9 million
4% for 7 years--$6.9 million
3% for 10 years--$11 million

Funding for your preferred option can come from:

(1) Adjustments in the credit sales program (assuming not all of the programmed sales materialize);
(2) selling at harder terms to some countries for which concessional terms are now planned;
(3) the contingency reserve (which at last report was about $18 million).

On Malaysian reaction:

There is no doubt in Ambassador Bell's reporting that the offer proposed by State and Defense will come as a severe disappointment to the Tunku and to his government. It may be "without any warrant from us"--as State says--that the Malaysians have built up their hopes for something better than 5 1/2%. But the fact is that those hopes exist.

Two years ago, we offered these same terms on Cessna aircraft. We lost out to the Canadians--and there were demonstrations in the street denouncing the U.S. as "uncle skinflint."

The Malaysians have come along well in backing our policy on Viet-Nam. They seem ready to do somewhat better in the future. I would not like to see that trend reversed without good cause.

Nor would I like to see the very positive effects of your visit to KL dissipated needlessly.

On probable outcome:

The Malaysians prefer our helicopters. But the French apparently have offered 3% for 10 years. Sikorsky representative thinks the Malaysians will go to the French if we offer 5 1/2% for 7 years. Ambassador Bell agrees.

On the problem of precedent:

State and Defense are concerned that a better offer than that proposed will encourage other military purchasers to expect concessional terms. They are also worried that the Malaysians would expect us to supplant the British military role which, as the memo states, "is the last thing we wish to do."

I am sympathetic with both these concerns. However, we have made concessional sales in the past, in a variety of countries, without those concessions automatically becoming the basis for future deals. We have, in fact, made military sales to the Malaysians themselves (in 1965) at 3% for 10 years. I see no reason why our position cannot be explained to the Tunku and to others (if the question arises). This is one of the functions of diplomats--to make complicated and sensitive matters clear to others. I would explain it as a very extraordinary case holding no promises for the future, and as your response to a quite special appeal from the Tunku.

Recommendation:

I recommend that you consider favorably an offer of 4% for 7 years, with a 10% down payment. Our best estimate is that we can get the deal on these terms, although they are not as good as the French. But, in any case, you would have clearly responded to the Tunku's appeal. You may want to tell State and Defense that this is your inclination but that you will consider any strong and overriding objections. Unless there are such major objections, you propose to move ahead on this line.

Walt

Approve 5-1/2% for 7 years
Approve 4% for 7 years
Approve 4% for 7 years but check whether State and Defense have major objections/4/
Approve 3% for 10 years
See me

/4/The President checked this option.

P.S. I haven't listed the options on a 15% down payment here; they are in the body of the memorandum, if you want them.

W

 

278. Memorandum From the President's Special Assistant (Rostow) to Acting Secretary of State Katzenbach/1/

Washington, December 12, 1966.

/1/Source: Johnson Library, National Security File, Country File, Malaysia, Vol. IV, Memos, 1965-1968. Secret. A copy was sent to McNamara.

SUBJECT
Helicopters for Malaysia

The President has considered carefully your memorandum of December 6 (copy attached)/2/ on the above subject. He has weighed and is sympathetic to the arguments therein regarding an offer of support for the purchase at 5-1/2 per cent interest and 7 years repayment.

/2/See footnote 3, Document 277.

However, he recalls that this matter was the one item of serious business raised with him by the Tunku on his recent visit to Malaysia. He attaches importance to the friendship of the Tunku and to the good relations that have developed between our two countries.

Given the importance of Malaysia's role in Southeast Asia, its internal situation, and its sympathetic understanding of our policy in Viet-Nam, the President believes that a somewhat more concessional offer is in order on a "one shot" basis. The sale will, of course, benefit our balance of payments. He has approved our support for an offer of 4 per cent for 7 years.

He believes that it is possible to make such an offer and at the same time make clear to the Malaysians that it is not a precedent, that it is made at considerable sacrifice on our part, and that it will not provide the basis for any future sales. The Malaysians should be reminded of our severe and burdensome obligations elsewhere in Asia.

As to financing, possibilities within the present MAP program should be explored first. Defense might want to consider hardening somewhat the concessional terms for other sales. Drawing on the contingency reserve for credit sales is another possibility.

The special circumstances of the President's trip to Malaysia and the Tunku's personal appeal could be considered as putting this matter in the "contingency" category.

If there are major considerations not heretofore brought to the President's attention, he has expressed his willingness to take them under advisement. In the absence of such overriding considerations, he has approved moving ahead along the lines noted in the third paragraph of this memorandum./3/

/3/On December 27 Rostow cabled the President the following: "Your offer to Malaysians worked. We got the order for Sikorsky plus some goodwill." (Telegram CAP 661338 to the President, December 27; Johnson Library, National Security File, Country File, Malaysia, Vol. IV, Memos, 1965-1968)

W W Rostow

 

279. Intelligence Note From the Director of the Bureau of Intelligence and Research (Hughes) to Secretary of State Rusk/1/

No. 652

Washington, August 9, 1967.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 SINGAPORE. Confidential.

SUBJECT
Prospects for Lee Kuan Yew's Visit to the US/2/

/2/The Department of State indicated in telegram 763 to Kuala Lumpur, March 24, repeated to the Consulate in Singapore, that a Lee visit to the United States "is clearly in our interest and our future relations would benefit from a maximum exposure to the intellectual, social, and cultural aspects of American life about which Lee is clearly inadequately informed." (Ibid.)

In mid-October Lee Kuan Yew will make his first visit to the United States as Prime Minister of independent Singapore./3/ His primary purpose will be to make personal contact with the leaders of a great power he now regards as vital to Singapore's future economic stability and security. While he is anxious to maintain Singapore's non-aligned foreign policy and can portray this visit as balanced by his own 1966 trip to Eastern Europe and that of his deputy to Moscow in 1965, he will nevertheless hope that his visit will eventually pay off in concrete benefits for Singapore.

/3/His only previous visit was in July 1962 when he made a brief stop in San Francisco and attended a UN meeting in New York. [Footnote in the source text.]

Lee's Attitude Towards the US; Aloof but Friendly. In the first days of Singapore's independence, Lee Kuan Yew, who had a reputation for being pro-British but unfamiliar and somewhat contemptuous of Americans, was acidly critical of the United States to the press, revealing in the process a 1961 CIA effort to penetrate the Singapore police. This public, bitter anti-American phase (to which family problems then probably contributed) was shortlived. Before the end of 1965, Lee and his principal cabinet advisers were convinced that, for economic survival, an independent Singapore must expand its exports to the United States and attract American capital to develop new export industries.

Lee also recognized the importance to Singapore's stability of the American effort to forestall Communist aggression. In private talks with important American visitors, Lee has supported the US position in Vietnam,/4/ although not all our tactics, particularly the bombing of North Vietnam; in public, he has said that the fate of Asia for years to come will be decided by what happens in South Vietnam and that holding the line in South Vietnam against Communist expansion is essential to Singapore's stability. In addition to recognizing the strategic importance of the US role in Vietnam, Lee and his government appreciate the economic benefits accruing from purchases in Singapore for US forces in South Vietnam and from Rest and Recreation expenditures there.

/4/On June 29 John P. Roche of the NSC Staff sent President Johnson a summary of Lee Kuan Yew's off-the-record remarks to the Institute of Strategic Studies in London. One of Lee's three themes was that the United States must resist Hanoi's aggression (Lee's characterization). Johnson saw the memorandum from Roche. (Johnson Library, National Security File, Country File, Singapore, Vol. I, Memos, 8/65-7/67) A CIA [text not declassified] Report, [text not declassified], which was retyped in the White House, reported on a private conversation with Lee and a colleague in which the Prime Minister said he supported American intervention in Vietnam and feared that, if it failed, Communist subversion would slowly spread through all of Southeast Asia. There is no indication on the retyped copy that the President saw it. (Ibid.)

Lee has also been led to reassess his attitude towards an American security role in the area by his gradual acceptance of the fact that the British are going to withdraw militarily from the Malaysia-Singapore area by the mid-1970's except possibly for small forces to fulfill the UK commitment under the mutual defense treaty. He has suggested publicly that, under certain circumstances, an American military presence might become necessary.

Lee's Principal Objectives. Lee probably does not expect to obtain specific commitments from the United States during the course of his visit. Rather he probably hopes to establish a climate in which he can obtain sympathetic understanding of Singapore's problems and of his own views as to how the United States can contribute to their amelioration. Defense arrangements, economic problems, and Singapore's role in the area will probably be foremost among his preoccupations.

Lee may raise the question of US willingness to cooperate with the UK in guaranteeing the external defense of the area. In the light of Malaysia's and Indonesia's interest in diverting their trade away from Singapore and the economic effects of the British military withdrawal, he may hint that the US should make especially favorable conditions for Singapore exports. He may suggest that the US contract with Singapore to have some of its ship repair work done in Singapore. He will want to convince us that Singapore's population is primarily oriented to Singapore not China, and he will assure us that Singapore is willing to bear its share of responsibility for effective regional cooperation.

Possible Results of Lee's Visit: A Good Public Image in the US but Friction in Southeast Asia. The Lee visit will probably command considerable American press attention. Lee's already scheduled public appearances at the National Press Club in Washington and the Council on Foreign Relations in New York may well be supplemented by others and by TV and radio interviews. All of this will be gratifying to Lee and may well increase the sympathy and respect with which he is now inclined to view the United States. On the other hand, to the extent that Lee is widely publicized by the American press and built up as an Asian intellectual leader, his visit may antagonize the Malaysian government, particularly Prime Minister Tunku Abdul Rahman and Finance Minister Tan Siew Sin, who have not themselves attracted wide publicity in the US. While Lee's American visit may enhance his prestige as an Asian leader and Singapore's status among other Southeast Asian countries, too much and too favorable publicity for Lee, an ethnic Chinese, could also be resented by non-Chinese leaders of other neighboring states who also crave the limelight as Asian leaders. This possibility, together with Lee's disinclination to take public positions that will compromise Singapore's non-aligned status, may lead him to curb his natural instinct for publicity during his American visit.

 

280. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, September 14, 1967.

/1/Source: Johnson Library, National Security File, Country File, Malaysia, Vol. IV, Cables, 1965-1968. Confidential. Rostow based this memorandum on memoranda from Jorden, May 9, and Wright, September 14, to him. (Ibid., Memos, 1965-1968 and ibid., Cables, 1965-1968)

SUBJECT
Malaysian Desire to See You on Fall in Rubber Prices

The price of rubber has recently reached a 17-year low. The Government of Malaysia is trying to give the impression that it is doing something about it. Without any discussion with us, they announced that their Finance Minister was coming to Washington to discuss with you, if possible, the "serious problem" posed by sales from our rubber stockpile.

This is nonsense. During the past 12 months we have cut our stockpile sales from 170,000 tons a year to the current 70,000 tons, all of which is used to meet U.S. Government contracts. These sales simply are not a significant factor in the current rubber market.

I do not believe you should see the Malaysian Finance Minister:

(1) He will be asking that we totally suspend our disposal sales. He should be told "no," and I think it best that he get that answer from a lower level.

(2) It is probable that the Malaysians will, at some stage, try to make us the whipping boy for their rubber problems. I, therefore, think it best that you avoid any personal involvement in this matter.

(3) Finally, they are trying to meet a serious problem by chanting magic incantations. I think it is beneath the dignity of your office to get involved in this exercise in futility.

The State Department is in agreement, but I expect Malaysian Ambassador Ong will make strenuous efforts to arrange the appointment through the back door, once he finds the front door is locked. This memorandum is intended to "cut him off at the gulch."

I recommend that you decline all efforts to arrange a meeting between you and the Malaysian Finance Minister./2/

/2/Johnson checked the "Approve" option. Rostow added the following handwritten option: "My boys recommend that I see him." Johnson subsequently changed his mind and did see the Finance Minister; see Document 283.

Walt

 

281. Memorandum From Marshall Wright of the National Security Council Staff to the President's Special Assistant (Rostow)/1/

Washington, September 29, 1967.

/1/Source: Johnson Library, National Security File, Country File, Malaysia, Vol. IV, Memos, 1965-1968. Confidential. A copy was sent to Jorden.

SUBJECT
Your meeting at 5:00 p.m. on September 29--rubber, Malaysia, and Finance Ministers/2/

/2/No memorandum of conversation of Rostow's meeting with Ghazali has been found, but in a September 30 memorandum to Rostow, Wright described the results of the meeting. Wright wrote: "prior to the meeting with Ghazali in Ernie Goldstein's office [a Special Assistant to the President specializing in domestic issues] Malaysian Finance Minister Tan was planning to follow his meeting with the President with a speech in New York in which he would call for complete suspension of our sales from the rubber stockpile. It [an attached cable from Kuala Lumpur] also shows that exposure to reality in Ernie's office has led the Malaysian Government to order the suspension of GOM statements attributing the rubber price decline to U.S. stockpile releases." Wright considered this a "move in the right direction," as well as evidence of the danger of connecting the President with the rubber problem and the need for "courteous but complete candor" with the Malaysians. (Ibid., Cables, 1965-1968).

I thought it might be useful for you to have this background prior to the meeting.

The Malaysians are continuing their all-out efforts to get Finance Minister Tan Siew Sin in to the President. They have sent Foreign Ministry Permanent Secretary Ghazali here as an advance man charged with the task of getting the appointment.

In meetings at State and here, Ghazali has made a very vigorous presentation, the essence of which is:

(1) The Malaysians greatly value their friendship with the U.S.

(2) The Malaysian future is based on the success of current development efforts largely based upon stability in the rubber market.

(3) The decline in the rubber market is an extremely serious problem for Malaysia, and Communist propagandists are attempting to poison U.S./Malaysian relations by using our stockpile disposals as "evidence" that the U.S. is not really helpful to Malaysia.

(4) The Malaysian government wants to remove, once and for all, this irritant in U.S./Malaysian relations.

(5) The Malaysians, therefore, want to discuss a series of proposals for ending the stockpile problem.

(6) In the meantime, it is essential that Tan see President Johnson and that the President indicate that he has instructed his government to work "together" with Malaysia in regard to the rubber problem.

(7) This will then enable the Malaysian authorities to handle their public relations problems with Communist agitators.

Ghazali stresses that, for the time being, concrete steps are not as important as the atmospherics of a presidential meeting.

Of the various Malaysian proposals for dealing with the stockpile, only one has any possible merit from the U.S. point of view--that the Malaysians purchase the entire stockpile. We have had several meetings with the technicians on this possibility, and Ed Fried has come up with a package which all agree is worth considering from our point of view. Briefly, the package is:

(1) The Malaysians would convert $100-$150 million of their reserves into 5-year Treasury bonds. Thus we get an immediate balance-of-payment effect to the value of the stockpile.

(2) EXIM extends a credit to the Malaysians to enable them to purchase the stockpile. This is a washout from the budgetary point of view in that it is a debit to EXIM and a credit to the stockpile account. The loan agreement would provide for repayment within three years. Thus, we would get a net favorable budget effect, either immediately by selling the paper at a discount, gradually through the amortization of the loan or, at worst, in lump-sum repayment after three years.

We do not know whether this idea is even in the ball park, so far as the Malaysians are concerned. Bob Barnett is informally sounding out the Malaysians on this. Thus far, all agree that if the Malaysians are not serious about a previous agreement on something concrete, Tan should not see the President. State, however, is giving at the seams and will, I think, eventually recommend the meeting, even if it is only for cosmetic effect.

My own instinct is that the Malaysians are really engaged only in an effort to get Tan in to see the President. I believe they will take the position that nothing concrete can be agreed upon without extensive study, but their hearts are in the right place, and we should show that our hearts are in the right place by having the President receive Tan and make noises on working together on the rubber problem.

An additional complication, of which you should be aware, is that the Indonesian Finance Minister, Franz Seda, will be in town at the same time (next week) as Tan. Seda also wishes to see the President to deliver a letter from President Suharto./3/ State is much concerned with the damage that could be done if Seda were to see the President while Tan was refused. I agree that this is a problem. One way out would be for you to see Seda on the President's behalf.

/3/Seda met with Vice President Humphrey; see footnote 2, Document 245.

Marshall

 

282. Memorandum From Secretary of State Rusk to President Johnson/1/

Washington, October 9, 1967.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 MALAYSIA. Confidential. Drafted by Barnett and Robert W. Duemling (EA/MS) and cleared by Eugene Rostow and Solomon.

SUBJECT
Possible Appointment with Malaysian Minister of Finance, Tun Tan Siew Sin

The Malaysian Minister of Finance has been in Washington for ten days as a Special Emissary of the Malaysian Prime Minister, to explore with us ways of alleviating the situation in rubber whose price has fallen to an eighteen year low. He has asked us in the strongest terms for at least a courtesy appointment with you. Our recommendation is that you agree to such an appointment on Tuesday, October 10, or Wednesday, October 11, with the understanding, already obtained from the Minister, that he would make no requests of you with respect to rubber, would make Southeast Asian regional cooperation, and the role of the Asian Development Bank in particular, the major focus of the exchange of views he desires, and would agree to issuance to the press of the release attached./2/

/2/The press release was attached to an October 9 memorandum from Bundy to Rusk, in which Bundy recommended that the Secretary send this memorandum to the President. Bundy outlined in more detail the issues and described in Tan's seven meetings with State, Treasury, and GSA officials. (Ibid.) The text as released by the White House Press Office is in telegram 52462 to Singapore and other relevant posts, October 11. (Ibid.)

Recommendation

That you agree to a short courtesy call with the Minister of Finance on October 10 or 11 with the understanding that a public statement would be made along the lines of the enclosed./3/

/3/For the memorandum of Johnson's discussion with Tan, see Document 283.

Background

The Malaysian Minister of Finance left Kuala Lumpur with the Malaysian press stating that his purpose was to request you to suspend sales from the GSA stockpile. For a considerable period of time, Malaysia has attributed an entirely disproportionate importance to stockpile disposals as a factor in the downward trend of rubber prices which currently are at their lowest level in 18 years. They have taken hitherto no account of the difficulties you would face in reducing disposals below the present level of 70,000 tons being sold exclusively for U.S. Government purposes. We have said in the strongest terms that reduction below 70,000 would be impossible. The Finance Minister brought with him to Washington a proposal to purchase the whole of the 360,000 tons of stockpile rubber. Under what precise arrangements such a transaction may be possibly completed without adverse effect upon either the U.S. or Malaysian budget and balance of payments situations has been under urgent study for the past week. After very careful calculations, it was the opinion of both sides that the gap between the price Malaysia was prepared to offer and that which GSA could accept was too wide to offer any promise that a transaction could be closed without some other, perhaps radically different, approach to the possibility of a sale. Discussion of possibilities can be resumed if the Malaysians desire.

We have been impressed by the way Minister Tan and his colleagues have begun to search for realistic solutions to the problems of natural rubber and are gratified that they seem ready to try to deflect Malaysian public opinion from a long-standing preoccupation with our stockpile sales. He has accepted, with disappointment but in seeming good spirit, our judgment that an international rubber agreement, dealing with synthetic and natural rubber, is impractical and that the United States could give no encouragement to holding conferences or commencing discussions for the purpose of establishing such an agreement.

Minister Tan faces real problems in returning to Malaysia if he can offer no credible explanation for why he remained ten days in Washington as Special Emissary of the Tunku and failed to see you. Minister Tan is prepared to make firm commitments that in a call on you he would ask nothing of you nor raise any points brought up in our recent discussions on rubber. Instead he would be prepared to express appreciation for reductions you have made in rubber stockpile disposals, and would wish otherwise to use the occasion of his call to discuss Southeast Asian regional cooperation and, in particular, the important role of the Asian Development Bank.

Dean Rusk

 

283. Memorandum of Conversation/1/

Washington, October 10, 1967.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 MALAYSIA. Confidential. Drafted by Bell and approved by Walt Rostow on October 17. The meeting lasted from 5:23 to 5:50 p.m. (Johnson Library, President's Daily Diary)

SUBJECT
Rubber and Malaysian Role in Viet-Nam

PARTICIPANTS

The President
Walt W. Rostow, Special Assistant to the President
Joseph A. Califano, Jr., Special Assistant to the President
Ambassador James D. Bell, American Embassy Kuala Lumpur
Robert W. Barnett, Deputy Assistant Secretary (EA)

Tun Tan Siew Sin, Minister of Finance, Malaysia
Ong Yoke Lin, Ambassador of Malaysia
Mohd. Ghazali bin Shafie, Permanent Secretary, Malaysian Ministry of Foreign Affairs

The Minister conveyed greetings from Prime Minister Tunku Abdul Rahman and referred to the warmth and joy of President Johnson's visit to Malaysia. He said he had come to Washington because of difficult circumstances which had arisen in Malaysia because of the price of rubber. He explained the economy was heavily dependent on rubber and the price was the lowest in 18 years, causing budgetary and balance of payments problems. To illustrate, he said that rubber smallholders are--reminiscent of days of the Japanese Occupation--now getting only one meal a day. In short, rubber prices were having grave social and economic effects.

The Minister said although he did not want to burden the President with details, he did want to explain that Malaysia had brought to Washington three proposals. One was to buy up the rubber stockpile and here he said the United States and Malaysia had found a wide area of agreement, but none yet on the critical question of price. His second proposal was for Malaysia to have first refusal to buy the 17,500 tons we are now offering quarterly. This was not acceptable to the United States. The third was an offer to buy on the open market, the foreign exchange costs of which could be covered by a switch in Malaysian reserves from London. The present situation was a decision to continue the dialogue and not to close the door on further exploration of possibilities. He said he thought this was a useful step toward solving the problem.

The President asked how much surplus we had and how Malaysia would pay for it. It was explained that there was a 360,000 ton surplus and that it could be paid for through a financing arrangement with the Export-Import Bank. The President asked whether or not there would be a loss or a gain in the sale of rubber. Mr. Barnett explained how discount of the price from the current 19.5 to 13.5 might be possible. The Malaysians still said they could only pay 6 less than this. The calculations that went into our reduction from 19.5 to 13.5 represented savings to GSA by selling rather than storing, administering, and processing this deteriorating commodity. The Malaysians took into consideration in arriving at an offer of 7 a pound such additional factors as a discount for bulk sales, projection of declining price, and a certain "aid" factor. The President agreed immediately that we should not make such discounts. He would be obliged one day to justify sale to the Congress.

Minister Tan Siew Sin explained decline in value of our stockpile. We had bought when prices were very high during the Korean War. The current soft market price of rubber was due to an economic recession in Western Europe (he also included the USA), more Indonesian rubber in the market, closure of the Suez, and strikes in the United States.

The President said why didn't we use rubber in tires purchased by the USG. Ambassador Bell said that we were using the rubber for USG purposes.

The President explained that he was faced with $30 billion deficit due to costs for the war in Viet-Nam. He said that the USG had estimated a revenue of $800 million from disposals on surplus commodities, but that in fact this was running at a rate of only $400 million. He asked Mr. Califano to take another look at how sales of stockpile items could be increased.

The President asked what Malaysia was doing to help in the Viet-Nam War, especially in regard to training, which he recalled he had discussed with the Tunku last October. The President said he had to show some more aid from Malaysia and from other countries in the area whose interests and safety we defended. Ambassador Bell explained that Malaysia was training 35-40 police officials at any given time. The President thought this was pretty small and expressed the hope that many more Vietnamese would be sent to Malaysia for broader training. We should step up this program./2/

/2/In a memorandum to Walt Rostow, October 13, Wright stated that the Malaysian contribution to Vietnam was greater than this. Since 1962, Malaysia had trained about 2,000 police and had sent a high-level group to Saigon to discuss rural development, which got "the cold shoulder from the Vietnamese." Wright suggested that the Malaysians' best contribution was training high-level officials in implementation of economic development plans and getting political credit from it. (Ibid., National Security File, Country File, Vietnam, 5 D (2), Allied Troop Commitments and Other Aid, 1967-1969)

Referring back to the rubber stockpile, the President said that Mr. Moody/3/ should be asked to determine the lowest price at which we can sell the stockpile to Malaysia.

/3/Acting Administrator of GSA Joseph Moody.

Minister Tan, referring to a recent talk with Mr. Eugene Black, expressed appreciation for the American contribution to the Asian Development Bank. The President expressed some doubt that he would be able to get the needed legislation from Congress this year.

As the Minister was leaving, the President asked him to tell the Tunku he would appreciate anything further that Malaysia could do to help in Viet-Nam. He said it wasn't the number that counted but a really sincere effort./4/

/4/In a memorandum to the President, October 11, Goldstein reported that as a result of their meeting with Johnson, Tan and Ghazali had a "more realistic appreciation of the complexities and burdens" of the President's position. This realization would make the Malaysian Government more reasonable and improve U.S.-Malaysian relations. (Johnson Library, National Security File, Country File, Malaysia, Vol. IV, Cables, 1965-1968)

 

284. Memorandum From Secretary of State Rusk to President Johnson/1/

Washington, October 13, 1967.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 SINGAPORE. Secret. Drafted by William Bundy and cleared by Maurice D. Bean, Country Director for Malaysia-Singapore. A typewritten note reads: "Original sent to WH in Briefing Book." In an attached covering memorandum to Rusk, Bundy noted that this memorandum was lengthier and in a different format than the normal practice, but Bundy felt that since Lee was such "an exceptional individual" and since he and Johnson had never met, it would be of greater use to the President. Johnson met Lee alone in the White House on October 17 from 12:03 to 1:22 p.m. (Johnson Library, Daily Diary) No record of their conversation was made. While Galbraith did not know what Lee and Johnson spoke of, he concluded from subsequent meetings with Lee that "the meeting left Lee with a deeply favorable impression of the President and a desire to be helpful to him." (Memorandum from Galbraith to Rostow, November 15; National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 SINGAPORE)

SUBJECT
Your Meeting with Prime Minister Lee Kuan Yew of Singapore

General Lee's visit is in many ways similar in tone and objectives to that of Ne Win a year ago. Although Lee has come out strongly in basic defense of our actions in Viet-Nam, and is deeply engaged in Southeast Asian regional cooperation, he remains basically independent and non-aligned. What he really wants to do is to discuss the future of Southeast Asia frankly with you and to assess American policy there.

Lee is a highly intelligent and able man, educated in the law in England, and deeply familiar with the British and particularly the current Labour Government. He now realizes that the British are in the process of disengaging from Southeast Asia, and this leads him to two related beliefs: (a) that a continuing American role in Viet-Nam and in support of individual and regional economic development is vitally important; but (b) at the same time, that the nations of the area must use the time we have bought for them in Viet-Nam (his own phrase) to strengthen themselves and to cooperate much more strongly. What he wants to know, not only from talking with you but from a wide schedule of contacts in the rest of his trip, is whether the United States has the stamina to see Viet-Nam through, and the subtlety and will to play the important but over time diminishing role that he envisages for us in the area.

Lee is Singapore, and would probably appreciate it particularly if your conversation with him was largely private and without staff. He may be tense at first in a new setting, but we believe you will find him direct, frank, and very much worth talking to. He has no significant requests to make, and no desire whatever even to mention the frictions we had with him two years ago [1 line of source text not declassified]. For him, the past is dead, and the important thing is to plot his future in a new type of Southeast Asia, with an American role along lines very similar to those we ourselves would visualize.

If you wish to get a capsule picture of his thoughts and intentions, we enclose major excerpts from a television interview that he gave in late September./2/

/2/Attached but not printed.

Specific Topics:

1. Viet-Nam

Lee has no doubt of the basic importance of our seeing it through. He has made a number of strong and helpful statements in the past nine months, the latest being at the British Labour Party conference in Scarborough. He does not expect to be thanked for these, but a quiet expression of appreciation for his understanding would not be amiss.

You might consider asking him what he would do at this point in your shoes. He has no very special knowledge of Hanoi, but he does know Communists from long experience, and he considers himself something of an expert on China. His response could be interesting and would probably be along the lines of a middle course--doing all we can in the South, keeping up the pressure and the bombing unless we get something very concrete in return for stopping, but not appearing to threaten China or the existence of North Viet-Nam. Although Lee has signed on to one "stop the bombing" communiqué with the Indians, it seems pretty clear that--like the Indonesians--he did so for the sake of his non-aligned image and not out of deep belief. He would be deeply interested if you gave him your personal views on the strength of dissent and opposition in this country, and how you are handling the situation. He and the inner circle of his government are highly discreet, and we have no reason to believe that any confidence you share with him would be violated.

2. Southeast Asian Regional Cooperation

Lee's conversion to this was due much to the highly successful visit of Eugene Black during his trip last fall. He became convinced that our quiet general support made sense, and he then went to work with the other nations to form what is now the ASEAN grouping of Malaysia, Singapore, Indonesia, Thailand, and the Philippines. Lee would have liked to see ASEAN bite off more concrete economic projects, but he accepts it as a good first step. You might wish to draw him out on this, not only on the economic possibilities but on whether he sees ASEAN making an indirect security contribution over time. We ourselves believe that ASEAN could reduce the chances of further difficulty between Indonesia and its neighbors, and that--even though it has no express security provisions--it could develop a useful morale and authenticating function against future aggression directed at any of its members or countries in the area.

3. Indonesia

Singapore's economy could be enormously benefited by the revival of Indonesia, and Lee is totally in favor of our policy of multilateral aid. He is not all that sure that Indonesia can maintain its stability, but he has no doubt that this is essential in the future picture of the area.

4. Malaysia

Lee and the Tunku are oil and water, and there are continuing suspicions and criticisms. Basically, Lee is a bright Chinese who thinks that Malays are pretty sloppy people. Occasionally, he gets into destructive and unhelpful comment on this, although we doubt very much that he would do so with you. Nonetheless, he knows that the two have to get along, and will not demur to being told so in quiet but firm tones, as we are making clear that this is something the two have to handle for themselves. In the past, he has been concerned that we were going to step into the British shoes in Malaysia and give Malaysia extensive military support; this fear has now been allayed by our low-key policy in Malaysia and by our willingness to sell modest military equipment to Singapore itself.

5. Implications of British Withdrawal

Lee fought last spring's fight with the British, shoulder to shoulder with us, the Australians, and the New Zealanders, and may well have been the most effective of any of us. He is deeply concerned that the British at least adhere to their present timetable, and he will be joining with the Malaysians, Australians, New Zealanders, and hopefully the British to review the situation in early 1968 and see what can be done. His comments on the current British situation would be worth hearing, as he has just come from England. His comments on the future will probably be general, except for point 6 below.

6. U.S. Use of Singapore Bases

Lee has now said publicly that he would be perfectly willing to have our naval vessels and aircraft use the facilities in Singapore on a commercial basis. Privately, he may well urge us to do so. DOD and JCS have gone over the possibilities, and are reluctant to change present arrangements at least in the short term. We suggest you tell him simply that we have had a hard look at this, and that he should discuss it with Secretary McNamara./3/ He does not expect any firm undertaking from us, and any decision on our part will probably have to come gradually and over a period of time, if at all.

/3/McNamara met with Lee on the evening of October 18. They discussed prospects of continued British military use of Singapore's facilities in face of the Wilson government's plans to withdraw east of Suez. Lee was confident Singapore's repair and maintenance facilities and its military airfield would keep the British Navy there. Lee hoped that the United States would also consider using Singapore, and McNamara agreed to look into that possibility. Lee and McNamara then had a long discussion on Vietnam in which Lee argued that the United States was placing military considerations before political ones. (Memorandum of conversation, October 18; Washington National Records Center, RG 330, OSD Files: FRC 72 A 2468, Singapore 1967 (Singapore 09.1.112) and memorandum from Galbraith to Rostow, November 15; National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 SINGAPORE)

7. Economic Matters

We doubt if Lee will raise anything on this score with you. We have a reasonably satisfactory cotton textile agreement, and his main concern is to get more American private investment. If he should even mention the cotton textile situation, on which certain minor matters are pending, we suggest you refer him to Secretary Rusk.

8. Overseas Chinese

Lee is deeply convinced that the future of the overseas Chinese in Southeast Asia lies in their individual countries, and that Singapore can serve as an independent model and influence in the area. At one time, he had the suspicion that Americans were convinced that the overseas Chinese were a Chinese Communist fifth column. If he gets on to this topic, you should leave him in no doubt we have no such belief today, and that we fully share his basic view.

9. Singapore Itself

Lee and his government have done an outstanding job of making Singapore work. The living standard is the second highest in Asia, and his housing and other programs are models. So are his civil service and lack of corruption. At the moment, his political troubles seem minimal, with the more chauvinist Chinese put at a disadvantage by the disorder on the mainland.

He would doubtless appreciate your expressing a word of congratulations on his domestic performance and asking for his comment.

10. Developments in Communist China

Lee is as uncertain as the rest of us of what is going to develop there, but probably sees it as a gradual unraveling unless Mao calls off the cultural revolution. His main concern is that when Communist China pulls itself together--2, 5, or 10 years from now--Southeast Asia should have been strengthened to the point where the Chinese will let it alone. He is entirely clear that the Communist Chinese do not plan military aggression, but equally clear that they will inevitably exert great pressure and build up subversive assets if Communist China is again united and determined and Southeast Asia has not become a lot stronger and more cooperative.

Public Statements

We have drafted a very simple joint statement to be issued on the afternoon of the second day of the visit./4/ We expect to have this worked out fully before Lee arrives, and at the latest on the first afternoon. In Washington, Lee is not appearing in public, but is making an off-the-record speech to the Overseas Writers and seeing the House and Senate committees. Thus, there should be no real competing publicity during his Washington stay, unless the Congressional committees should leak.

/4/The joint statement, October 18, is printed in American Foreign Policy: Current Documents, 1967, pp. 806-807.

On the rest of his trip, he has several public speeches and will appear on "Meet the Press" on Sunday, October 22. He knows how to handle himself, and we think the net results could be very favorable. You might wish to indicate your awareness that he is doing these public appearances, but we strongly urge that you give him no substantive advice unless he asks for it--and then only in low key. He is an articulate and tough politician who will have already figured out what he wants to say.

Dean Rusk/5/

/5/Printed from a copy that indicates Rusk signed the original.

 

285. Memorandum of Conversation/1/

Washington, October 17, 1967, 4:15 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL SINGAPORE-US. Secret; Exdis. Drafted by Galbraith and approved in S on November 2. The meeting was held at Blair House.

SUBJECT
Singapore Prime Minister Lee Kuan Yew's Meeting with the Secretary

PARTICIPANTS

Singapore
His Excellency Lee Kuan Yew, Prime Minister of Singapore
His Excellency Professor Wong Lin Ken, Ambassador of Singapore

United States
The Honorable Dean Rusk, Secretary of State
The Honorable Francis J. Galbraith, Ambassador to Singapore
Assistant Secretary for East Asian and Pacific Affairs William P. Bundy

1. In response to the Secretary's opening question about what he thought British intentions in Singapore were, Lee said that barring catastrophe to the British pound, the British position would hold until April 1971. They would, however, be gone from Malaysia, and the die would be cast for their eventual complete withdrawal from the ground in Southeast Asia. Lee indicated that he gave little credence to the British defense commitment once that withdrawal took place. The danger would be internal, not external, and there was little that a mobile force, afloat or in the air, could do to help on that. It was important that someone fill the vacuum. Lee said he was disturbed at the prospect of New Zealand's expected movement of troops out of Malaysia to Viet-Nam. The Communists along the Malaysia-Thai border would be watching these developments carefully. Lee said it had been the British and Australians who had convinced the Communists they couldn't win the insurgency in Malaya. They might, in the absence of replacement for the British troops withdrawn, be emboldened to try again.

2. The Secretary asked Lee what he would do if he were in our shoes in Viet-Nam. Lee said he would put the alternatives before his political opponents and make them choose. He thought a bombing pause might be tried but there was danger if it failed, that the hands of those political opponents who favored escalation would be strengthened. Lee thought the most important thing to do was to find "digits" strong enough to put backbone into the South Vietnamese and to provide the government there with the required credibility. He spoke critically of General Thieu and Marshal Ky and he questioned whether the United States would continue to show the necessary stamina in the face of the lack of productivity of the war effort under their leadership.

3. Lee also deprecated the U.S. record in Asia. As examples, he cited our alleged failure to come to the aid of the Kuomintang Government in China (giving our support, instead, to Europe in the form of the Marshall Plan) and other (unspecified) actions in the 1950's which he called "imperialistic, selfish and cynical." He said he would not commit himself to the side of the United States unless and until he could be assured that we would stand firm in Asia and that we would stand back of him. He implied that this would require proof on our part erasing his doubts. Lee went into some diatribe alleging that the American motives, leading it to favor its European at the expense of its Asian commitments were basically attributable to racial feelings against Asians. The Secretary said he could not accept that interpretation of our record in Asia or our motivations. He added that unless the Prime Minister could find the assurances he was seeking of the kind of people we are from our record in Asia since World War II, there was no form of words that would provide such assurance.

4. Lee talked at length about his suspicions that American "Eurocentrism" made it unlikely that we would do what will be necessary to preserve a balance of power in favor of the free countries of Asia. He seemed to be trying to draw the Secretary into a statement about the willingness of the United States to make a commitment to Singapore as a quid pro quo for more explicit support of the U.S. position in Asia by Singapore. Toward the end of the meeting, the Prime Minister's voice took on an urgent, almost desperate note as he pictured the United States and Singapore in partnership in Southeast Asia. The Secretary, however, made no commitment./2/ Lee then said they might not have another chance to talk as he didn't know when or whether he would be able to come to the United States again./3/

/2/In a November 15 memorandum to Rostow, Galbraith stated that for reasons not clear to him, the Lee-Rusk conversation was "less felicitous than most others." Galbraith thought Lee's expressions were "overdrawn and he sounded less reasonable and attractive than he was on most other occasions." Lee "seemed to be drawing the Secretary into a statement of commitment, or of a willingness to consider a commitment, to Singapore as a quid pro quo for more explicit Singapore support for the United States in Vietnam." Galbraith reiterated that Lee's argument was urgent, almost desperate, which he attributed to Lee's tension about his first meeting with Johnson, the long day, and his encounters with the American press corps. (Ibid., POL 7 SINGAPORE)

/3/In a meeting with William Bundy the morning of October 18, Lee expressed his desire to maintain a British military presence in Singapore and his hope the United States would use Singapore's repair and maintenance facilities more in the future. Lee warned against allowing the Malays and Indonesians to expect U.S. support if there was any discord with their Chinese populations. Bundy assured Lee of U.S. impartiality, but Lee remained suspicious of "the Generals" in Indonesia and "the young Turks" in Malaysia. Lee stated he wanted to arm Singapore sufficiently to "give anybody a bloody nose who is going to rob the house and take my jade pieces." Bundy promised the sale to Singapore of light weapons, but thought heavy weapons a mistake. Lee hoped that the word could be dropped that the Seventh Fleet would prevent Indonesian or Malaysian incursion into Singapore. Bundy and Lee then discussed Vietnam. (Memorandum of conversation, October 18, and memorandum from Galbraith to Rostow, November 15; ibid., POL SINGAPORE-US and POL 7 SINGAPORE)

 

286. Memorandum for the Record

Washington, October 18, 1967.

[Source: Department of State, Bundy Files: Lot 85 D 240, Lee Kuan Yew. Secret; Eyes Only. 3 pages of source text not declassified.]

 

287. Memorandum From Vice President Humphrey to President Johnson/1/

Washington, October 19, 1967, 11:30 a.m.

/1/Source: Johnson Library, National Security File, Name File, Vice President, Vol. II. No classification marking. A note on the memorandum indicates that the President saw it.

SUBJECT
Meeting with Prime Minister Lee Kuan Yew of Singapore
Wednesday, October 18, 1967

Yesterday morning in a frank exchange with Prime Minister Lee Kuan Yew of Singapore, Lee likened our experience in Vietnam to a long bus ride, from which we had several opportunities to get off, but from which we cannot now debark until the trip is successfully concluded. We could have left the scene in 1956 after the elections of that year; in 1961 because of the generally unfavorable situation; and in 1963 after Diem's death, by stating that we did not desire to get mixed up with the "generals' settlement" and therefore withdraw our 25,000 advisers. By 1965, there was no longer a choice, and in 1967 any talk of withdrawal is nonsensical.

"What will happen to you," he declared. "Who will place any confidence in you?"

The Prime Minister said that the United States had made no commitment to him, and that he was not looking for one. He said, however, that if the United States indulged in a "give-away" or withdrew from Vietnam, there would be fighting in Thailand within one and a half to two years, in Malaysia shortly thereafter, and within three years, "I would be hanging in the public square."

Lee stated that he had rejected Communism and defeated it in his country by "ballots and not bullets." "My God," he said, "they want to punish me for that!"

The Prime Minister, who was to speak before the National Press Club at noon and before the Senate Foreign Relations Committee later in the afternoon, asserted that he could not understand either our Senators or our Press. He asked if the Senators spoke from their hearts or for their constituents, when they declared we should get out of Vietnam. He said the Press was making Vietnam a domestic political issue, and he is reluctant to get involved in the domestic debate on Vietnam.

I explained to him the relative political independence of a U.S. Senator and told him that in my opinion, if the chips were really down, that 80 out of 100 Senators would support our policies in Vietnam. I also assured him that the Press would report what he said as he said it.

I urged him to tell the Senate, the Press Club and his viewers and listeners on his "Meet the Press" appearance, exactly what he had said to me.

Without urging or prompting, Lee summed up his feelings:

"Does America feel that we are human beings? That this part of the world matters? The center of gravity has moved from the Mediterranean to the Atlantic to the Pacific. You are going to have to take sides. No one wants to be on the losing side. With you, we have a fighting chance. For me, it's survival."

Speaking of the Viet Cong and the North Vietnamese, Lee stated that we must convince them that history is not on their side. If they believe this, they will not hold out for a long period of time. Referring again to the necessity for perseverance on the part of the United States in Asia, Lee stated: "If you are wavering, I am going to make some contingency plans." He added that the Thais, who have a legendary reputation in Asia for anticipating history and switching sides to end up on the winning side, will be the first to make other arrangements and reach some accommodation with North Vietnam or China.

Knowing that U.S. presence in Asia is essential to his own survival, Lee is nevertheless concerned about how one can keep the temperature controlled in the United States on this issue during an election year. He is greatly concerned that the war might widen. Speaking of Secretary McNamara, whom he had met and whom he greatly admires, he stated that "when I have seen him (McNamara) whittled down by the generals, this worries me."

I assured the Prime Minister that the main general, the Commander-in-Chief, is elected, and he is the man in charge. There is a strong tradition here of civilian supremacy, which once led President Truman to remove General MacArthur at the time of the Korean War. This government is not engaged in trying to obliterate North Vietnam. The President remains open to suggestion and innovations on the question of strategy and tactics. He is determined that every possible restraint will be applied to prevent the war from becoming a major conflagration. He has emphasized this in his talks with foreign leaders, including those with Prime Minister Kosygin at Glassboro.

I told the Prime Minister that there is general agreement here on the importance he attaches to the patience and determination of the United States in meeting its commitment in Asia. This is what has been called into question by critics in Congress, the Press and across the country. It is for that reason that it is so important that a man like Lee Kuan Yew, who is a highly-regarded Asian leader from a non-aligned country, speak frankly to the Congress and to the public on these issues. If the Prime Minister could say to the Congress and on television some of the things he has been telling U.S. officials in Washington this week, this would be immensely helpful.

In response to my inquiry about his recent visit to England and the political situation in Great Britain, he replied that it had been a very dispiriting visit. The pound was in trouble, and the closing of the Suez and the balance of payments were problems of great concern to the Labor Government.

In answer to my question about possible devaluation of the pound, he stated that if the pound were to be devaluated, it would be the end of the Prime Minister, the Chancellor of the Exchequer, and most likely the Labor Government. He said the Labor Party was in a "soul destroying" phase. Wilson was "doing all bad, hurting his own supporters." "Labor," he said, was "not winning a chap from the other side."

"Britain," he said, "has never been more depressed." The Labor Party Conference was like "whistling through a cemetery."

Lee did say, however, that the recent Middle East conflagration may have been the last crisis, and if the pound is not devalued or revalued, that there may be a recovery in the late seventies.

 

288. Editorial Note

Vice President Hubert Humphrey traveled to Malaysia after attending the inauguration of President Thieu and Vice President Ky in South Vietnam on October 30, 1967. On November 2 Humphrey met with Prime Minister Tunku Abdul Rahman and his Cabinet. The Prime Minister told Humphrey in this meeting that Malaysia was "keenly interested" in Indonesia's economic recovery, but felt the Indonesians were not receptive to Malaysian offers of assistance. The Tunku suggested that some sort of international committee should be established to this end, and Humphrey agreed. (Telegram VIPTO 64/1728 from Kuala Lumpur; National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 US/HUMPHREY)

Also at this meeting, the Tunku raised the problem of the Philippines claim to Sabah, saying that Malaysia was not going to surrender part of its soil to a claim based on Spanish and American rulers nor after the Philippines waited 17 years to bring the issue up. Humphrey confided to the group that the Philippines press was keeping the issue alive and hoped that Malaysia would continue bilateral negotiations to resolve the issue. (Telegram VIPTO 65/1729 from Kuala Lumpur, November 2; ibid.)

Humphrey and Malaysian Cabinet members discussed economic problems, including increasing rice production, financing low cost housing, and the problem of rubber, especially in the face of synthetics. Humphrey encouraged the Cabinet to consider economic diversification. (Telegram VIPTO 66/1730 from Kuala Lumpur; November 2; ibid.) The Cabinet and Humphrey then discussed Vietnam at some length. The Tunku urged South Vietnamese-Viet Cong talks, which even if they failed would demonstrate South Vietnam's desire for peace. (Telegram VIPTO 67/1731 from Kuala Lumpur; November 2; ibid.)

 

289. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, November 1, 1967.

/1/Source: Johnson Library, National Security File, Country File, Vietnam, 5 D (2), Allies Troop Commitments and Other Aid, 1967-1969. Confidential.

Your comments to the Malaysian Finance Minister about the need for more assistance in Viet-Nam generated some action./2/

/2/See Document 283.

Through Secretary Rusk, the Malaysian Prime Minister has sent his assurances to you that Malaysia will not only continue to train South Vietnamese officers, but will increase the size of that program./3/

/3/These assurances were contained in an October 13 note. (Johnson Library, National Security File, Country File, Vietnam, 5 D (2), Allies Troop Commitments and Other Aid, 1967-1969)

The Malaysians have also sent a note to the Department of State itemizing the assistance they have provided to South Viet-Nam./4/ Their contribution is considerably greater than was described to you in the meeting with the Finance Minister.

/4/This note is dated October 17. (Ibid.)

--Over 5,000 Vietnamese officers trained in Malaysia.

--Training of 150 U.S. soldiers in handling Tracker Dogs.

--A rather impressive list of military equipment and weapons given Viet-Nam after the end of the Malaysian insurgency (for example, 641 armored personnel carriers, 56,000 shotguns).

--A creditable amount of civil assistance (transportation equipment, cholera vaccine, and flood relief. Our Ambassador to Malaysia, Jim Bell, is all revved up to work with the Malaysians on an increased program of training assistance for the Vietnamese. I expect there will be some developments on this within the next month or so.

Secretary Rusk undertook to convey the Prime Minister's assurances to you, and this memorandum is intended to discharge that undertaking./5/

/5/Rusk informed Ambassador Ong in an October 27 letter that he had conveyed the Prime Minister's assurances.

Walt

 

290. Memorandum of Conversation Between President Johnson and Prime Minister Lee/1/

Melbourne, Australia, December 22, 1967.

/1/Source: National Archives and Records Administration, RG 59, Conference Files, 1966-1972: Lot 68 D 453, CF 253. Secret. Drafted by Rostow. President Johnson and Prime Minister Lee were in Melbourne along with other foreign leaders and officials for the memorial service for Australian Prime Minister Harold Holt who disappeared while swimming at sea on December 17.

Prime Minister Lee plunged in by telling the President that he had been in Cambodia to receive an honorary degree at the University; and Sihanouk had converted it into a big affair. At his arrival there were no representatives of Hanoi, NLF, or Communist China. At a banquet he had given a speech which was, for the setting, quite pro-U.S. The representatives of neither Hanoi nor the NLF walked out. At his departure there were representatives of both present at the airfield but not the Chinese.

This related, perhaps, to the fact that Hanoi now proposed to send a commercial delegation to Singapore. There is no longer any significant trade between Hanoi and Singapore because the U.S. has knocked out the cement factory and what they mainly bought from North Vietnam was cement. It is Lee's judgment they are sending this mission for three reasons:

--to demonstrate Hanoi is not Peking;
--to increase their propaganda coverage since Singapore is a good enough distribution point;
--perhaps for long run political purposes.

Lee said that when President Johnson won his election in 1968, Hanoi will talk. He could not prove that statement to anyone; and he was not given to emphatic statements. But he was prepared to stand on it. He sees a softening in Hanoi's general attitude. They could have treated him in Cambodia like a "cocker spaniel of imperialist U.S."; but they did not. They are leaving avenues open.

President Johnson asked how Prime Minister Lee had enjoyed his trip in the U.S. He said it was an intensive 10 days of education; but not always pleasant. He was shocked by the disloyalty of some of the youth he saw at Berkeley and by the fact they were simply dirty. Returning to his view of Hanoi, he said there would be no change until the U.S. had demonstrated its staying power to Hanoi.

The President said that only 17% of the American people wished to get out of Vietnam; 35% underwrote his moderate policy; but 45% want to do more--use more military force. The question is, assuming Mr. Nixon is nominated, where will the 17% go? To Nixon or to President Johnson? The second question is, will Nixon be able to pick up the whole 45%.

In general, the anti-Vietnam pressure on the President had been diminishing from roughly the time Prime Minister Lee came to the U.S. We have taken some strides in consolidating support.

Lee then observed that he found Senator McCarthy ambitious, rather intelligent, lazy, and interested in making jokes, rather than talking seriously.

The President then went on to describe the present state of Republican politics and the possible role in the campaign of the candidacy of former Governor Wallace. The President described his problem in Vietnam as how to steer between a Bay of Pigs withdrawal, on the one hand, and an avoidance of escalation and widening of the war, on the other.

Lee repeated: If you demonstrate your staying power, they will talk. I stake my credibility on that proposition. I have found that it is always best to speak the truth.

The President said we shall not compromise or trim in looking for an honorable peace.

The meeting ended with the Prime Minister wishing the President well in the 1968 election.

 

291. Telegram From the Embassy in Singapore to the Department of State/1/

Singapore, January 3, 1968, 0540Z.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 2 SINGAPORE. Secret; Exdis. Repeated to Canberra, Bangkok, CINCPAC also for POLAD, Djakarta, Hong Kong, Kuala Lumpur, London, Manila, Moscow, New Delhi, Rangoon, Tokyo, Vientiane, and Wellington.

1112. 1. In 1967 some striking changes have been set in motion in Singapore and I thought I would submit the following resume of the more salient of these and meaning as I see it.

2. Announced UK intention to run down its military presence here by half in next three-four years and altogether by mid-1970's. Despite adverse economic impact which loss of British presence threatens to bring, GOS professes not to be so concerned about economic results of British withdrawal (flow of Hong Kong capital, revival of Indonesian trade, success in attracting foreign investment into new Jurong industrial complex and belief they can develop foreign markets make GOS confident they can maintain economic growth, which continued in 1967 above eight percent, and finesse their unemployment problem). GOS most concerned about political and security problems that may develop as British leave. I believe this GOS concern is sound and that if British pull out completely before late 70's, some alternative to British military presence will have to be found if Malaysian-Singaporean stability is not to be endangered.

3. Establishment of diplomatic relations between Indonesia and Singapore and restoration of trade to pre-confrontation level. Resurgence of travel and commerce between Indonesia and Singapore, much of it still unregulated from Indonesia's viewpoint, is boon to both but until greater control of the illegal practices can be implemented between the two countries there is always danger that Indonesian resentment of Singapore and of Chinese who dominate in the trade will again become an Indonesian obsession detrimental to both.

4. Establishment of border crossing control and separate currencies by Malaysia and Singapore. While these additional steps of separation between these formerly federated and still interdependent countries have created some additional impediment to travel and trade, the effect does not seem yet to have been serious. Should a differential develop in the value of the respective currencies negating interchangeability there would be some additional awkwardness but it would not be insurmountable. Coolness between respective governments, especially Prime Ministers, continues, indicative of suspicions with which Tunku and some of his cohorts regard Lee and reflective of Lee's unfortunate tendency to make negative noises (happily not in public in recent months), about Tunku, his government and the Malays. If Malaysian economy should deteriorate seriously and Singapore continue to prosper to point of strikingly invidious comparisons, I would expect relations between two countries to worsen as result.

5. Establishment of trade missions by and expansion of trade and diplomatic relations with Eastern European and other Communist countries. Implementing their credo of trading with all (who will give them acceptable terms), Singapore greatly extended the nexus of relationships with Communist countries in 1967. There is every evidence that GOS is well aware of the political trickery that may lurk behind the exchange, however, and that they are on guard. Because the left wing in Singapore appears to be relatively less disaffected and better disciplined than in Malaysia and because communal relationships here also seem less volatile--hence less exploitable by the Communists--I regard the presence of a Soviet mission in Singapore as potentially far less dangerous than in Kuala Lumpur.

6. Growth of Singapore as buyer of and entrepot for Chinese Communist goods. Partly as result of troubles in Hong Kong, Singapore trade with China expanded markedly in 1967. ChiComs have offered easy credit terms through Bank of China for an ever greater variety of goods at extremely cheap prices and have subsidized rent of outlets. As a result, several new, so-called "emporia" devoted exclusively to the sale of these goods have been set up and the variety and quantity of food, clothing and other articles offered have found increased demand among Singapore's largely Chinese population. Singapore has also served increasingly as trans-shipment point for these goods to neighboring countries and has emerged as the biggest foreign exchange earner for Communist China next to Hong Kong. Perhaps rationalizing fact that these goods help Singapore hold line on wages, GOS professed not to be worried about potential for blackmail that may lurk in local dependence on ChiCom made goods. I am worried about long-term effect of this.

7. Further consolidation of Lee's People's Action Party control. The Peking-Lining Barisan Sosialis Party (BSP) abandoned parliamentary and electoral competition and turned to a program of street demonstrations which signally failed to accomplish anything except add to Singapore's prison population. This due in part to curious failure of BSP to address itself to real local issues and in part to effectiveness of Singapore police controls. At same time, GOS crippled BSP allies in the trade union movement by eliminating left wing unions. These developments left PAP power at highest point ever and contributed to its objective of creating "tightly knit" and "rugged" society that Lee sees as essential if Singapore is to survive critical decade ahead. But despite success, Lee remains concerned over increasingly serious unemployment problem and implications for Singapore of possible revival Communist insurgency in Malaysia. Communal strife that broke out in Malaysia in November in wake of controversy over devaluation regarded by GOS as indicative of dangers that lurk among disgruntled elements of Chinese community in Malaysia. They blame GOM for mishandling communal problem but despite these worries and although he has to take care that he does not offend the more China-oriented Chinese in Singapore, Lee strengthened his political control in 1967 and the fate of Singapore, so far as anyone in Singapore can decide it, is very much in his hands.

8. Happier notes in context GOM/GOS relationship emerging in 1967 were: (a) close cooperation at working level by security forces Malaysia and Singapore, especially during riots in Penang, (b) possibly as result of riots and of security problems expected to follow British military pullout, there seems to be renewed realization of interdependence in matters of security by both Malaysian and Singaporean leaders, (c) both sides appear to be thinking in terms of future cooperation, perhaps along with Australia and New Zealand, in defense.

9. Assignment Singapore's first Ambassador to U.S. in March and Prime Minister Lee's visit to U.S. in October. These were only part of growing evidence of greater acceptance and approval of U.S. by GOS in 1967. Although he did some public backtracking upon his return from U.S. visit (revealing, I believe, sensitivity of less assimilated elements among Singapore's Chinese community and of his own only indirect and tenuous personal rapport with them), Lee has continued privately to express his unequivocal support for U.S. defeat of Communist aggression in South Vietnam.

10. Singapore's joining with Thailand, Malaysia, Indonesia and the Philippines to form ASEAN. This was only part, though most important, evidence thus far that Singapore is placing its long-term bets for survival on regional cooperation with its neighbors. But GOS puts little faith in regionalism as short-term answer to Singapore's economic or security problems or, for that matter, Southeast Asia's.

11. Lee's visit to Cambodia in December, designed partly to burnish his non-aligned image after his forthright statements on Vietnam in the U.S., and partly to try to encourage Sihanouk to look more favorably on regional association. I believe evidence suggests that while Lee's tête-à-tête with Sihanouk may have made some superficial contribution to Lee's non-aligned credentials, his divergence with Sihanouk on important issues like U.S. presence in Vietnam and regional association with U.S. allies like Thailand, and Philippines was made more manifest by their exchanges.

12. Dramatic change in Lee's attitude toward U.S. Although Lee Kuan Yew has not entirely given up hope that something will happen to hold some British military presence in Singapore, he is not planning on it. He is aware that Singapore's security as a non-Communist entity depends more and more on presence of U.S. military might in Southeast Asia. Evidence accumulated during year suggests that Lee was toying very much with idea of trying to clear new path that would eventually lead to U.S. assumption de facto British protective relationship with Singapore, that he got well out ahead of an important segment of his Cabinet and constituents in this respect, and that he has accordingly revised his estimate of the time required to overcome Chinese antipathy in Singapore to anything, such as alignment with U.S., that would suggest that Singapore is taking sides against China. Lee's remark to me (Singapore tel 1050)/2/ that his generation can prepare the way for a close relationship between the U.S. and Singapore but that it will be the next generation which can implement and realize the full import of it, was revealing in this respect. Although Lee shares some of the ethnic resentment of indignities inflicted by the West on the Chinese nation in the past, his behavior in 1967 suggested strongly that he is in most other respects pro-West in outlook. In some of his public off-record talks in U.S. and in private then and since, Lee has come as close to declaring his personal support for President Johnson as Southeast Asian leader professing non-alignment could be expected to do.

/2/Dated December 20, 1967. (Ibid., POL 17-4 SINGAPORE)

Galbraith

 

292. Memorandum From the Assistant Secretary of State for East Asian and Pacific Affairs (Bundy) to President Johnson/1/

Washington, December 10, 1968.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL SINGAPORE-US. Secret; Eyes Only. Lee Kuan Yew was on a 2-month unofficial vacation/sabbatical in Canada and the United States from mid-October to mid-December. Rusk recommended that, as a matter of courtesy and gratitude for Lee's support on Vietnam, the President see him. (Memorandum from Rusk to Johnson, December 4; ibid., POL 7 SINGAPORE) Rostow also sent the President a briefing memorandum based on this memorandum by Bundy. Rostow suggested that Johnson should congratulate Lee on the economic success of Singapore and the increased American investment there and tell him that U.S. military forces were beginning to use Singapore's repair facilities on a commercial basis. (Memorandum from Rostow to Johnson, December 10; Johnson Library, National Security File, Country File, Singapore, Vol. II, 8/67-12/68)

SUBJECT
Your Meeting with Lee Kuan Yew

Lee wishes to convey his admiration for your whole conduct of policy in Southeast Asia and also for your personal sacrifice of March 31. He doubtless recalls vividly your meeting with him in Melbourne, at which you reviewed the political prospects with some frankness, told him the Republicans would nominate Mr. Nixon, and pretty clearly hinted that you thought you could beat him. Lee probably agrees.

No doubt he would again be fascinated by a frank personal forecast of how the Nixon Administration, and above all, the American public will be looking at Southeast Asia in the next few years. He thinks--and probably rightly--his own life and future depend on that judgment. Past experience should give you confidence that he will keep what you say wholly to himself.

More specifically, the British decision to pull out of Malaysia and Singapore after the end of 1971 came after your Melbourne meeting, and has preoccupied him all through the year. He thinks, as we do, that a clear Australian stand, including the willingness to keep limited ground forces in the area, is the key to post-1971 security for him. And he is as baffled and dubious about Prime Minister Gorton as we are. I probed him at length on this when I saw him in Cambridge two weeks ago, and he came up with one interesting thought--that a continuing American military presence in Thailand would go very far to convince Gorton that he had to do his share in Malaysia and Singapore. The latest we ourselves have on this is that the Australians have made a general decision for a "forward strategy" rather than a "Fortress Australia" view; however, this appears to be very general, and he would doubtless welcome a frank exchange on what goes on in Gorton's mind--as if anybody knew.

Another possible topic might be the future of ASEAN in view of the spat between Malaysia and the Philippines over Sabah. Again, his thinking is like ours--that Marcos has made a fool of himself--and his government has expressed blunt support of Malaysia's position. The question is how to get Marcos off the hook and who can help.

In general, Singapore under Lee is continuing to do a superb job, and in the past year has scored some outstanding successes in attracting American investment. He thinks this is fine, and is also most anxious to have our Navy and Air Force use his repair facilities on a commercial basis. We have started this, and it is going satisfactorily.

You should know of one minor issue, although I doubt very much that he would raise it. Singapore (and the Philippines as well) wants a license to manufacture the AR-15 rifle--the commercial version of the M-16. Secretary Clifford has reservations about this, and we have not come to any decision. In the remote event he raises this, I believe you should be sympathetic but noncommittal.

On my observation and by all other accounts, Lee is in a relaxed and forthcoming mood. He should be good value.

On press handling, Lee understands that his call is being made public. However, he would strongly prefer not to be exposed to the press for the purpose of making any remarks. This is in line with his unofficial status, which he has observed with the greatest care in the month he has been here.

William P. Bundy

 

293. Editorial Note

Prime Minister Lee Kuan Yew met with President Johnson on December 10, 1968, from 5:25 to 6 p.m. with William Bundy and Malaysian Ambassador Ong present. William Bundy sent Ambassador Galbraith a personal and eyes only letter, December 12, describing the conversation. Bundy's account reads as follows:

"In the talk with the President, Ong and I were also present, although I had thought the President would wish to see him dead alone. The talk started a little slowly, but finally became quite relaxed and the President engaged in a considerable amount of personal reflection and reminiscences but also in some serious questioning of Lee about Singapore and Southeast Asia. Lee readily handled his end beautifully, with just the right amount of sincere praise for the President's guts and determination, and a very frank and clear statement of how vital our sticking in Vietnam remained in his judgment. He also threw in some useful comments on Gorton and, for good measure, on Sihanouk--to the general effect that the latter readily depended on us just as much as everyone else in the area, even though he would hardly show it.

"However, I must tell you in the utmost confidence that some of the President's remarks may have left an unfortunate impression about the firmness and resolve of the new Administration. The President said that he had no doubt whatsoever of Mr. Nixon's personal views and intentions, but he then went on to say that he doubted very much that Mr. Nixon would stand up to the 'soft' advice he would get from the new Secretary of State, Rogers, from Laird, and in general from the 'soft liberals.' The net impression can well have been that Mr. Nixon would end up doing just about anything to get out of Vietnam on any terms at all, and that his standing in Southeast Asia was open to grave doubt. Quite frankly my own impression was that the President was indulging in the kind of disparagement of any successor that I have sometimes heard--in similar periods--from other senior officials. There was a good deal of the tone of 'I am a giant, and these men are pygmies.' It may or may not turn out to be true, but I am not sure that Lee discounted it to the extent that I personally would do as of now.

"Into the bargain, the President made some very uncomplimentary remarks about Mr. Humphrey's campaign speeches on the bombing, and this too may have left the impression that Mr. Humphrey and the dominant wing of the Democratic Party were ready to pull the plug in Southeast Asia. I injected myself once or twice to demur on this, but I doubt if I countered the impression the President was leaving. Nor do I think I was able to do so afterward--by further corrective efforts--believing as I do that Mr. Humphrey would in the end be at least as firm as Mr. Nixon, and that both would stand up to a considerable degree to the kinds of pressures that anyone can see.

"The point, of course, is that Lee may well be putting together his Harvard experience and what the President told him, into a very gloomy forecast indeed of future American intentions in Southeast Asia--and this is the serious possibility that warrants my telling you what was said.

"However, as I write this, there is one card left to be played, and that is his talk with Kissinger tomorrow. I myself am seeing Kissinger on other matters tonight, and will tell him quite frankly that he has a job to do--although I would not suggest that he give any flat assurances." (Department of State, Bundy Files: Lot 85 D 240, Private Correspondence with Ambassadors)

No record of Kissinger's conversation with Lee has been found.

Volume XXVI Index


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