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

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 [Page 643]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 [Page 644]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 [Page 645]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.

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