104. Telegram From the Consulate in Hong Kong to the Department of State1

1505. EA Only. For Asst. Secretary Holbrooke from Sullivan. Subject: A Policy Toward Southeast Asia.

1. Following the collapse of South Vietnam in 1975, the United States took the public position that nothing had really changed and that no policy reassessment was contempleted or needed. Rather than being reassured, the ASEAN countries and Japan interpreted our apparent unwillingness to come to grips with the “new realities” as another indication that the United States, after twenty years of exaggerating the extent of its interests in Southeast Asia, might now decide it had no interest there at all.

2. This is not the conclusion we want them to draw and the change of administration offers an opportunity to make clear that the end of Vietnam era does not mean we are washing our hands of Southeast Asia. Long delay in redefining our interests and role would carry a high risk of further destabilizing the region and unnecessarily complicating our relations with Japan.

3. At the heart of Asian concern over the American inability to frame a new, relevant policy is that they are as aware as we that the United States has no major interests intrinsic to the region. We became involved initially through the policy of containment and continued our preoccupation with the area in the 1960s because we had concluded that the competition with China and the Soviet Union had shifted from the developed to the underdeveloped world. Detente, normalization of US-PRC relations and increased attention to relations among the industrialized nations make our Southeast Asia policy an anachronism.

4. Looked at in isolation from other policy interests, Southeast Asia is not of major importance to the United States. We want continued access to the region for trade and investment as well as transit and overflight rights for our ships and aircraft. And so our now traditional policy objective of preventing the domination of Southeast Asia by any power or combination of powers hostile to the United States remains relevant. But the prospect of that happening seems remote given the economic dependence of the area on the United States and Japan and the likelihood the Sino-Soviet dispute will continue.

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5. However, Southeast Asia is not separate from other policy concerns. We want to demonstrate in a practical way that we take the North-South issue seriously, and Southeast Asia is one of the more promising areas in which to do so. We also need limited military facilities, not for Southeast Asian contingencies but in order to maintain our Naval deployments in support of our Pacific and Indian Ocean policies. But our overriding interest is that the metaphor of our Asian policy as a wheel of spokes without a rim is no longer apt. The rim is the US-Japan relationship. Our interests, as well as those of Japan and the countries of the area, would be served by the policy of working in partnership with Japan to encourage confidence and a lessening of intraregional tension and to contribute to the political and economic development of the region.

6. That Japan places a high priority on its relations with Southeast Asia needs no elaboration. What is new is that Japan which has long wanted to work with us in the area, now seeks an opportunity for the kind of close US-Japan coordination that our military involvement in Indochina made politically impossible for Japan.

7. The ASEAN members, which are the countries we [should] be most concerned with, would also welcome this policy. They want Japanese trade and investment, but they would prefer to see Japanese influence diluted with a good admixture of some non-threatening third country influence. The Japanese understand the problem; they are aware of the correlation between the high level of trade dependence in the area on Japan and rising anti-Japanese sentiment. Unwillingness on our part to share the political and economic burden would create political problems for Japan in Southeast Asia, reduce the effectiveness of their efforts there and inject an unnecessary irritant in US-Japan relations. Over the long term, leaving the Japanese to go it alone could result in the establishment of Japanese hegemony in Southeast Asia with all the implications that might have for US-Japan and Japan-PRC relations.

8. Whether a US policy of demonstrating continued intrest in Southeast Asia through partnership with Japan would be credible, effective and acceptable to the countries of the area will depend on what we do in four key areas: the economic issues; ASEAN; Vietnam and the Philippine base negotiations.

A. Economic issues—Saying we have important economic interests in Southeast Asia does not reassure when the data on investment suggest the same shift away from the area that the countries see in such other indicators of US interest as military presence and the frequency and content of high-level statements. We need a systematic study of the reasons for the falloff in investment and an examination of whether we are using or can improve on the policy tools we have [Page 364] avilable to increase the transfer of real resources. Should we seek changes in GSP, OPIC guarantees and EXIM policies? To what extent should we use the Asian Development Bank as a funnel for assistance and a means of demonstrating our interest in the area? Are American firms holding back because they too are concerned about the lack of consistent and credible US policy? Would they respond to a combination of US Government encouragement, expressions of confidence and specific policy decisions? How do we work with Japan so that our policies and actions in trade, aid and investment will complement each other? Would coordinated US-Japanese approaches to the problems of corruption and human rights be effective?

B. Vietnam—Our policy toward Vietnam should convey that we have put the war behind us without at the same time arousing fear that we may follow our usual postwar pattern of aiding our former enemy thereby strengthening a Vietnam that the countries in the region still do not trust. Our long-term objective may be to integrate Vietnam into the area, but for the time being we should concentrate on building strength, cohesion and confidence in the ASEAN countries. At the same time we should move to take the heat out of the US-Vietnam relationship. Failure to do so would not only cast doubt on our statements that the Vietnam war is over but would also complicate our relations with the ASEAN countries by putting them in the position of feeling they had to choose between cooperation with us and improved relations with Vietnam. Pending resolution of the MIA and “reparations” issues, we should consider such unilateral gestures as removing trade restrictions and permitting Vietnam’s admission to the United Nations. We should balance these gestures with firm and credible assurances to the ASEAN nations that we have no intention of making Vietnam the focus of our attention in Southeast Asia or of engaging in any massive aid program there. Until we can normalize relations with Vietnam, Japan can usefully take the lead.

C. ASEAN—Our policy toward ASEAN as an organization requires a lot more study than we’ve given it. This is also a subject tailor-made for US-Japan consultation. We have to be in favor of ASEAN because it exists and the member countries think it is a good idea. It probably also has some value as a means of reducing intraregional tension. But we should not accept without analysis the assumption that regional integration is a means of bringing about economic development. The evidence from other experiments in the underdeveloped world suggests it is the other way around. Nor should we assume that it is desirable for the organization to concentrate on economic integration through the reduction of tariff barriers. Again the history of other efforts at regional integration among underdeveloped countries suggests that trying to integrate the economies of countries with widely different [Page 365] levels of development causes serious problems by benefitting the more developed at the expense of the less. This “backwash effect” of drawing investment from the poorer to the more highly developed areas causes not only economic problems but increased intraregional tension as well.

We and the Japanese will have to tread a careful line, supporting ASEAN in principle and showing willingness to consult with it on matters relevant to the region’s relationship with us. At the same time, we should avoid making any judgments on relations among the member countries or giving the impression that we would favor a more rapid pace toward institutionalization of the organization. Rather our emphasis should be on promoting the economic development of the member countries and particularly in reducing the differences in levels of development which will provide the foundation for later, effective efforts at achieving integration.

D. Philippine base negotiations—A prompt and satisfactory agreement on base rights in the Philippines is necessary for our political-military purposes in the Pacific and Indian Oceans and is an essential element of a credible new policy in Southeast Asia.2

—The financial benefits to the Philippines aside, our bargaining advantage lies in the fact that the Philippines along with Japan and the ASEAN countries, want a continued US military presence in the region. Even though they know we have no intention of employing military force in any foreseeable contingency, our presence (particularly Naval presence) is reassuring and provides visible evidence of continued US interest in the area. At the same time the bases present a problem for the region. In Southeast Asia, unlike Northeast Asia, there is no realistic conventional military threat. Against threats countries like the Philippines see as real: Communist insurgency; Muslim insurgency; the dispute with Malaysia over Sabah and possible conflict with Vietnam over the Spratlies, the bases contributed nothing. Indeed they may increase the danger by making it impossible for the Philippines to take on the protective coloration of non-alignment.

—In the new situation where the security benefits to them are minimal, the Philippines need an agreement which increases the other benefits and reduces the political costs. Reducing costs means more than cosmetic changes. The agreement must be such that they will be able to say there are no US bases in the Philippines and that they have agreed only to allow the Americans to use Philippines facilities just as Singapore and Malaysia permit the Australians and British to use facilities in their countries.

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—Assuming we can reach an acceptable understanding on money, is the kind of agreement the Philippines want negotiable? If we want to keep Clark Airbase the answer is probably no. The Air Force would not be willing to accept Philippines operational control, and the price tag would be higher than the base is worth. The Naval facility at Subic is another matter. We could accept a Philippine base commander there and a Philippine requirement to approve any use of the facility beyond repair, maintenance and support (including P–3 flights) of our normal Indian Ocean and Pacific deployments. An agreement which included Subic and nothing more than transit rights at Clark could be reached at reasonable cost. Such an agreement would also be likely to win congressional support since we could quantify the economic advantages of continued use of Subic over any alternative.

—Clark Airbase, aside from providing transit facilities for cargo aircraft has no purpose other than to satisfy the requirements of obsolete JCS contingency plans. Whether giving it up in an agreement that secured use of Subic would be adequate to reassure Japan and the ASEAN countries would depend on the face we put on it. If we made it clear we were satisfied with the agreement and believed it both met our needs and respected the sovereignty and neutrality of the countries of the region, there is every reason to believe the reaction would be favorable. Even Lee Kuan Yew might be impressed. Again consultation with Japan will be essential.

9. Finally there remains the question of the reaction of the Congress and the public toward this policy. Provided it was clear that we were not undertaking another open-ended commitment toward the area, it is likely that Americans would applaud a policy which involved the Japanese in a form of burden sharing which did not require or presage rearmament or the assumption by Japan of a regional security role.

10. The March summit meeting with Japanese3 would be an appropriate occasion to open consultation with the Japanese on Southeast Asia. There is obviously not time before that meeting to complete a thorough reassessment and to prepare detailed policies but we could at least begin the process by letting the Japanese know that we put a high priority on working together toward our shared objectives in Southeast Asia.4

  1. Source: National Archives, RG 59, Central Foreign Policy File, D770042–1117. Confidential; Stadis.
  2. For documentation on the Philippine base negotiations, see Document 291.
  3. Prime Minister Takeo Fukuda visited the United States March 20–23.
  4. Telegram 2207 from Tokyo, February 16, further addressed Japan’s role in the region. (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 3, Asia, 1977)