Foreign Relations of the United States, 1977–1980, Volume XXII, Southeast Asia and the Pacific

196. Memorandum of Conversation¹

New York, September 30, 1977, 5:30 p.m.

SUBJECT

• The Secretary’s UNGA Bilateral with Malaysian Prime Minister Hussein (Topics covered included ASEAN, Thailand, US Policy in Asia including Philippine bases, USSR, PRC and SRV Medium Term Perspectives, Malaysian Political Developments, US-Private Investment and FMS Sales Credits.)

PARTICIPANTS

• Malaysia

  • Prime Minister Datuk Hussein bin Onn
  • Foreign Minister Dato Ahmad Rithauddeen
  • Datuk Zakaria bin Ali, Secretary General, Foreign Ministry
  • Ambassador to the U.S., Zain Azraai
  • Tan Sri Thong Yaw Hong, Director General, Economic Planning Division, Prime Minister’s Office
  • Other members of the PM’s party

• United States

  • The Secretary
  • Under Secretary for Political Affairs, Philip C. Habib
  • EA Assistant Secretary Richard Holbrooke
  • Ambassador Robert H. Miller
  • EA/TIMBS Director, Robert E. Fritts

After amenities, the Prime Minister noted his interest in getting a better view of U.S. attitudes toward peace and stability in Asia. In doing so, he wished first to outline the Government of Malaysia’s views which he had presented to the President.

ASEAN—A useful experiment in regional cooperation which after some years of “groping” had now identified areas of definite cooperation. ASEAN was based on economic, social and cultural interests and was non-military. Nevertheless, ASEAN showed an “accumulated concern” for the long-term stability and security of the region, which would be beneficial to “all” countries of the region. In doing so, ASEAN placed a premium on economic development in the pursuit of political stability and security.

For its part, Malaysia was doing “its best” to create conditions for stability based on its own national efforts. However, the U.S. could assist a great deal in Malaysia’s national development effort particularly through such means as technical assistance. He had just spent six days in Japan and Prime Minister Fukuda understood this very well. Indeed, if Malaysia’s development effort were to slow down, the impact on Malaysia would be “fatal”.

Thailand—The Prime Minister wished to bring Malaysia’s concern over Thailand to the Secretary’s notice. The Prime Minister had mentioned this topic to President Carter as well as Prime Minister Fukuda. The approaches were being made with the concurrence of Prime Minister Thanin of Thailand. The Prime Minister hoped Thailand would receive some “understanding” from the U.S. and that the “past was not the cause” for an “apparent U.S. coolness” toward Thailand. In Thanin’s view, he was having a difficult time “putting the country together”. It was very much in ASEAN’s interest that Thailand be stable. There had been recent welcome cooperation by Thailand in insurgency border operations. Thai goodwill was also important in relation to other understandings, would be conducive to regional cooperation and minimize local problems. The Prime Minister hoped for a “friendly understanding” by the U.S. toward Thailand. Japan understands the matter in both economic and security terms and is committed to support ASEAN development efforts.

The Prime Minister noted his particular interest in the Secretary’s views toward Asia in the context of the Asia Society speech which had been cast in “very broad terms”.²

U.S. Policy in Asia—The Secretary characterized his Asia Society speech as a much-needed declaration by a senior U.S. official clarifying the views of this Administration toward Asia. The U.S. is and will remain (with the emphasis on is and remain) an Asian and Pacific power. Both he and the President fully support that view. In that regard, the future of our bases in the Philippines is frequently raised. We intend to retain those bases and Assistant Secretary Holbrooke went to Manila recently to see President Marcos and to reopen discussions.³ The visit was “very satisfactory”. The Secretary had also spoken with Mrs. Marcos (heading the Philippine Delegation to the UN) and the two nations will resume full-time discussions when newly-appointed Amb. Newsom arrives in Manila in the third week of October.⁴ Our intent (and we believe the Philippine intent) is for the bases to remain and we will work together to consummate the arrangements.

ASEAN—The U.S. attaches great importance to ASEAN and the progress made since its birth. We wish to act in “close harmony” with ASEAN in ways that meet the desires of its members. Our recent meeting in Manila with ASEAN⁵ (and other contacts) demonstrate our wish to cooperate in a constructive manner in ways that suit ASEAN best. We also wish to receive helpful advice from ASEAN nations.

Thailand—The U.S. has not intended any “coolness” toward Thailand. Instead, we wish to have good relations with a strong and confident Thailand which would be to our (including Malaysia’s) mutual benefit. The President and Secretary intend to work toward that end as part of a policy of close and cooperative relations with all ASEAN members. The task requires thought and effort—but we are prepared to do it.

Malaysia—Malaysia has great importance to the U.S. and we hope our friendly relations are of mutual benefit to Malaysia. He was interested in Malaysia’s view on the region particularly the SRV and PRC roles over the next 5–10 years.

USSR-PRC—The Prime Minister replied that all his comments represented “general attitudes”. Provided the SRV was not “forced”, it would remain “as independent as any other country”. Malaysia was not concerned over any direct SRV aggression for the next few years provided that regional states did not adopt an “antagonistic” stance toward the SRV. If the SRV were to “foolishly attack, Malaysia would fight”. The situation also had to be viewed in the context of the uncertain development of USSR-PRC relations. In that regard, Malaysia’s primary concern was the USSR which was “more active” than the PRC (the situation was different in Indonesia) “exerting an active political presence” in Africa and the Indian Ocean, and carrying out “undiplomatic” activities in rural areas of Malaysia. Official protests were only “temporarily effective” and the GOM must remain “vigilant”. The PRC was “more clever”.

Political Development—The Prime Minister then explained in detail GOM efforts to create national unity through extensive and “vital” policies of economic development, social services, education, information, health and communal harmony. He spoke at length on the loyalty of the vast majority of the ethnic-Chinese population noting that the 1969 riots had “proven” that most ethnic Malays and ethnic Chinese other than a few extremists were moderate and sensible. Malaysia’s mistake had been to become complacent after 1960 simply because the insurgency had been “physically destroyed”. Policies had been neglected and it was to Prime Minister Razak’s honor that he had recognized and redressed these policies. There had been much “beneficial improvement” over the past year as well. Malaysia had learned its lesson and would “stick together or sink together”.

Investment—The Prime Minister raised foreign private investment specifying that it was an important component of economic momentum for Malaysia and the progress of ASEAN. There was thus concern at U.S. policies which were “restricting” investment and he hoped the U.S. would not “prevent” joint ventures and other business activities. The Secretary replied that the U.S. had “no intention” of restricting the free flow or choice of investment which he confidently expected to expand to ASEAN in the years ahead. Tax laws would have an effect “from time to time” but would be dealt with carefully. There was no U.S. intent to discourage overseas investment—particularly in ASEAN.

AID—The Secretary then outlined his hope that the current review of U.S. aid programs would result in clarifying objectives and procedures to the extent that he and the President could shape a defensible program which could be explained to Congress in a manner which would increase future aid. It would be “a hard job”. In addition, he believed the welfare of developing countries would be furthered by current international negotiations on commodities, common fund,⁶ MTN, UNCTAD discussions and the IFIs. The U.S. energy policy was also of key importance, but there was “not much help” coming from Congress. There was thus a “whole host of possibilities for concrete action”. Progress required careful thought and all concerned must “avoid improvisation”.

Security Sales—The Prime Minister noted that Malaysia was “not unappreciative” of U.S. efforts in those fields as well as security assistance. The Malaysian “spirit” was not to accept free aid (“Our defense is our life”), but to purchase arms for its own defense as an element of national determination. He hoped, however, that the U.S. would assist with pricing and that terms (FMS) would be “reasonable”. The Secretary noted his understanding.

The Secretary expressed his appreciation for the visit and the President’s pleasure as well at meeting the Prime Minister. The Prime Minister smilingly thanked the Secretary for sending such “good American Ambassadors” to Malaysia.

1. Source: Department of State, Office of the Under Secretary of State for Political Affairs, 1976–1978, Lot 81D5, PCH Log, Nov 1, 1977 to Mar 25, 1978. Confidential. Drafted by Robert E. Fritts (EA/TIMBS) on October 3; approved by Wisner (S/S) on October 14. The meeting took place at One UN Plaza.
2. Vance delivered his speech to the Asia Society on June 29. See Department of State Bulletin, August 1, 1977, pp. 141–145. See also Foreign Relations, 1977–1980, vol. I, Foundations of Foreign Policy, Document 48.
3. See Document 300.
4. See Documents 304 and 311.
5. The first U.S.-ASEAN Dialogue was held in Manila September 8–10. For Under Secretary Cooper’s statement at the conference, his press briefing, and the joint statement issued on September 10, see Department of State Bulletin, October 31, 1977, pp. 595–605.
6. At the end of its fourth session in Nairobi, Kenya, in May 1976, UNCTAD agreed to the establishment of a Common Fund to finance a buffer stock program designed to smooth out primary commodity price fluctuations.