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6. Anglo-Portuguese Alliance.
E.H. As in memo. Salazar has said he is examining Treaty. H. intends therefore to spk. to P. For. Minister at Athens mtg. Para. 6.
J.A. Staging at Sal. Cape Verde is vital to us. Overlying Angola is also important.

Wd like to discuss with F.O. possibility of a reciprocal agreement with them on staging & over-flying. – in substitution for Treaty.


H.W. Don’t mind so long as we exclude El Adem
Ch.H. Is it wise to raise this?
D.E. I doubt it: this is a dying regime. Goa was humiliating to P. Army, on whom S relies. Shd we do better with successor Govt. Unless it’s urgent, better to wait.

Br. community in P. are v. Lièn with regime. They wd. think we had let them down.


Hail. P. will have social revolution in P. itself. That is their real problem. An approach based on their Colonial position misses the real point.
P.T. We can live with this for longer.
E.H. Argument for action is tht. our relations with P. generally are v. Unsatisfy & it’s embarrassing for us if we make no effort to improve them.
J.A. Put it on basis, not of difference of our Colonial policy, but on future possibility of guaranteeing support when we relinquish sovereignty over Rhodesia, Singapore, etc.
S.Ll. Wise for the For. Secy. himself to get involved? Better to do it thro’ Ambassador?

Doubtful about 2nd half of para. 6.


E.H. At Athens talk by H. wd. be less committed than approach thro’ Ambassador.

Agreed. (i) J.A. & F.O. to explore possibilities of


reciprocal agreement.

  1. Authorise H. to have tentative talks.

  2. Warn him there are misgivings over getting too deep into this.

(ii) to be done at Athens mtg of N.A. Council.

[Exit J.A.

7. M/East Kuwait.


H.W. Communications with Ldn. are liable to interruption.

Flying-time for Iraq to Kuwait is virtually nil.

Need therefore to authorise C-in-C to take out airfield, in event of aggression, if commn with Ldn. are broken.
E.H. A large authy to delegate to mil. commander.

We shd. need to be able to show tht. Iraq attacked before we acted. Risk of appearing to have offered provocation.

Awkward in U.N.

This point shd. be brought out in instructions.

H.W. During Kuwait operns communication with Ldn. was broken for all of one night.

But cd. re-draft to meet some of E.H.’s point.


D.S. Are we sure we can deal with Iraq attack.
H.W. Yes: but only if we can fly re-enforcements in.
Agreed: M/D to revise directive with F. O. in light of the

Cabinet’s discussion.



C.C. 30(62). 3rd May, 1962.
1. European Economic Committee. [Enter M.R.
E.H. Stated our views. They have excited few comments. But some

difference in Six on ques. whether we shd. be associated in

further discns of political union. Fr. alone are opposed to this…...

Brussels negotiations. Report by officials shows all the gaps. 8 main

headings. Compromises explored w’out commitment. Next

phase: true negotiations. Deputies have proposed areas for

discn – save for one these coincide with our own ideas. They

want to concentrate on agricultural ques. wh. affect C’wealth:

we are ready for that. Levy system also – will be one of most

difficult negotiations: a test case.


2. Economic Situation.
P.M. Political situation is threatening. On economic situation –

i) what ought we to do, in next stage. } over next

ii) what are we to say – in presenting our case. } 3 months.

In this period, no pol. capital to be made over C. Market because

can’t prejudice negotiations.

I was interested in a) interest rates b) credit, generally.


S.Ll. B/payments. 1962 will show continuing improvement

i) 1960: - £288 m. 1961: - £70 m. 1962: + £150.

ii) 1959: - £152 1960 - £490 1961 – 62. £ m. 1962 – small surplus.

ii) is inclusive of capital movement.

Reserves 576 fr. I.M.F. Aug. Reserves 350 m. more than July, having

paid off large part of borrowings.

C/living figures. From 100 to 120 since 1956.

B/payments will continue to improve in first half 1963 but not in

second.

Exports: can’t rely on general improvement: four or five lines are



carrying most of the burden.

Fixed investment: will rise.

Current expenditure (public) will also rise.

Unwise to start reflating: we might have to clap reservations on later.


D.E. Satisfy if we can restore our pol. posn by improvement in economy.

But we are in different sitn now.

After 6 years of war and 6 of Socialism, people wanted period

of quiet govt. They have had this. They now are ready for

change – esp. on home front. won’t be satisfied merely by

demonstratg. tht. economy is healthier.

Moreover, if we say the economy is better, incomes policy may be

undermined. Shd we not rather say – these are some of the things

you can have if the incomes policy is accepted.

P.T. We can’t buy ourselves out of our political difficulties.

Our policies have gained many advantages.

Make it plain tht. an incomes policy is a permanent feature.

If we reflate at all, be v. careful to consider where it shd. go. Not

to personal consumption, certainly.

Main need is to remain tough on incomes policy.
R.M. Improvement in economy won’t itself solve our political problem.

But C. Market will be the main issue.


D.S. Indicate targets which are worth sacrifices involved by wages policy.
Hail. New mood – good time since 1951 – now they want more.

C. Market will be a theme, but can’t be put forward now.

National efficiency isn’t high enough. Our theme shd. be – revival

of efficiency. Not easy for us now, after 11 years in office.

Also sense of insecurity about Britain’s future.
Ch.H. People are tired of us, but also of emphasis on material things. There

is need for new enthusiasms. C. Market will provide new &

vivid controversy. In addn, we must seek for new ideas in other

fields, work them out & present them.

Some progress in international affairs wd. help.
I.M. Agree tht. economic improvement won’t win us next election.

But I wd. not reflate. Lower Bldg. Socy. rates would help.

I wd. hold off pressure for increase in O.A.P. as long as possible.

But public service pensions shd. be increased – pari passu

with any increase in public assistance.

Wages policy vital – as permanent. But some anomalies must be

rectified – e.g. nurses.

Endorse Hail.’s view. Linked with end of Empire. Entry into

C. Market cd. give us a new enthusiasm.

M’while, we shd. claim we have won (by policy since last July)

a sound base for expansion.
R.A.B. We must continue economic policy. At this stage consolidate our

own supporters. Support S.Ll. in holding a stiff line.

Incomes policy. Develop this on permanent policy. But some

anomalies will have to be removed, sooner or later.

Special claims of nurses, probation officers and nurses.

New ideas – stress competition. Link with C. Market.


C.S. Need for incomes policy after we had bn. in office 10 years – this

alone wd. have accounted for our loss of popularity. But we

must hang on it for some time yet. Don’t relax even for nurses.

Esp. in areas which have caused us unpopularity.


H.B. Support Ch.H. and R.A.B.

Don’t relax. We don’t need quick prosperity. We need a steady rise

coming twds. peak in autumn ’63.

Incomes. It’s not possible to petrify all differentials at point they

happened to be at in July, 1962. Nurses.

Targets: don’t assign dates.

More speed in pressing desirable policies.

x/ Lack of confidence between Ministers & business people.

Malaise – not end of Empire – rather a feeling tht. Tories have no

sense of purpose.


J.H. “Permanent incomes policy.” Govt. can’t impose it. Must be done

with consent of employers and unions. Can’t get it from

N.E.D.C. w’in a year. In this intermediate phase we must be

more flexible – e.g. revaluate status of certain classes of worker

w’out leading to leap-frogging.

We, as Govt., shd. interest ourselves more in fixing prices.

Can’t buy popularity. Most we can hope for is respect for what we

have done. We have established base for expansion.


E.M. W’out incomes policy we are bound to fail.

Tough speeches needed to keep workers from claiming

increases.

Building & civil engineering is key thing in affluent society.

Work of P.O. & M/Ed. in getting economic bldg. M/Housing

has not done this for houses: we need more pre-fabrication.

Incomes policy needs to be supplemented by attack on restrictive

practices by labour.


K. Intermediate phase before c. Market period. Can’t wait for

second. (Oct.)

Can claim no economic crisis this summer.

Wages policy – shd. relate it more directly to growth.

Disappointed at slow pace of N.E.D.C. – get some of its work

going even if we have to go slow in getting it to endorse incomes

policy.

After 11 years we are giving impression of not being interested in



people’s lives. Housing: can’t rest on 300.000 achievement.

Consumer: some legn needed next session.

Rights of individual: Franks report 5 years’ ago.

Look now at Ombudsman.

x/ also: we must do more. P.M. may have to act.
P.M. From now on, we must devote more time in Cab. to these things.
Resume this evening – at 6 p.m.

C.C. 31(62). 3rd May, 1962.
1. Economic Situation (resumed).
P.M. Will consider report of this a.m.’s discussion & take up points later.

M’while, right way of using N.E.D.C. on wages: invite them

to consider the means of increasg. industrial efficiency which

wd. make it possible to pay higher wages.

Can we dramatise our approach - presentation - picking out some

targets.


If so, we must mobilise all Ministers – and also back-benchers.
2. Canada.
P.M. In a bad way. Invested in the boom, now in trouble. Devalued

currency.

Politically, we shall get nothing from existg. Adminn – esp. Dief.

They tend to criticise C. Market on principle w’out considering

merits.

J.D. may run campaign on patriotic anti-U.S. line.



Public, and business people, are more realistic about C. Market.

They believe we wd. influence it twds. expansion.

People are v. friendly to U.K.

Narrow result, whichever way election goes.


3. U.S.A.
P.M. i) In spite of Keynsian policies, Admn is finding diffy in getting

economy moving. Row with steel is popular, but rather

demagogues. The steel cos. cd. have done it more sensibly –

by items instead of average increases & not doing it so soon.

Even so, some shadow of New Deal – risk of losing co-opn of

business.

ii) Defence. Mr K. is in diffies: better armed v. Govt. agencies because

keeps his counsel in narrow circle. Disappointed at out-turn of

tests ques: but looks as tho’ R. will do another series. After that

U.S. might be ready to give it up.

Nuclear strength of R. & U.S. has got much too large. To catch

up R. must have devoted enormous resources. A nuclear

exchange wd. kill 100 m. Europe, 130 in U.S. & 200/250 m. in

U.S. What will happen to credibility of deterrent when that is

more widely known. Will Govts. be willing to risk that sort of

destruction? If not, this is instrument wh. will never be used. This is what causes them to think of larger conventional forces –

as reply to e.g. nipping out Hamburg.

U.S. have eliminated pre-emptive R. war – by protection of sites

& Polaris as 2nd strike.

But, unlike previous Adminn, this one believes tht. some day all

this nuclear business must stop.

K.’s emphasis, in speeches & interviews, are largely on his

domestic problems. This must reflect recognition of huge cost,

in resources of nuclear effort.

iii) Summit Mtgs. I’m anxious to concentrate this year on C. Market.

Mr K. understands this - & recognises its importance to us.

He accepts tht. pro. tem. we shd. avoid mtgs. which wd.

exacerbate de G.

iv) Berlin: W. Alliance. U.S. annoyed with Fr. and G. Cross at thought

tht. U.S. will be said to have sold Germans. Tried to make Mr K.

realise tht. this is price of power. But not sure any progress will

be made on Berlin – not a settlement anyway: perhaps

modus Vivendi which works on. That wd. give us respite until

we are ready to go forward on tests. Avoid Summit failure.

v) General relations with U.S. are good. Won’t be affected by our entry

into C. Market. Depends, not on our power nor on our nuclear

capabbilty, but on fact tht. they can trust us as they can’t trust

French etc.

vi) Irritants – tariffs. Protection is traditional in U.S. & has now extended

to the South. Pressure to let Tariff Commn have final decision.

He must accept some of their recommendations, or he may lose

his jurisdiction.

On shipping I have promised to send him a memo.
R.A.B. Opinion here is not sure what U.S. motive is in pressing for our entry

into C. Market. Must be political, not economic. Suspicion

therefore that our sovereignty may be impaired

Press – brought out well tht. we are defending C’wealth interests.


P.M. vii) Colonialism. Co-ordination W’ton/N. York. [Enter Hailsham, M.R.

Congo: Anglo-U.S.-Belgian co-ordinated policy.



C.C. 32(62). 10th May, 1962.
1. Parliament. [Enter M.R.
I.M. Business for next week.
2. Foreign Affairs.
a) Laos.
H. Serious break of cease-fire nr. Ch. frontier. No evce tht. Ch. troops

intervened. Royal troops tho’ numerous ran away at once.

Commr is going to P. Lao H.Q. to-day to meet them & Phouma.

Macdonald happens to be there – none of Laotian leaders is in

the country – and it will be up to him to keep things quiet. Some

signs tht. Phoumi is giving way to U.S. pressure. No genl. wish

to resume civil war on full scale.
b) Congo.
H. A. & T. talks adjourned. Gardiner (U.N.) talking to T: hopes tht. T.

may be ready to return & settle – at end of this week.

On other hand mercenaries are returning to Katanga in some strength.

Airfield at Kolwezi being enlarged & bomb-proof pen being

built. U.N. Commn wishing to inspect is being stalled off.

Cttee – U.S./U.K./Belgium: in return for federal constn, T. to cough

up revenue. B. Govt. have agreed to Cttee: must be secret.

Agreed soln might be given to Sec-Genl. to put across. (This

arises from W’ton talks.)
P.M. If we cd. get tripartite agreement on aim, it wd. be great advance.
H. Yes: but care over U.S. disposition to impose agreed policy.
c) N.A. Council.
H. Buried i) N.A.T.O. deterrent ii) M.R.B.M. plan. Satisfactory.

We substituted plan for Nuclear Cttee thro’ which U.S. can tell

others their prepns & plans. This will help in next stage – getting

x/ more reasonable strategy, balancing nuclear & conventional.

Political side. Tensions because of Col. policies of Dutch &

Portuguese. Informal talk with P. For. Minister: warned him no

likelihood of help in Colonies: he was not disposed to review

Treaties: but agreed to talks thro’ dipl. channels.


H.W. Defence: making some progress. But x/ contain many unresolved

problems.


d) Disarmament.
H. R. want to adjourn on 1/6. Clear they don’t want serious talk now.

We and U.S. propose to decline adjournment and continue until

Aug. – seriously comparing U.S. and R. plans.
P.M. For some time therefore it will be mere propaganda exercise.
3. Oversea Aid.
S.Ll. With b/p. improvement increased pressure must be expected. Cab.

shd. therefore see scope of commitment totally.

For multi-lateral arrangemts. we shall be under heavy pressure.

C’wealth. Most urgent is Nigeria. But Kenya will be inescapable.

Fedn will need a good deal.

F. countries. Egypt: have got contns from U.S. & Fund: want some

from us. If we don’t, trouble with our investments there. If we

do, can’t refuse requests from others e.g. Turkey etc.


R.M. May need money to get settlement in Aden. Yet it’s E. that is making

trouble for us there.


H. Cd you not make loan conditional on better behaviour in Aden? Some

suggn tht. E. now wants to turn to West.


E.H. E. For. Minister understands tht. outstandg. ques. must be resolved

before loan: but wd. not want two made inter-dependent

publicly. Also his latest figures are better. Brely’s??? talk y’day. [Exit E.H.
4. Industrial Dispute: Docks. [Enter J.P., Att.G.
J.H. Explained reasons for break-down in negotiations y’day morning.

Statement issued by Govt. last evening with P.M.’s approval.

G. Brown last p.m. pressed me to intervene, saying diffy was v. small.

Suggesting Govt. statements etc., are provocative: Govt. are

putting all their pressure on T.U.

Saw G. Woodcock 9.a.m. today. He stressed small difference & asked

if we were trying provoke a strike: I said we had not influenced

employers. He was anxious tht. Cousins shd. not invoke

T.U.C. Promised him we wd. consult him re use of troops.

He suggd I shd. see leaders, separately.

I seek guidance on 2 pts. i) If employers want compromise & suggest

3¼ - 3½% in all, shd. they be discouraged? ii) If employers

don’t move upwards themselves, am I to suggest it? In any event

unwise for me to “conciliate”, from my Dpt., in view of wages

policy.

Troops. To be efficient on Mon., want to have recce parties Fri. a.m. I’m against that. Don’t want them to be seen until all negotn



is over. Avoid provocation.
S.Ll. More to gain (incomes policy) by standing firm. Don’t therefore

do (ii). On (i), more room for doubt: but inclined to think offer

already made is too high. Wd it appear tht. they were acting in

concert with Govt?


P.M. 70.000 dockers. About 50% or less are on time-rate at any given time?
J.H. 50% of cost is on time: but less men are on time.
P.M. Well: majority are on piece-rates: they have accepted 3%.

Time rate: 5½ days at 32/10. 1/= p.day = 3%. 1/6 (demanded) =

4.5%. The 6d in dispute therefore represents another 1.5%.

Apparent anomaly: piece-rate workers who draw more earnings have

had 3% increase offered & have accepted it.
I.M. Cousins’ action is direct challenge to Govt., - as before. Must be

resisted . Clear therefore tht. we don’t urge employers to

raise bid. If employers themselves want to do so, Minister shd (if asked to advise) discourage them – on basis tht. what they

y/ have offered already is on high side: but shd. make it clear it’s

their responsibility.
M. I agree.
J.H. So do I, actually.
H.W. Troops shd. be used, initially, only for m’taining essential supplies.
R.A.B. Agree: tho’ we mght. want to enlarge scope later.

We can put in 35.000 initially: another 35.000 later if all

training suspended.
R.M. On y/ we shd. either discourage or say it’s their responsibility.

Can’t say both.


H.B. I agree. Other trades are settling much higher & we say nothing.

We shd. stand on posn tht. it’s their responsibility.


D.E. With a policy we have a view on average %age. Follows we must

have a view on who shd. have more & who less than the average.

If we believe these people are being offered too much, we ought

to be seen to be saying so – to get p. opinion behind the policy.


Ch.H. What about statutory duty of M/L. to conciliate?
I.M. Discharged by conversations y’day and to-day.
J.H. If then a strike, Cousins will seek to spread it – to markets,

lorries etc.


D.E./P.T. With the redn in hours from 1.1.63, total value will be 7½% of which

3% now. (The 1/= on time rate = 3%: and 1/6d wd. be 3¾%.)


P.M. Troops. Certainly don’t have recce before weekend. Dockers might

back down up to Sunday p.m. Don’t need 100% efficiency from

dawn on Monday.

No Proclamation until Mon. a.m. Don’t move troops in advance of

that. They can come in on Tuesday.
I.M. We have known for weeks tht. this threat was over us. We shall look

weak if there isn’t prompt movement on Mon. a.m. Agree no

action until after Saty; but no delay until after that.
S.Ll. Move them up on Sunday p.m., when their demonstrations are over.
J.P. What about recce? We need to send 30 people, in plain clothes,

while men are still working.

Advance parties: to “billeting” areas, to make preparations. Wd like

them to go on Saty & move troops fwd. on Sunday. In first

phase, they will be accommodated in mil. establishments

Tho’ they won’t go near the docks, they will be seen to be

moving.
Agreed: { Recce parties (plain clothes) on Saturday p.m.

{ Advance parties Saturday p.m. or Sunday p.m.

as necessary & troop movements (Sunday).
S.Ll. If employees had accepted the offer, we ought (on form) to be

protesting against decision. Inconsistent therefore not to

discourage employers from offering more, in this case.
H.B. Still think we shd. have it with employers. Otherwise we shall be said

to have caused this strike. And we can’t fight it effectively if

public opinion is against us.
D.E. We shall have to be ready to say tht. settlement (this or any other) is

out of line with our policy.


J.H. Enough for me to state the facts – which will show 7¼% not 2½% -

clear enough that this is out of line.

Will suggest to employers tht. they bring this out in Press – now.
Ch.H. What am I to say m’while? If I say this goes beyond incomes

policy, Govt. is taking sides in the dispute.


P.M. State facts and let people draw own conclusions.
Ch.H. Can’t avoid answering ques: what is Govt. view?
I.M. I can state facts & say I am going no further in individual case now

under negotiation.

S.Ll. Tho’ at some stage we shall have to express disapproval – otherwise

rlwaymen. must get 5% or more.


H. What answer will J.H. give if Opposn ask him why he won’t appoint

a court of enquiry?


J.H. V. awkward. Must think about it.
F.E. Troops. Can exports have 1st priority?
P.M. This must be worked out over next few days.
R.A.B. Unloading foodstuffs must come first. [Exit J.P.
5. Incomes Policy: Nurses. [Enter E.P.
E.P. Propose to let Council start discussing an ultimate solution, on basis

that it might have to be implemented by stages.

[Exit E.P.

6. Shipping.


E.M. i) U.S. policy of flag-discrimination. To get their trade in

U.S. bottoms.

ii) U.S. attempt to regulate liner conferences.

Bonner Act restrictions. Our line: i) no country can alone

control international conference: ii) Act is to be

administered in interests of U.S. Commerce (esp. shipping).

Maritime Bd. in U.S. can under this Act make life

impossible for foreign shipping. European Ministers of

Shipping are trying to evolve collective policy in respect of

this – Scandinavians are dragging on this. Brought to a

head by demand for documents: I have told our cos. not

to produce them: Bd. maintains their demand. Risk of

show-down in some court.
Att.G. 28/2/62 was last time I heard of this. F.O., were considering wtr. this

cd. be referred to Internatl Court.

Repns were successfully made about this sort of thing some years ago

in context of anti-terror legislation. V. large ques. of principle.

If we can’t succeed by persuasion, our only remedy is recourse

to Internatl Court.

H. I wd. like F.O. to examine this with Att. Genl. and M/T.
Att.G. I shd. like further factual informn.
H. P.M. has sent memo. to Mr K.
Agreed: F.O. to initiate considn with Att.G. & M/T.

Take a/c. of work in progress by officials.


7. Incomes Policy: Probation Officers.
R.A.B. We appointed Cttee to re-phase their pay. We proposed to suspend

this & give only 2½%. Employers have declined to toe the



line & offered 10%.

There will be a row over this.
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