by Brian Toohey
Soon after the election, Whitlam, who hated breaking election promises, tried to please the Americans by abandoning his commitment to tell the public what the US bases in Central Australia did. He made no substantive comment at a press conference after US president Richard Nixon embarked on a massive air attack on Hanoi, Haiphong and other parts of North Vietnam in late December 1972. The ‘Christmas bombing’ campaign involved the largest-ever deployment of B-52 bombers, each capable of carrying up to 40 tonnes of bombs, supported by a wide range of other combat aircraft. The US subsequently agreed to peace terms on essentially the same basis as the North Vietnamese had proposed.
Many leaders and commentators around the globe condemned the bombing, with some highly regarded US journalists denouncing the onslaught as ‘war by tantrum’ and the act of a ‘maddened tyrant’.3 Whitlam merely sent a polite private letter to Nixon, written by Keith ‘Spats’ Waller, the experienced head of the Foreign Affairs Department, arguing that the bombing was counterproductive and negotiations needed to resume. When Nixon got the letter he flew into an uncontrolled rage. The outrage of his national security adviser, Henry Kissinger, was equally irrational: he objected to the letter’s call for both sides to resume negotiations, and angrily complained to an Australian embassy official that Whitlam had put an ‘ally on the same level as our enemy’.4 Would Kissinger have preferred that Whitlam call for only the US to resume negotiations but not its enemy? Marshall Green, then an assistant undersecretary of state for East Asia and the Pacific, who happened to be in Nixon’s office when Whitlam’s letter arrived, later said it ‘was perfectly understandable and reasonable, but the president took great offence’.5
The record of conversation of a meeting of the PM with Ambassador Rice on 8 January 1973 shows that Whitlam said he would keep the US bases, which didn’t appear to harm Australia and could help the US, but added, ‘If there were any attempt to “screw us or bounce us” inevitably these arrangements would become a matter of contention.’6
The US opposed Whitlam’s plans to withdraw the 1700 Australian troops in Singapore as part of his government’s policy to drop the forward-defence doctrine and improve relations with Indonesia. The US said the withdrawal could undermine the Five Power Defence Arrangement (FPDA) signed in 1971 between Singapore, Malaysia, Australia, New Zealand and Britain. This arrangement did not require the permanent stationing of Australian, British or New Zealand troops in either country. There were no external threats to either Malaysia or Singapore at that time; nor have there been at any time since. A secret briefing paper from the Defence Department considered the FPDA mainly as a restraining influence on Singapore and Malaysia, whose relations were uneasy. In contrast to stereotypical views of Defence thinking, the brief said the English-educated leadership in Singapore could sometimes present the more plausible case to the European observer, but the Malays had a case to put: ‘There are 130 million of them, Indonesians included. Singapore has only 2 million rich aliens living off their ability to skim cream from the regional economy.’7 The paper also said, ‘Singaporean military thinking countenances the possible need to make a lodgement in the Malayan Peninsula, e.g. to protect Singapore’s water supplies.’8
Australia’s withdrawal was complicated by the fact that the new government didn’t know that some troops in Singapore intercepted communications for Australia’s signals intelligence agency, the Defence Signals Division. After he was briefed, Whitlam reluctantly agreed to a slower withdrawal. Following an article in the US magazine Ramparts referring to the DSD’s role in Singapore, the National Times reported on 12 February 1973 that the delay in the troop withdrawal was due to the DSD presence, which was unknown to Singapore. The US then falsely accused Whitlam of leaking the DSD information and ordering ASIO to stop targeting the Australian Communist Party. The interim head of the CIA James Schlesinger, asked the Australian ambassador, James Plimsoll, to see him with the rabidly anti-Labor head of counterintelligence, James Angleton, on 20 March. Plimsoll pointed out that ASIO still targeted the Communist Party and that Ramparts had named an ex-US intelligence official as the source of the DSD leak.9
Another Whitlam policy goal was achieved when the SEATO partners agreed in September 1975 to wind up the organisation. Despite its name, SEATO only ever had two South Asian members—Thailand and the Philippines—and six outsiders. It was a front for US power in South-East Asia, and vanished without trace.
Historian James Curran says Nixon didn’t have time to talk to Marshall Green before Green took over as ambassador to Canberra in February 1973, but they had a brief discussion at a White House lunch, in which Nixon said of Whitlam, ‘Marshall, I can’t stand that cunt.’ Green later said it was ‘a strange kind of parting instruction to get from your President’.10 After settling in as ambassador, Green accepted that Whitlam’s centre-left Labor government was broadly similar to governments the US had managed to live with in Europe. From a broader perspective, it is difficult to think of a senior US diplomat at that time who was more in tune with aspects of Whitlam’s larger global perspective than Green. He told me, ‘It is now the American century, but East Asia—not the Pacific Rim—will be the next century.’11
Whitlam was deeply annoyed by the failure of the US to tell Australia that the North West Cape base was being used to communicate a general nuclear alert to US forces in the Western Pacific and the Indian Ocean during the Yom Kippur War in October 1973. This legitimate complaint enraged Kissinger and Schlesinger, the latter having become defence secretary in July 1973.
The secret report of the talks between Barnard and Schlesinger in Washington on 10 January 1974 (see Chapter 16) exposed Schlesinger’s woeful ignorance of the pacifist influence in postwar Japan. He warned that the partial embargo on exports imposed in October 1973 by the newly established Organization of the Petroleum Exporting Countries (OPEC) could trigger the re-emergence of Japan’s extreme prewar nationalism, and raised the prospect of a rearmed Japan establishing a ‘quasi co-prosperity sphere’ in the Middle East—a reference to Japan’s prewar attempt to impose a co-prosperity sphere in the Pacific following a US embargo on supplying raw materials.12 In language sounding like a parody of Cold War hyperbole, Schlesinger said that if the Soviets dominated Persian Gulf oil it would lead to ‘the decline of the Western civilised world as we know it’.13 He was also concerned that Japan had been attempting to buy Siberian oil: Japan was sensibly diversifying its supplies, but Schlesinger could only view this through a Cold War lens.
After Green left the Canberra posting in 1975, he was belatedly replaced by a Texas businessman, James Hargrove, whose priorities became clear at a lunch he invited me to in September 1976 (I covered energy for the AFR). I was the only guest and had barely sat down before Hargrove spread out large geological maps of the Great Barrier Reef and asked which areas were most likely to have oil. I said the recent royal commission on the reef had suggested there wasn’t much oil there, but, more pertinently, drilling would never be allowed. Hargrove disagreed, saying his potential partner and good friend, Queensland premier Joh Bjelke-Petersen, was confident drilling would occur. Hargrove departed Australia without leaving any mark on the political or diplomatic landscape or extracting oil from the reef.
Some of the petty US techniques intended to belittle Whitlam only diminished Kissinger’s reputation as a statesman. For example, he once rolled out a metre less of red carpet for Whitlam than for the visiting New Zealand Labour PM, Norman Kirk, whose protest letter about the Christmas bombing of Hanoi had been as strong as Whitlam’s.14 Curran notes that other leaders were on the receiving end of Kissinger’s threats, bluffs and petulance. The UK’s Conservative leader, Edward Heath, ignored Kissinger’s fury after Heath adopted a more Europe-oriented foreign policy and refused to reverse Britain’s military withdrawal from South-East Asia.15 After Labour’s Harold Wilson cut UK defence spending, Kissinger’s threats to cancel intelligence sharing and nuclear cooperation proved nothing more than bluster.
Whitlam�
��s worst foreign-policy mistake was to condone Indonesia’s preparations to invade Portuguese Timor in December 1975, but the damage to his reputation was nothing compared to the dreadful suffering of the East Timorese people for twenty-five years after the invasion. Thanks to a JIO leak, Peter Hastings reported in detail on the Indonesian military’s invasion plans in the Sydney Morning Herald on 21 February 1975; the Indonesians then delayed action. One of Hastings’ long-term friends, JIO head Gordon Jockel, was concerned that the invasion, which some moderate generals opposed, would strengthen the political influence of the hawkish generals to Australia’s long-term detriment. The head of Defence’s strategic and international policy division, Bill Pritchett, wrote a briefing note to Whitlam on October 1975 warning him of the potential pitfalls and correctly predicting that an Indonesian invasion would cause many Timorese to resort to guerilla warfare. Pritchett said, ‘The Australian domestic reaction would probably make it very difficult for the government to sustain cooperative policies towards Indonesia.’16 He explained that ‘Indonesia is the country most favourably placed to attack Australia … An attack would not necessarily involve such major changes in the global strategic order as would critically affect US interests compared to an attack by, for example, Japan. US involvement in support for Australia would therefore be more uncertain.’ He said the Timor issue might develop in such a way as to identify Australia in Indonesian eyes ‘as an adversary, or at least an unsympathetic and unhelpful neighbour’, and that Defence had advocated very early on a policy with reasonable prospects of meeting the basic requirements of all the parties—namely, the acceptance of an independent state of East Timor. He said this would satisfy the demand for self-determination and move the Indonesians away from confrontation, as they would gain because the new territory would be heavily dependent on Indonesia’s support and on Australia.
Pritchett’s advice fell on deaf ears.17 The enduring relevance of Pritchett’s warning was demonstrated by the United States’ refusal to meet John Howard’s request for American ‘boots on the ground’ during the tense military stand-off with Indonesia in East Timor in 1999.
The petulant US treatment of Whitlam contrasts with the way the US usually accommodated the behaviour of Bob Hawke’s Labor government—behaviour that would have enraged Nixon and Kissinger. The Hawke Government criticised the US mining of Nicaraguan harbours, supported a South Pacific nuclear-free zone, backed sanctions on South Africa for its apartheid policy, and objected to Ronald Reagan’s Star Wars weapons because they destabilised the nuclear balance. The US did not publicly object when Foreign Minister Bill Hayden described those who objected to any criticism of ANZUS as ‘craven and servile’.18
Politically, Whitlam’s worst decision was to let his irascible energy minister, Rex ‘The Strangler’ Connor, pursue his obsession with using a con man, Tirath Khemlani, after November 1974 to seek a $4 billion petrodollar loan from the Middle East. The headstrong minister kept searching after Cabinet withdrew his authority on 20 May 1975. Although Whitlam did not find out until later, Marshall Green cabled back to Washington in July, ‘There is every indication [Connor] is still exploring the possibility of a large overseas loan.’19 The political impact of the ‘loans affair’ was disastrous. Without it, there is a good argument that Malcolm Fraser would not have been able to convince his colleagues to block the budget, thus removing the governor-general’s justification for sacking Whitlam.
The Treasury head, Fred Wheeler, was so concerned about the petrodollar loans that he broke the law by taping his phone calls as part of a wider investigation. The transcripts, which were later leaked to the National Times, gave a disturbing account of the frenzied hunt for the elusive loan.20 The US was deeply worried about any threat to Wall Street’s dominant role in recycling petro-dollars, and Australia’s search for a big loan in the Middle East became another black mark against the Whitlam Government. There would have been nothing wrong with bypassing Wall Street and seeking a Middle East loan using official channels, but Connor ignored warnings not to use intermediaries. By the time the Saudi Arabian Monetary Authority offered to lend in 1975, it had become political poison to touch a petro-dollar loan from any source.
The immense cost to Labor of this incident provides a salutary lesson about the damage secrecy can cause. Had Khemlani’s role been made public at the start, the reckless decision would have been reversed in a day or two rather than remaining at the centre of a political scandal drawn out over nine months before Whitlam sacked Connor. I later discovered that the FBI arrested Khemlani in 1981. A New York court convicted him on charges relating to $2 million in stolen bonds previously held by the Mafia, but came to an agreement that saw him serve no jail time.21
The loans affair overshadowed the Whitlam Government’s numerous enduring achievements. It introduced important structural reforms to open Australia’s inward-looking industries to the global market, including the politically painful removal of rural subsidies, and importing frigates from the US rather than surrendering to intense pressure to build an Australiandesigned light destroyer locally. Subsequent governments have supported the exceedingly costly policy of building submarines in Adelaide to uniquely Australian designs.
Few countries coped well with OPEC’s unprecedented quadrupling of oil prices in 1973 and 1974, but thanks to a strong fiscal stimulus under Whitlam, Australia did not go into recession—unlike the US and the UK, which suffered long slumps. Australia was roughly in the middle of the international pack on inflation and better on unemployment, which rose to only 4 per cent. (It rose to almost 11 per cent in the early 1990s.)
When Whitlam died in 2014 at age ninety-eight, there was widespread recognition of the gains his government made for women, education, health, the environment, Aboriginal people, the arts and myriad other areas—gains that mostly survived the political turmoil of the time.
30
PUNISHING AN INNOCENT ALLY
‘The [Nixon] administration was contemplating what course of action would have the most devastating domestic political effect.’
James Curran1
US and Australian intelligence officials made an early attempt to remove Whitlam as prime minister in 1973. Their failure didn’t mean the idea was never resurrected. James Curran has revealed that ‘some kind of covert CIA activity in Australian domestic politics’ was at the very least considered by US policy-makers in 1974.2 What had the Whitlam Government done on either occasion to warrant the possible resort to clandestine action? Whitlam hadn’t burgled his political opponent’s headquarters and covered it up; nor had he killed large numbers of people in Vietnam, Laos and Cambodia. Yes, there were the disputes with the US over issues such as the Christmas bombing of Hanoi, and more minor issues that caused disproportionate anger. Labor’s approval of the opening of a Cuban consulate in Sydney in January 1974 enraged Kissinger, but this was innocuous compared with the US’s attempts to assassinate Fidel Castro and the use of CIA mercenaries to invade the island.
Well before the 1974 discussions in Washington about how to damage the Labor government, senior US intelligence officers and renegade members of ASIO attempted to remove Whitlam. The PM was oblivious to the career history of a fervently anti-Labor US official, James Angleton, who tried to topple him. Angleton had headed the CIA’s counterintelligence (spy-catching) division since 1954 until the CIA head, William Colby, sacked him in December 1974 because his briefings were incomprehensible and his wild accusations of treachery were driving good people out of the agency.3 David Martin’s book Wilderness of Mirrors: Intrigue, Deception and Secrets provides solid grounds for Colby to sack Angleton much earlier. David Wise does the same in Molehunt: The Secret Search for Traitors that Shattered the CIA. These authors and many others showed that from 1954 Angleton tore apart the CIA’s Soviet section so thoroughly that it was impossible to imagine how a KGB mole could have caused more damage. Likewise, he undermined US foreign policy with unfounded allegations that foreign leaders were KGB agents.
/> Angleton supervised an extensive covert surveillance project called Operation Chaos against members of the American civil rights and anti-war movements. He also controlled a CIA network run by an excommunist union leader, Jay Lovestone, that funded anti-communist unions in a large number of overseas countries, including Australia, and developed informers in others. One of the great lessons of Angleton’s career is that obsessive secrecy and a lack of scrutiny can severely damage an organisation. It also demonstrates that elements within secret organisations can go rogue and undertake actions that aren’t always approved by their political masters. Angleton would have been lucky to last a few weeks in a job where secrecy did not protect his tenure. By 1970 he was especially close to ASIO’s deputy head, Jack Behm, and Bob Santamaria, the guiding hand behind the Democratic Labor Party, which helped keep the Australian Labor Party out of power until 1972.
Whitlam also knew little about Ted Shackley, even though he headed the CIA’s East Asia division, which included Australia, for much of the time Whitlam was prime minister. Shackley was probably the agency’s most experienced covert action operator. At age thirty-four he had headed JM/WAVE, a CIA program that conducted worldwide action against Castro’s Cuba, and was part of another program that focused on assassinating Castro. Some of the Cubans working for Shackley joined him when he subsequently ran the CIA’s ‘secret’ war in Laos, using mercenaries who were deeply entangled in drug trafficking.4 More bombs were dropped on Laos than on Germany during World War II.5 Around 80 million of these bombs did not explode, leaving a terrible legacy that continues to kill Laotians, especially children. The CIA achieved none of its objectives in Laos: the country still has a communist government.
