For 23 years before 1972, the Australian people had
been electing the "right people," the Liberal-National Country
Party Coalition headed for most of that period by Robert Menzies.
The Coalition was essentially conservative, and had a foreign policy
which was sycophantic, to say the least. Menzies himself actually
despised Australia, and would much rather have been the Prime Minister
of Britain. He once said, "A sick feeling of repugnance grows
in me as I near Australia." He hated his country so much, and
loved England enough to beg the British government to conduct their
nuclear bomb tests from 1952 to 1958 in the Australian deserts at
Maralinga (home of thirteen Aboriginal settlements). Menzies agreed
to the testing without even consulting his cabinet. As John Pilger
says, "Australia gained the distinction of becoming the only
country in the world to have supplied uranium for nuclear bombs which
its Prime Minister allowed to be dropped by a foreign power on his
own people without adequate warning." (A Secret Country,
Later Liberal Prime Ministers turned their sycophancy
towards the United States. John Gorton said in 1969 "We will
go a-waltzing Matilda with you," and Harold Holt coined the phrase
"All the way with LBJ" when sending Australian troops to
the Vietnam War. Again, the Liberal government was so desperate to
please the Americans that they did all they could to engineer from
the South Vietnamese government an invitation to send Australian troops.
When the South Vietnamese government was not forthcoming, the Liberal
government sent troops and advisers anyway, and mislead Parliament
in a similar way that Lyndon Johnson misled Congress with the Gulf
of Tonkin incident.
Compared to the Coalition government (made up of the
conservative Liberal and National Country parties), the Labor Party
which was elected into office in December 1972 on the platform of
"It's Time" quickly showed themselves to be the "wrong
people" in the eyes of the United States.
In the domestic sphere, Labor Prime Minister Gough
Whitlam's first 100 days put Bill Clinton to shame. The Whitlam government
ended conscription and ordered the last Australian troops home from
Vietnam. It brought in legislation giving equal pay to women, established
a national health service free to all, doubled spending on education
and abolished university fees, increased wages, pensions and unemployment
benefits, ended censorship, reformed divorce laws and set up the Family
Law Courts, funded the arts and film industry, assumed federal government
responsibility for Aboriginal affairs (health, education, welfare
and land rights), scrapped royal patronage, and replaced "God
Save the Queen" as the national anthem with "Advance Australia
Whitlam and several of his ministers, most notably
Rex Connor, Minister for Minerals and Energy, and Dr. Jim Cairns,
who eventually became Treasurer and Deputy Prime Minister, wanted
to pursue a policy of "buying back the farm."
BUYING BACK THE FARM
The 1973 oil crisis pushed the costs of energy to
an all-time high, and caused disarray to economies all over the world.
Australia suffered with the rest of them, with rising inflation and
Yet one of the Whitlam government's platforms was
to reclaim Australian ownership of Australia's vast natural resources,
such as oil and minerals, and its manufacturing industries. By the
late 1960s, foreign control of the mining industry, for example, stood
at 60%, while 97% of the automobile industry was foreign-owned. Both
Whitlam and Rex Connor had grandiose ideas for developing the necessary
infrastructure, and the means to help Australian companies to "buy
back the farm." Connor's schemes included a petroleum pipeline
across Australia, uranium enrichment plants, updated port facilities,
and solar energy development, as well as the establishment of government
bodies with the authority to oversee development and investment in
key areas, such as oil refineries and mining. Connor estimated that
Australia's mineral and energy reserves were worth $5.7 trillion dollars.
However, buying back the farm would not be cheap for
a nation in the grip of inflation and economic stagnation. It was
determined that the government would need about $4 billion. While
Australia had an excellent credit rating with its usual lending banks
in the U.S. and England, no established bank would extend Australia
an amount even close to a quarter of what it wanted.
The other side to the oil crisis of 1973 was that
the OPEC members in the Middle East were rolling in petrodollars.
To Whitlam, Rex Connor and Jim Cairns, the Middle East seemed an appealing
source of funds, as it would also be yet another step towards gaining
independence from Australia's traditional economic partners.
In 1974, Whitlam instructed Connor and Cairns to find
a Middle Eastern source for a $4 billion loan.
So began the Loans affairs.
THE LOANS AFFAIRS
Once word got out that the Australian government wanted
to obtain such a large loan, both Connor and Cairns were inundated
with offers to broker the loan. Most offers were from crackpots. There
were two offers, however, which brought about the downfall of both
the Ministers involved, and eventually the downfall of the Labor government.
In March 1975, Treasurer and Deputy Prime Minister
Jim Cairns met with George Harris, a Melbourne businessman, who told
Cairns that a $4 billion loan was available "with a once-only
brokerage fee of 2.5%." To confirm that the offer was genuine,
Harris showed Cairns a letter from the New York office of Commerce
International. According to an intermediary present at the meeting,
Cairns rejected the offer, as the terms of the loan were "unbelievable"
and a "fairy tale" and Cairns refused to sign any letters
making a commitment to the brokerage fee. He did, however, write for
Harris two letters saying that the Australian government was interested
in raising a loan.
Two months later, Cairns was asked in Parliament whether
he had signed a letter committing the government to a 2.5% brokerage
fee. Cairns denied he had signed any such agreement. However, several
days later, an incriminating letter with Cairns signature was reproduced
in major newspapers around Australia. Cairns did not remember signing
the letter, and said so. Nevertheless, he was forced to resign his
position for misleading Parliament.
THE KHEMLANI AFFAIR
Minister for Minerals and Energy, Rex Connor, was
also commissioned by Whitlam to find a Middle Eastern source for the
$4 billion loan.
The Khemlani affair began in October 1974 when South
Australian Greek emigre Gerry Karidis met up with and old friend of
his, Labor Minister Clyde Cameron, at a party in Cameron's electorate.
Karidis told Cameron that he knew of some sources for loans if the
Australian government was interested. Cameron passed the information
on to Cairns and Connor, who then met with Karidis.
Karidis was not certain of the sources of the funds,
but a friend of his said that the money could certainly be raised.
The connection between Karidis and Khemlani is circuitous.
Khemlani, who was manager of Dalamal and Sons, a London-based commodities
firm, was a business associate of Theo Crannendonk, a Dutch arms and
commodities trader. Crannendonk in turn knew Thomas Yu, a Hong Kong
arms dealer, who in turn knew Karidis' friend, Tibor Shelley.
Khemlani said he first heard that the Australian government
was interested in raising a loan while he was visiting his friend
Crannendonk. Khemlani was in Crannendonk's office when a telex about
the loan came through from Thomas Yu. Khemlani volunteered to broker
the loan at very reasonable rates, despite the fact that he had no
experience in brokering loans, let alone such a large one.
Khemlani arrived in Australia on November 11, 1974
with Theo Crannendonk, and met with Cameron and Connor. Connor told
Khemlani about the government's interest in a $4 billion loan, and
gave him a letter of introduction to that effect. On December 13,
the Labor Party's Executive Council (which on that day consisted of
Connor, Cairns, Whitlam, and Lionel Murphy) authorised Connor to raise
the $4 billion 20-year loan "for temporary purposes."
The Executive Council can approve loan-raising activities
without consulting the Labor Caucus or Parliament, but only if the
loans are for temporary purposes. How Whitlam and his close circle
of Ministers could consider a $4 billion loan over 20 years "temporary"
is beyond comprehension, and smacks of attempting to keep the matter
as secret as possible.
Unfortunately, by not consulting the Labor Party Caucus,
Whitlam, Connor, Cairns, and Murphy were their own worst enemies.
Had they consulted with their colleagues and Parliament, they would
not have placed their party and their government in hot water, and
would not have entertained the idea of a loan the terms of which meant
that the Australian government would have to pay $20 billion in November
Various attempts were supposedly made by Khemlani
to raise the money. But each time he claimed to have come up with
the goods, the deals fell through. By late December of 1974, Australian
Treasury and other officials became increasingly suspicious that Khemlani
was leading the government on. Sir Frederick Wheeler, the permanent
head of the Treasury Department convinced Cairns, then Treasurer,
that Khemlani was lying to the Australian government about his ability
to raise the loan.
On December 21, 1974, Connor telexed Khemlani and
terminated their relationship. On January 7, 1975, the Executive Council
revoked Connor's authority to search for loan sources.
Nevertheless, Khemlani continued to work on the loan-raising,
and on January 28 Connor's loan authority was re-instated, on Khemlani's
promise that he was confident that a loan would soon be provided,
even up to $8 billion. Connor's authority, however, was reduced to
securing a loan for only $2 billion.
But again Khemlani failed. For months Khemlani promised
Connor he could raise the money. Connor became obsessed that Khemlani
was the man to get results, regardless of the many disappointments.
Khemlani let Connor down every time.
On May 20, 1975, Connor's authority was revoked once
and for all. But three days later, Khemlani contacted Connor and told
him that a loan was within short reach. Connor replied positively,
and continued to deal with Khemlani, behind the government's back.
Even Whitlam did not know of this. On June 10, Whitlam told a press
conference that none of his Ministers any longer had the authority
to raise a loan, and no loan was being raised. On July 9, Connor was
asked to table in Parliament all documents relating to his loan-raising
activities. He neglected to tell Parliament that he was still dealing
Leaks of the loan deals appeared in various newspapers
around the country. Then in October 1975, after nearly a year of promises
to drum up a loan, Khemlani turned up in Australia with two suitcases
full of the telexes Connor had sent him, including those sent after
Connor was ordered not to contact Khemlani again. Khemlani handed
the telexes over to the Opposition (who had provided Khemlani with
bodyguards on his arrival to Australia), and the incriminating telexes
appeared in newspapers around the country.
It is not known why Khemlani would turn on the government
as he did, but it is presumed that he was handsomely rewarded for
it. The Liberal-Country Party Coalition denied they had paid Khemlani,
but there is evidence that the media did buy the telexes off him.
Connor was forced to resign on October 14 for misleading
Parliament, just like Jim Cairns five months before him. As Whitlam
had also told the Australian people that no more attempts were being
made to raise such a large loan, he was also accused of misleading
the public. The scandal provided for the Opposition with the "reprehensible
circumstances" they needed to block the passage of the Budget
though the Senate and force an election.
The scene was set for the dismissal of the Whitlam
Although the Labor party won the 1972 election, it
did not have a majority in the Senate. A majority is only required
in the House of Representatives in order to form a government. The
Senate is usually seen, and usually behaves, as a rubber-stamp body,
approving the Bills introduced in the lower house. Nevertheless, in
late 1973, the Coalition led by then Opposition leader, Liberal MP
Billy Snedden, blocked the passage of the Budget in the Senate in
order to force an election. As a result, both houses of Parliament
As the Labor Government was riding high in popularity,
Whitlam called an election for May 1974. His government was elected
for the second time in 18 months. It also gained a few more seats
in the Senate. Labor and the Coalition each held 29 seats, and two
independents held the balance of power.
Then in February 1975, Attorney-General Lionel Murphy
was appointed to the High Court, thus leaving his New South Wales
seat vacant. Traditionally, when a Minister retired from or died in
office, the Premier from his State would replace him with a person
from the same Party. However, the New South Wales Liberal Premier
broke with tradition and appointed a non-Labor Senator. In May that
year, Labor Senator Lance Barnard retired, and the Liberal Party won
his seat in the June by-election. Then in June, Labor Senator Bert
Milliner died in office. Queensland Premier, Joh Bjelke-Petersen,
a staunchly anti-Labor man, also broke with tradition and appointed
a non-Labor man to the vacant seat. The government balance in the
Senate was lost.
With three Labor seats handed to the Opposition or
"independents", it was possible for the Liberal-National
Country Party Coalition in Opposition to again block Supply in the
Senate. Malcolm Fraser had threatened to do since he wrested the Liberal
Party leadership from Snedden in March 1975. On becoming leader of
the Opposition, Fraser had announced that he would allow the government
to govern, but kept his chances open to block the budget in the Senate
and bring down the government, if the Labor Party provided any "reprehensible
circumstances" that would force him to do so.
When the loans scandals broke, Malcolm Fraser saw
his chance to bring down the Labor Government. Attempting to raise
$4 billion dollars was in itself reprehensible, but for two senior
Ministers (Cairns and Connor) to mislead Parliament about their activities,
and for the Prime Minister to mislead the public that loan-seeking
had ceased, were definitely the "reprehensible circumstances"
Fraser was looking for.
Fraser made sure that he had the backing of the senior
bureaucrats, big business, the legal authorities, and the media. He
personally phoned the four main press barons, who ensured their support.
Then on October 16, Coalition MPs in the Senate, under Fraser's orders,
deferred the Budget bills introduced by the Labor party, thus blocking
Supply to the government.
Day after day in the Senate, Coalition ministers refused
to pass the Budget. Without its passage, the government would run
out of money and would not be able to pay civil servants' wages or
pensions. The business of government would grind to a halt and cripple
The Opposition insisted that Whitlam call an election
for December 1975. Whitlam refused and threatened a half-Senate election
- which would cause the Senate to go to the polls - something Fraser
did not want, due to the threat that Fraser could lose seats and,
therefore, control of the Supply bills. Neither side would back down.
The Labor government sought alternatives to the Supply budget, and
designed a credit system with various banks to pay pensions and wages.
As the days dragged on, public opinion began to sway in favor of the
Labor Government. The public blamed the Opposition for the deadlock
in the Senate, and for the government's inability to pay wages and
pensions. Many Coalition ministers began to waver, and tried to convince
Fraser to back down. But Fraser stood firm in the face of public and
party opinion, and risked his political career.
Meanwhile, the Governor-General, Sir John Kerr made
feeble attempts to broker a peace.
ENTER THE GOVERNOR-GENERAL
The Governor-General is the representative of the
Australian Head of State, the Queen or King of England, who is also
the Queen or King of Australia. The position is one of appointment
- the Governor-General is not elected by the Australian people, but
is appointed by the Prime Minister of the day.
The duties of a Governor-General are ceremonial, though
the there are some "reserve powers" which had never been
used until November 1975.
Both John Kerr and Gough Whitlam came from working
class families. Both followed careers in law, and wanted to pursue
careers in politics. Both started out early in the Labor party. But
while Whitlam worked his way slowly to the top, Kerr followed a different
path. Even when in the Labor party, Kerr was essentially conservative,
and a monarchist. As time passed, he left the Labor Party and at one
time wanted to join the Liberal Party, on the condition that if he
were elected, he immediately be given a seat on the front bench. Liberal
party leader Robert Menzies told him he would have to wait his time
like everyone else did, so Kerr abandoned the idea.
Given this background, it is interesting that Whitlam
chose to appoint him Governor-General in July 1974. Kerr's appointment
was seen as an attempt to appease those who wanted a titled Governor-General
as well as those who wanted someone more sympathetic to Labor. Whitlam
believed that Kerr as Governor-General would take, as is the norm,
"advice from his Prime Minister and from no-one else."
But this was not the case.
THE DISMISSAL - NOVEMBER
The Budget crisis dragged on for a month.
On November 11, Parliament sat as usual, after the
morning commemorations for Remembrance Day. Whitlam and Fraser met
mid-morning, and Fraser made it clear that he would accept nothing
less than a full election. Whitlam then telephoned Kerr to make a
1 p.m. appointment to speak to him about a half-Senate election. Kerr
then rang Fraser and made an appointment to see Fraser 10 minutes
after his meeting with Whitlam. Fraser arrived early, and to save
appearances, Kerr insisted that his car be parked out of sight, so
that Whitlam would not see it, and hid Fraser in a back room.
When Whitlam arrived, he was unaware that Fraser was
waiting in the wings. Before Whitlam could present Kerr with the letter
requesting a half-Senate election, Kerr asked the Prime Minister if
he would hold a full election in December. Whitlam said no, but he
would be willing to hold a half-Senate election. The Governor-General
then used his reserve powers, and terminated Whitlam's commission,
at 1:10 p.m.; dismissing the government from office.
Whitlam stormed out and went to the Prime Minister's
residence, without informing his Senate ministers of what had occurred.
After Whitlam left, Kerr appointed Malcolm Fraser
as caretaker Prime Minister until an election could be held on December
The Senate resumed sitting after lunch, at 2 p.m.
The change in government had not been publicly announced, but Fraser
had informed Coalition ministers in the Senate. So when Labor Senators
re-introduced the Budget Bills 75 minutes after Whitlam was dismissed,
the Coalition ministers passed the Budget, thus guaranteeing their
new government had Supply.
The new Coalition government called for an election
on December 13, the last possible day to hold an election before the
Fraser won the election.
Sir John Kerr always insisted that the decision to
sack the Whitlam government was his alone, and that he was well within
his constitutional rights and duties to do so. He also insisted that
he gave Whitlam enough warning about what he might do.
Neither appears to be the case. On November 4th, Kerr
consulted with the Governors of New South Wales and Victoria, and
received an agreement from both that if advised by Kerr, they would
not issue writs for a half-Senate election. He did this behind Whitlam's
On November 6, he sought legal advice from Sir Garfield
Barwick, the Chief Justice of the High Court. Barwick's written reply
was that it was the Governor-General's duty to dismiss the Whitlam
government if Kerr was satisfied that the Labor government could not
secure supply. The letter further advised that Kerr should give Whitlam
the options of resigning or holding a general election. If Whitlam
refused to do either, then, Barwick advised, Kerr should sack him.
With Barwick's backing, Kerr knew that dismissing
Whitlam would not be considered illegal should the matter go to court.
It is worth noting that Barwick's decision was hardly
non-partisan. He is a conservative with no sympathy for the Whitlam
government. Garfield was recently interviewed on ABC's Four Corners
program, during which he admitted talking with former Liberal Prime
Minister Robert Menzies a few days before the Dismissal. There is
no doubt that the former PM would have taken the news of Kerr's decision
to Fraser. This would explain why Fraser stood unwavering in his commitment
to bring down the Labor government while the rest of his party were
about to give up.
Kerr's letter dismissing Whitlam said that the deadlock
in the Senate had to be resolved as quickly as possible, and that
Whitlam had to either resign or call a general election. He said that
as Whitlam refused to do either, he was being dismissed, and a caretaker
government was being appointed to secure supply and hold an election
before the end of the year.
However, there are many inconsistencies between Kerr's
letter and his previous actions.
- At no stage did Kerr tell Whitlam that a prompt
solution was necessary. And if a quick resolution was on his mind,
why did he wait until the 26th day of the deadlock to dismiss Whitlam?
- Kerr never previously indicated that Whitlam had
to either call a general election or resign. On the contrary, the
opposite impression was given.
- Kerr never indicated that a half-Senate election
was not suitable. Even on the 11 November, when Whitlam spoke to
Kerr by phone about it, Kerr did not tell Whitlam that he would
not accept it.
- Kerr said he was satisfied that there was no chance
of a compromise, yet many in the Liberal party believed there would
- Kerr said that a Prime Minister who could not obtain
Supply could not govern, yet Supply had not yet been exhausted;
the money would not run out for another two to three weeks. Why
didn't Kerr wait until Supply had run out?
- Whitlam was never given the option to resign or
call a general election. Kerr simply asked him if he would hold
a general election. When Whitlam said no, Kerr sacked him. Therefore,
Whitlam did not refuse both his options.
- Kerr moved very secretly, and very quickly. This
indicates that he did not want to give Whitlam a choice.
- Kerr appointed as caretaker Prime Minister the
leader of the minority party, and stood by his decision even after
the House of Representatives had passed a vote of no confidence
- It is also interesting to note that Kerr must have
known that Fraser would accept the commission as caretaker Prime
Minister, with the conditions that he would call a general election
and guarantee the passage of the Supply Bills. Does that mean that
he spoke to Fraser before dismissing Whitlam? If so, Fraser had
prior knowledge about Kerr's decision, and would have stood firm
about blocking supply.
That may explain the comments made to the press by
Deputy Liberal Party leader, Phillip Lynch just hours before the dismissal:
"We believe the present course is sound for reasons which will
become apparent to you later."
After the dismissal, two other Liberal ministers said
that they had known what Kerr was going to do that morning. (The
Unmaking of Gough, p. 355). Of course, Fraser and Deputy
Opposition leader, Doug Anthony, deny they had prior knowledge of
These inconsistencies call into question Kerr's motives,
and lead to questions about the timing and the real reasons behind
the Dismissal of an democratically elected government.
COUP D'ETAT - WAS THE
CIA INVOLVED IN THE DISMISSAL OF AN AUSTRALIAN GOVERNMENT?
While the Loans affairs and the Supply crisis exploded
onto the front page headlines day after day, another crisis simmered
in the background - the security crisis. As John Menadue, the head
of the Prime Minister's Department, says, to understand the events
leading to the dismissal, you must "follow the path of the security
crisis." (The National Times, November 9-15, 1980).
The new Labor Government's changes in both domestic
and foreign policy earned Whitlam Henry Kissinger's epithet of "one
more effete social democrat." Neither Kissinger nor Nixon had
any time for Whitlam or left-wing politicians in general.
People at the highest levels were concerned about
what Whitlam might do to the long-standing Australian - U.S. relationship.
CIA Director until 1975, William Colby, in his book Honorable Men,
ranked the Whitlam government as one of the major crises of his career,
comparable to the 1973 Yom Kippur (Arab-Israeli) War, when the U.S.
had considered using nuclear weapons to help Israel win the war.
Many others in the intelligence community were concerned,
including Ted Shackley, head of the East Asia Division of the CIA,
who was said to be paranoid about Whitlam; and James Jesus Angleton,
head of the CIA's Counter-Intelligence section, who despised the Labor
One has to ask why a new government in an allied country
would cause such consternation. It seems that in the areas of foreign
policy and foreign (and domestic) intelligence and security that Whitlam's
Labor government stepped on a few (American) toes.
Almost immediately after Whitlam came into office,
his government's foreign policy initiatives angered the Americans.
Among Whitlam's many sins were opening an embassy in Hanoi and allowing
Cuba to open a consulate in Sydney.
The question of the Vietnam War was a particularly
sticky one between the new Labor government and the Americans. Several
Labor politicians had gained popularity in Australia by leading the
anti-Vietnam War movement. They outspokenly called Nixon and Kissinger
"mass murderers" and "maniacs" for their conduct
of the Vietnam War. Dr. Jim Cairns called for public rallies to condemn
U.S. bombing in North Vietnam, and also for boycotts of American products.
The Australian dockers unions reacted by refusing to unload American
ships. While Whitlam was more moderate than Dr. Jim Cairns, Clyde
Cameron and Tom Uren (prominent anti-Vietnam War Labor Ministers),
he felt he had to say something to the Americans. He wrote what he
considered a "moderately worded" letter to Nixon voicing
his criticism of the bombing of Hanoi and Haiphong in North Vietnam,
on the basis that it would be counterproductive. Nixon, needless to
say, was not amused. Some insiders said he was apoplectic with rage
and resented the implications that he was immoral and had to be told
his duty by an outsider. Kissinger added that Whitlam's "uninformed
comments about our Christmas bombing [of North Vietnam] had made him
a particular object of Nixon's wrath." (Mother Jones,
Feb.-Mar., 1984, p. 15)
Soon after Whitlam took office, the American ambassador
to Australia, Walter Rice, was sent to meet with Whitlam in order
to politely tell him to mind his own business about Vietnam. Whitlam
ambushed Rice, dominated the meeting, and spoke for 45 minutes rebuking
the U.S. for its conduct of the Vietnam War. Whitlam told Rice that
in a press conference the next day, "It would be difficult to
avoid words like 'atrocious' and 'barbarous'" when asked about
Whitlam also brought up the issue of the American
bases in Australia, and warned Rice that although he did not propose
to alter the arrangements regarding the U.S. bases, "to be practical
and realistic," Whitlam said, "if there were any attempt,
to use familiar jargon, 'to screw us or bounce us' inevitably these
arrangements would become a matter of contention." (Minutes of
the meeting were reproduced in The Eye, July 1987.)
The issue of Pine Gap was a touchy one for the Americans.
The Pine Gap installation at Alice Springs is one
of several U.S. bases in Australia. Its stated primary function is
the collection of data from American satellites over the Soviet Union,
China, and Europe, and other CIA sources and transmitters around the
world. The base could pick up the Soviet's coded messages about missile
launchings, and can also intercept radar, radio, and microwave communications.
It was integral for tracking Soviet missiles and missile testing during
the Cold War, and making sure that the Soviet Union was adhering to
arms control agreements. Pine Gap, as well as the other bases at Nurrungar
in South Australia and North-West Cape in Western Australia are extremely
important to the U.S. James Jesus Angleton, head of CIA counter-intelligence
for 20 years, said Pine Gap's importance was "unlike any similar
installation that may be in any other place in the free world, it
elevates Australia in terms of strategic matters." (A
Secret Country, p. 198). Among the reasons for Pine Gap's
importance are the political stability of Australia, the Australian
government's tendency towards loyalty to the United States, and the
isolation of the location of Pine Gap itself. It is extremely well-placed
for its purpose.
Pine Gap is supposed to be a joint facility, staffed
equally by Australians and Americans. The information gathered there
is also supposed to be shared. However, it had long been suspected
by Australians, and by many in the Labor Party, that the Americans
did not share all the information with the Australian government,
nor was the U.S. forthright about some of the functions of the base.
There were at least three occasions when the Americans
did not share vital information about the bases.
1) The transmitters at the North West Cape were used
to assist the U.S. in mining Haiphong harbor in 1972. The Whitlam
government was opposed to the mining of Vietnamese harbors, and would
not have appreciated U.S. facilities on Australian soil being used
to assist such an undertaking.
2) The satellites controlled by Pine Gap and Nurrungar
were used to pinpoint targets for bombings in Cambodia. Again this
was an activity to which the Whitlam government was opposed.
3) Whitlam was furious when he found out after the
fact that U.S. bases in Australia were put on a Level 3 alert during
the Yom Kippur war. The Australian bases were in danger of attack,
yet the Australian Prime Minister was not alerted to this. (Incidentally,
Kissinger was angered that Whitlam could be such a pest about such
There was also speculation that Pine Gap was really
run by the CIA. Victor Marchetti, former Chief Executive Assistant
to the Deputy Director of the CIA, and one of the drafters of the
Pine Gap treaty, confirmed this suspicion: "The CIA runs it,
and the CIA denies it," he said (A Secret Country,
It was vitally important that the American base at
Pine Gap remain in Australia. The U.S. had apparently discussed re-locating
the base to Guam, because of the political turmoil in Australia in
1975. The cost of relocating the base was estimated to be over a billion
dollars. Besides the costs, Guam was not considered to be nearly as
suitable a location as Pine Gap (The National Times, Nov.
Whitlam's conversation with Rice was not the only
time he introduced uncertainties about the American bases. When asked
in Parliament in April 1974 about Soviet approaches for scientific
facilities in Australia (which were rejected), Whitlam suggested that
the existing bases treaty with the Americans would not be extended.
The treaty covering Pine Gap was due for renewal in
In 1975, the Australian Defense Minister, Bill Morrison,
met with CIA Director William Colby. Morrison was blunt with Colby,
and said that he couldn't guarantee the future of the U.S. bases if
it was found that the CIA was involved in activities the Australian
government hadn't been told about. (The Sun, 30 April, 1977)
Yet despite such comments, it seems unlikely that
Whitlam would have closed the bases down. Comments like those made
to Rice and in Parliament were mostly posturing. Most comments made
by Whitlam indicated that he did not mind the bases being in Australia.
What he did want was to reform the alliance. He would have preferred
that the U.S. keep the Australian government informed about the true
functions of the bases, and disclose all information gathered by the
bases - not a totally unreasonable request.
Nevertheless, Whitlam's posturing caused alarm. When
Ambassador Marshall Green (Walter Rice's replacement) was interviewed
years after the Dismissal, it was suggested to him that Whitlam would
never have closed the bases. He answered, "You might say that
with hindsight, but you don't know how complex things were at the
time. The trouble was you never really knew where you stood with him
[Whitlam]" (Book of Leaks, p. 90).
Ted Shackley, chief of the East Asia Division at the
CIA was furious about Whitlam's threats to the bases. According to
Frank Snepp, who served with him, Shackley was "paranoid"
about Labor, and regarded it as a security risk.
After Whitlam's threats to the U.S. bases, Shackley
in return threatened to cut off the flow of intelligence information
to Australia. This was a serious threat, as Australia was a long-standing
member of the UKUSA agreement by which Australia, the U.S., England,
Canada and New Zealand shared intelligence information with each other.
In this instance, the newly appointed CIA Station
Chief in Australia, John Walker, successfully argued against cutting
off the flow of intelligence information to Australia, on the grounds
that the Labor government could then have legitimate grounds for shutting
down Pine Gap.
THE HATCHET MAN
The appointment of Marshall Green as the U.S. Ambassador
to Australia in 1973 indicates how seriously the U.S. took the situation.
Green was far and away the most experienced man to be appointed Ambassador
to Australia. The post was usually given to amateurs: friends of the
President, or campaign contributors. Green, on the other hand, was
a career diplomat who had served in many countries important to the
His appointment was seen by some Labor ministers as
a sinister move. Senator Bill Brown called Green a "top U.S.
hatchet man" and pointed out that Green's previous postings had
been marked by coups and political upheaval in four of the countries
in which he had been posted, including Indonesia. He was widely known
as "the coupmaster".
Green's stated goals (in order of importance) were
1) to maintain U.S. bases in Australia; 2) to keep the door open to
American investment; and 3) to encourage Australian political support
to the U.S. when and where it needed it, such as at the United Nations,
and over issues such as East Timor, North Korea, and Vietnam.
Green's appointment did little to ease the tensions
between Australia and the U.S. government and intelligence community.
It was too late.
The security crisis began when Whitlam insisted that
his aides did not need to be vetted by ASIO (the Australian Security
and Intelligence Organisation, whose function is similar to the FBI).
Sir Arthur Tange, permanent head of the Defense Department, and the
UKUSA's "main man" in Australia "dutifully" reported
this to U.S. intelligence, who saw Whitlam's move as not only irresponsible
but dangerous. The next day, a U.S. Embassy official told Richard
Hall, author of The Secret State, "Your Prime
Minister has just cut off one of his only options." (p. 2). Whitlam
backed down immediately, but the impression of unreliability had already
THE MURPHY RAID
The next glitch in the intelligence relationship came
as a consequence of what came to be termed "the Murphy raid."
In March, 1973, the Attorney General, Lionel Murphy, was preparing
security of the upcoming visit from the Yugoslav Prime Minister. It
came to Murphy's attention that ASIO was not being forthright about
its knowledge of Croatian terrorist groups which might threaten the
life of the Yugoslav Prime Minister. He flew down to the ASIO headquarters
in Melbourne, where Commonwealth police had already secured the building,
and went in search of the relevant information. The media got wind
of the "raid", and blew it out of proportion.
The CIA was furious. "We entrusted the highest
secrets of counter-intelligence to Australian services and we saw
the sanctity of that information being jeopardized by a bull in a
China shop," said James Jesus Angleton, head of counter-intelligence
at the CIA until 1974. Angleton said the raid "had shown an outrageous
lack of confidence," and added, "how could we stand aside
without having a crisis in terms of our responsibilities as to whether
we would maintain relationships with the Australian intelligence services."
The threat of breaking off the intelligence relationship had been
a distinct possibility (Denis Freney, The CIA's Australian
Connection, 1977, p. 27-28).
Angleton had seemed perplexed by the fact that it
was Murphy's prerogative, as an elected representative of the Australian
people, and whose jurisdiction covered ASIO, to scrutinize ASIO's
ASIO, ASIS, AND THE
As members of the UKUSA agreement, ASIO and ASIS (the
Australian equivalent of the CIA) were very close to the CIA, and
have often been accused of being more loyal to the U.S. and British
intelligence community than to their own country's government. In
the early 1970s, many ASIO and ASIS agents were certainly ideologically
closer to the right-wing elements in the CIA than to the Labor government.
When Labor came to power, they did little to help the floundering
relationship between the Whitlam government and the U.S., and instead
tended to exaggerate the "threat" posed by the Labor party
to themselves and to the American intelligence agencies.
The relationship between the Whitlam government and
the intelligence services (ASIO, ASIS and the CIA) was further soured
by a number of other factors. For example, members of the Labor Party
complained that ASIO dedicated too much of their time to following
the activities of left-wing groups, and not enough time to right-wing
groups. The Croatian terrorist groups were a case in point. ASIO resented
having their resources diverted to what they saw as wasteful areas,
such as keeping tabs on the small Nazi party.
Another area of tension resulted when Whitlam discovered
that ASIS agents were working with the CIA to destabilise Chile and
overthrow President Salvador Allende. Whitlam ordered them to leave
immediately. He was even more furious when he learned that the ASIS
men had still not left Chile months later.
A similar fracas occurred over East Timor, during
the lead-up to Indonesia's invasion of its small neighbour. In late
October 1975, Whitlam sacked ASIS head William Robertson for not informing
him that there was an ASIS contact working in East Timor. This caused
great consternation in the U.S., because the American government wanted
the Australians to at the very least ignore Indonesia's actions in
taking over East Timor. The concern (though unfounded) was that Whitlam
would side with the left-wing Timorese independence movement. Certainly
many Labor ministers did favor the Fretelin movement over Indonesia.
The National Intelligence Daily, a top secret CIA
briefing document for the eyes of the President, reported that "The
Whitlam government seems willing to risk important relationships with
Indonesia and the U.S. in order to appease leftist forces within the
Labor Party." (Book of Leaks, p.93).
Whitlam also sacked ASIO head Peter Barbour in October
1975, though the reasons are unknown. Both Robertson and Barbour were
long-standing and trusted members of the UKUSA community. Both were
replaced by men Whitlam thought would be more loyal to him. The replacements
were not approved of by the Americans.
Whitlam also set up the Hope Royal Commission in 1975
to look into the domestic intelligence services. This was widely perceived
to be a threat to the power and existence of the various intelligence
The combination of incidents involving the security
and intelligence services brought a sense of disquiet to U.S. intelligence,
which was reinforced by Whitlam's occasional hints that the treaty
concerning U.S. bases in Australia, including Pine Gap, may not be
renewed if the U.S. did anything to anger Whitlam.
Steve Gerlach is a Melbourne based researcher.
He founded the Australian JFK Assassination Information Centre in
1992, and was its director from 1992 to 1995 and editor of the Centre's
magazine "Probable Cause". He now works independently, and
is employed as a researcher by a major Melbourne newspaper.
Adelaide Gerlach has spent eight years in Peru
and eight years in the USA. She has a BA (Hons.) in Politics and is
employed as a researcher in the Australian trustee industry.
TO PART TWO