NEW ZEALAND TODAY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001300010045-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 15, 2016
• Document Release Date: July 14, 2004
• Sequence Number: 45
• Publication Date: October 11, 1966
• Content Type: IM

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11 October 1966
Copy No. r.
INTELLIGENCE MEMORANDUM
NEW ZEALAND TODAY
DIRECTORATE OF INTELLIGENCE
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This Document contains information affecting the Na-
tional Defense of the United States, within the mean-
ing of Title 18, Sections 793 and 794, of the U.S. Code, as
amended. Its transmission or revelation of its contents
to or receipt by an unauthorized person is prohibited
by law. The reproduction of this form is prohibited.
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
11 October 1966
INTELLIGENCE MEMORANDUM
New Zealand Today
Summary
New Zealand is a stable democracy patterned
after the British parliamentary system. Its econ-
omy is substantially sound and expanding despite
recurring balance-of-payments deficiencies caused
by fluctuating world market prices for its few
exports. As the country emerges from a geograph-
ically induced isolation, it is becoming less de-
pendent on the United Kingdom's foreign policy
guidance and is developing both a national and a
regional identity. Heightened concern for its
own security, resulting from recent developments
in Southeast Asia and Britain's reduced defense
commitments east of Suez, has led New Zealand
generally to a greater emphasis on collective se-
curity and specifically to an increased dependence
on the United States. At the same time, New Zea-
land recognizes and conducts a limited trade with
Communist countries while subscribing to a policy
of containing Communist expansion.
This is one of a series of memoranda pro-
duced by CIA on those countries to be
visited by President Johnson. It was pre-
pared by the Office of Current Intelligence
and coordinated with the office of National
Estimates and the Office of Research and
Reports.
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A Stable Democracy
1. New Zealand's political structure is a
simplified adaptation of the British parliamentary
system. Executive authority is centered in a cab-
inet headed by a prime minister who is responsible
to an 80-member unicameral parliament. The two ma-
jor parties are the mildly conservative ruling
National Party (NP), whose chief spokesman is Prime
Minister Keith J. Holyoake, and the moderately left-
of-center Labor Party (LP) led by Norman E. Kirk.
The two parties differ more in theory than in prac-
tice, both having supported social legislation which
has transformed the basically rural country into a
welfare state.
The Economy
2. The economy relies heavily on a narrow
range of exports, principally meat, dairy products,
and wool. Periodic balance-of-payments crises are
caused by fluctuating foreign market prices, es-
pecially in the United Kingdom, which buys almost
half of New Zealand's exports. The country needs
much greater diversity of export products and mar-
kets, and is handicapped by limited natural re-
sources for industrial development. Despite these
handicaps, the economy is generally stable and the
per capita gross national product (GNP) of almost
$2,000 is among the highest in the world. The real
growth in GNP was about five to six percent in fis-
cal 1965 and four to five percent in 1966. The
government has developed one of the most compre-
hensive social welfare services in existence today,
devoting about 40 percent of the national budget
to this end.
National Elections
3. National elections, scheduled for next
month, have produced some political maneuvering but
very little popular enthusiasm. The powerful New
Zealand Federation of Labor (FOL), the opposition
LP's single strongest supporter, has called for the
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withdrawal of New Zealand's troops from Vietnam.
Privately opposing such a move, party leader Norman
Kirk has argued for replacing the artillery bat-
teries with noncombatant military personnel. More-
over, he advocated providing protection for New
Zealanders engaged in noncombat services in Vietnam.
The party conference adopted the FOL policy by an
overwhelming vote of 360-64, but the LP thus far has
not emphasized the question in its campaign.
4. The Holyoake forces, however, are report-
edly poised to introduce and force the issue shortly
before the elections. They expect to win strong pub-
lic endorsement for their Vietnam policies and to
create further disarray in opposition ranks. A sub-
stantial majority of New Zealanders appear to under-
stand and accept the involvement in Vietnam, at least
within its present modest limits.
5. LP strategy has been to focus on the coun-
try's "serious economic position." In late August,
Kirk asserted that the "gathering clouds" of a bal-
ance-of-payments crisis were "casting a shadow over"
the economy, and charged that the government was
deliberately concealing the seriousness of the coun-
try's economic and financial position "to creep past
the election hurdle." Whether LP strategy is sound
remains to be seen, although public concern over the
balance-of-payments situation appears to be growing.
Much will depend on the state of foreign exchange
reserves on election eve, on the government's ability
to raise additional loans on acceptable terms from
overseas sources if necessary, and on the impact on
voters' pocketbooks of economic restraints being im-
posed by the government.
6. The NP under Prime Minister Holyoake prob-
ably will win its third three-year term in office,
but with slightly less than its present 45-35 ma-
jority. The LP seems to have only an outside chance
of coming to power, and then only if the balance-of-
payments situation becomes critical and stimulates
a popular feeling of "time for a change."
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Defense and Foreign Policies
7. New Zealand's defense policies are in a
state of metamorphosis, explained in part by the
diminishing UK influence in Asia and by the gradual
development of both a national and regional iden-
tity. Complacency and remoteness from world prob-
lems are giving way to a sense of involvement and
a willingness to assume increased responsibilities
for the security and stability of Asia and the Pa-
cific.
8. Commonwealth, ANZUS, and SEATO membership,
as well as geography, have contributed to New Zea-
land's general security. As a result, very little
effort has been devoted to the development of a
sophisticated defense system. The military es-
tablishment, numbering less than 13,000 men, has
been heavily extended to support the country's mil-
itary commitment in Southeast Asia, principally in
Malaysia; there are.only'-about 200 New Zealand per-
sonnel in Vietnam. The decision to withdraw over-
seas Commonwealth forces following the Indonesian-
Malaysian ratification of the Bangkok Agreements
of August 1966 will reduce the commitment in Malay-
sia, but New Zealand is expected to assume a larger
responsibility for defense east of Suez as British
responsibilities wane in the years ahead. This will
necessitate a considerable increase in defense ex-
penditures, but no move in this direction is antic-
#ated until after the elections and after the
balance-of-payments improves substantially. Only
six percent of the budget and two percent of the
GNP presently are allocated for defense expenditures.
9. Content with its insularity and remoteness,
New Zealand subscribed fully to London's foreign
policy guidelines until after World War II. Since
that time dependence upon the UK has diminished
somewhat, particularly in more recent years as New
Zealand has come to rely more heavily upon the
United States for protection. Like Britain, none-
theless, New Zealand pursues a policy of containment
toward Communism while recognizing and conducting a
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restricted trade with Communist countries. This
trade is in such "nonstrategic" goods as hides,
wool, fats, and oils, however, and the country's
total exports to both Communist China and the So-
viet Union during the past fiscal year amounted
only to slightly over eight million dollars (less
than one percent of New Zealand's total export
trade).
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