by Denis Smith
in his only major speech in Ceylon, by underlining the purity of Canada’s motives in contributing through the Colombo Plan. It sounded a little off-key, but it was his way of warning his audience of parliamentarians against the insidious purposes of communists, both foreign and Ceylonese, in their midst. For good measure he added a warm testimonial to the United States, just as he had done in New Delhi. The effect of this on the audience was one of puzzlement, but Diefenbaker was quite unrepentant. Whenever on this journey he sensed a coolness towards the United States, he felt it his duty to speak in support of Canada’s neighbour and ally, if only as an act of solidarity with his esteemed friend, the president. Three years later he might not have offered quite as solid support to Eisenhower’s successor.105
In Kandy, “that oasis among oases, that other Eden, demi-paradise” (as he described it), Diefenbaker rode an elephant and Olive’s name was given to a new variety of rose.106
By comparison with Bandaranaike, Diefenbaker found his next host, Prime Minister Tunku Abdul Rahman of Malaya, both warm and politically sympathetic.107 The Tunku was staunchly anti-communist, at war with communist rebels in his own land, and an outspoken supporter of American policy towards China. He warned Diefenbaker that Canadian recognition of the People’s Republic would be taken in Asia as support for Chinese expansionism. On the same day, Diefenbaker told a press conference that Canada had made no decision on the subject: “We do not intend to take any course which will weaken the opposition to Communism anywhere or be so interpreted as constituting on the part of Canada a weakening in our stand.”108 Privately, he realized that non-recognition imposed an unhelpful isolation on China. But faced with constantly conflicting arguments and the opposition of the Eisenhower administration, Diefenbaker preferred to leave the issue in permanent limbo. The views of Ayub Khan and Tunku Abdul Rahman had reinforced his indecision.
In Singapore - still a British colony - Diefenbaker sought advice from the British governor and commissioner general for Southeast Asia about whether Canada should cut its aid to neutralist Ceylon and increase aid to pro-Western Malaya. The British responded that the best policy, despite neutralist success in playing off East and West in appeals for competitive gifts, was to persevere in giving specialist aid that might strengthen “integrity and independence.” The British commissioner reported to London that - in spite of their hectic twenty-four-hour schedule in Singapore - the Diefenbakers “were in surprisingly good form, she especially, relaxed and interested, and appeared much less fatigued by their tour than might have been expected.”109
In a brief two-hour stop in Djakarta, Diefenbaker met the Indonesian prime minister and again emphasized his concern that Asian governments should not let local communists subvert democratic institutions. He favoured a liberal policy on foreign investment and told his host that Canada had found that American capital was “not as avaricious as it was made out to be in other parts of the world.”110
In Australia and New Zealand the Canadian prime minister felt himself once more on solid ground among old friends in the British family. Diefenbaker reported his European and Asian conversations in detail to his Australian and New Zealand colleagues, enjoyed warm hospitality from Robert Menzies in Australia, and made familiar speeches to friendly audiences about Commonwealth brotherhood. The British high commissioner in New Zealand wrote that “the feeling in Government circles here is that he made the right noises about the Commonwealth but did so in a rather diffuse and woolly manner. The speeches at the Government Lunch in fact were protracted and a common comment after them was that in long-windedness ‘Walter [Nash] has at last met his match.” ’ Diefenbaker offended the Indian high commissioner by claiming that Canada had no ulterior purpose in its Colombo Plan assistance to India, but “that its main purpose was to combat communism.”111 Aside from that unthinking slip, the official side of the journey passed easily and the party went off to the resort of Wairakei for four days’ holiday. The next day Diefenbaker received word that his mother was ill, and arrangements were quickly made to return to Canada the same day.112
For the prime minister, the tiring journey had been an unqualified success. Diefenbaker told a Canadian television audience on December 21 that he was “more convinced than ever of the importance of these personal meetings with national leaders … The normal diplomatic channels are still of the utmost importance, but there are times when direct communication between those in high authority, often by long distance telephone, becomes desirable and indeed essential.”113
IN DIEFENBAKER’S ABSENCE HIS GOVERNMENT, WORKING UNDER HOWARD GREEN AS acting prime minister, had kept a low profile. “Ottawa,” Patrick Nicholson wrote to the prime minister in early December, “is a very quiet place, uneventful almost to the point of causing alarm.” But Diefenbaker, ever alert to the political winds, had heard of fresh conflicts among his ministers. Nicholson reassured him: “I think you have been receiving unduly alarmist reports about your Cabinet’s solidarity.”114
The new government had easily dominated its first two sessions of parliament, but few observers expected that to continue in 1959. George Bain commented in the Globe and Mail that the government could no longer coast on the prime minister’s “heady phrases … of oratorical vision,” or blame the old Liberal regime for the country’s economic ills. Now it would have to produce its own remedies. He predicted difficulties in three areas: fiscal and monetary policy, defence, and agriculture. Defence policy had been “in an apparent muddle for months. The controversy and uncertainty over the Arrow jet fighter is the most dramatic example of the problem, but more generally it is becoming clearly evident that the whole defence establishment needs overhauling.”115
The Diefenbaker government inherited the dilemma of the Avro Arrow from its Liberal predecessor. The A.V. Roe Company of Malton, Ontario, had begun designing the supersonic CF-105 Arrow interceptor in 1953, when the government committed itself to development planning. The confident prospect was that a successful prototype would lead to a large RCAF order for the fighter plane by the late 1950s, to replace the subsonic CF-100, another product of A.V. Roe. Over the next three years, design and development went forward on the tailless, delta-winged airframe at A.V. Roe, on the engine at Orenda Engines - an A.V. Roe affiliate also located in Malton, on the ASTRA radar fire control system at the RCA company in the United States and at Westinghouse in Hamilton, and on the Sparrow II missile at Canadair Limited in Montreal.116
By 1955, complications in designing the fire control system and reductions in RCAF requirements from twenty squadrons to nine squadrons raised doubts about the project among Liberal ministers. “I can say,” C.D. Howe told the House of Commons in June 1955, “that now we have started on a program of development that gives me the shudders.”117 Nevertheless, active development and tooling up went forward on the assumption that the aircraft would go into production, and there were no realistic assessments of development or production costs until 1957. With an election approaching in the spring of 1957, the Liberal cabinet postponed any decision on the future of the project, just as it had postponed consideration of NORAD.118
The new government approached defence spending in a spirit of cost-cutting, and in September 1957 it agreed, on the recommendation of the minister of national defence, to eliminate production of the final Mark VI version of the CF-100, for a saving of an estimated $66 million.119 The decision brought an immediate - and harsh - political response from A.V. Roe and Orenda, who threatened to lay off almost three thousand workers before July 1958. The minister of labour, Michael Starr, suggested to cabinet that Avro “was adopting a vindicative [sic] attitude and that in their lay-offs they were going far beyond what was necessary.” Ministers noted that the three Conservative MPs for the Malton area “had been elected on a programme that there would be no lay-offs,” and estimated that 10,000 votes might be lost if the decision were sustained. Urgent talks were arranged with the companies for the same evening.120
The cabinet record shows th
at - with another election approaching - ministers were preoccupied with the political rather than the military effects of the decision. This put the two companies in a strong bargaining position, which they exploited skilfully. They told Pearkes and his colleagues Fleming, O’Hurley, and Hees that 3200 layoffs were in prospect, 1200 of them directly resulting from the CF-100 cancellations. There would also be large layoffs among the subcontractors. Avro and Orenda also awaited a more crucial cabinet decision on the future of the Avro Arrow, and warned that both companies would close if the project were cancelled, throwing 15,000 employees onto the street. Pearkes told them that a decision on the Arrow would come within a week, and with that assurance they agreed to withhold layoffs until then. When cabinet met the next day, members noted that “these layoffs would be the first major increase in unemployment directly attributed to action of the government and efforts should be made to lessen the effects which could influence the government’s chances of re-election.”121
By the end of the month, after further talks with the companies, Pearkes brought a compromise package to cabinet. It would reduce layoffs to a politically manageable 1450 persons, some by attrition, while adding millions to federal spending. Pearkes proposed that the government should buy an additional twenty CF-100 Mark Vs, costing $10 million, to be given away to NATO allies as mutual aid, and that development of the Avro Arrow and its components should be continued for a further twelve months, at an added cost of $173 million in 1958-59. This would involve the completion of thirty-seven pre-production aircraft, some of which could go into service if production followed. Cabinet agreed.122
For their part, Orenda and A.V. Roe made some adjustments in production and staffing, but gained contracts for twenty CF-100s and the assurance of another twelve months’ development of the Arrow. For its part, cabinet “went a long way towards solving the problem” of layoffs at Malton, but took “a tremendous gamble” with the Arrow. No test flights had yet taken place. The minutes noted ominously that “$400 million would have been spent before it was known if the aircraft could be put into use in the R.C.A.F. However, there was no time to study and weigh the programme in its entirety.” More generally, ministers understood that the politics of such support for the re-election of three MPs required a parallel show of generosity elsewhere.123 This was expensive damage control. Above all, it indicated to A.V. Roe that the Diefenbaker government was politically sensitive and that it capitulated easily under pressure.
If the manufacturers were reassured by the Diefenbaker cabinet’s acts of appeasement, the minister of defence had few illusions. When he wrote to Diefenbaker in January 1958 to recommend an early election, he anticipated hard decisions on air defence in the coming months. “I am having a study made of the nature of the threat. Present indications are that it is quite possible we may have to make radical changes. For instance, it is not at all clear that we need to proceed with the construction of the CF-105. If next summer we have to cancel development of this aircraft, the aircraft industry at the Avro plant will be seriously dislocated with possible large-scale layoffs of personnel. This would of course affect our Members who represent constituencies in that area.”124
By mid-summer, following studies by the defence chiefs, discussions with the American military, and review in the cabinet defence committee, Pearkes was ready to recommend those radical changes. In the meantime the first test flights had occurred, with spectacular success, and the defence department had sought American orders for the aircraft. Pearkes met his American counterpart in Washington in August and learned that the United States would not consider a Canadian aircraft purchase. Instead, Defense Secretary Neil McElroy outlined new air defence plans involving Canadian participation and urged them on Pearkes.125 The Canadian minister accepted them, and on August 22, 1958, he brought his proposals to cabinet. They preoccupied ministers in six meetings extending over a full month.126 When the marathon was finished, they had accepted American Bomarc missiles (probably to be armed with nuclear warheads) as a partial replacement for the Avro Arrow, cancelled development of the ASTRA fire control system and the Sparrow II missile designed for use in the Arrow, and postponed a decision to sustain or cancel production of the Arrow and its Iroquois engine for a further six months, until March 31, 1959. In the meantime, the development programs at A.V. Roe and Orenda Engines would proceed. This unstable and confusing compromise reflected a divided military leadership, a divided cabinet, a determined industrial lobby, and Diefenbaker’s attempt to bring them all together by delay.
There were now at least five compelling influences on the decision: escalating costs that seemed beyond the capacity of the Canadian government; doubts about the technical nature of the potential Soviet threat, whether bomber or missile; a military preference for tactical atomic weapons for defence as well as attack; an interest - both economic and political - in maintaining a large and sophisticated Canadian aircraft industry; and an overriding American influence on the shape of Canadian defence policy. The government responded by simultaneously inching sideways and forwards. In the process, the prime minister preferred not to sort out too clearly what policies his government was actually pursuing.
Pearkes offered cabinet a straightforward analysis of air defence policy for the 1960s, evidently based on his Washington briefings.
The assessment of the threat to North America had changed. In the 1960s, the main threat would probably be from ballistic missiles with the manned bomber decreasing in importance after 1962-63. However, a combination of the two might be the threat until Soviet manned bombers were depleted. The rapid strides in technology were such that to provide a suitable manned fighter to cope with heavy jet bombers was extremely expensive. Furthermore, ground-to-air missiles had now reached the point where they were at least as effective as a manned fighter, and cheaper. The original requirements in 1953 for between 500 and 600 aircraft of the CF-105 fighter had been drastically reduced. Subsequently, thought had been given to reducing it still further now that the BOMARC missile would probably be introduced into the Canadian air defence system. Finally, the cost of the CF-105 programme as a whole was now of such a magnitude that the Chiefs of Staff felt that, to meet the modest requirement of manned aircraft presently considered advisable, it would be more economical to procure a fully developed interceptor of comparable performance in the U.S.127
Pearkes recommended to cabinet the defence committee’s proposals for two Canadian Bomarc missile bases, additional heavy radar installations, and negotiations with the United States on cost-sharing for these projects. Since the defence committee and the military chiefs of staff were divided on the future of the Arrow, Pearkes made his own recommendation that development of the CF-105 should be cancelled at once. He proposed further studies on the purchase of an alternative American fighter plane and on two additional Bomarc bases, but without any commitment to buy aircraft for at least one year.128
The United States Air Force had already incorporated Bomarc missiles into its defence plans, and the two bases now proposed for Canada simply involved moving elements of the network northwards into Ontario and Quebec. Pearkes explained to cabinet: “There were considerable advantages in adopting BOMARC. It was cheaper than the CF-105, in terms of men and money, and just as effective. The missile could be fitted with an atomic warhead and the U.S. would probably supply heads on the same basis (“key-to-the-cupboard”), as they made atomic weapons available to the U.K.”129 He estimated the full costs of substituting Bomarcs for Arrow interceptors, without any American cost-sharing, at $520 million, or less than half the production costs of one hundred Arrows.130 During the first days of cabinet discussion, the US Defense Department eased the minister’s efforts of persuasion by indicating its interest in cost- and production-sharing for both Bomarcs and radar installations. It emphasized that its chief concern was to complete the heavy radar system. Since the cabinet’s agonies arose over the future of the Arrow, with all its political complications, the addition of two Bomarc bases
and more radars seemed a deceptively simple affair. On September 8 cabinet authorized Pearkes to begin negotiations with the United States on those projects. At Diefenbaker’s urging, a decision on the Arrow was postponed for two weeks “pending further examination of various alternatives.”131 That adoption of the Bomarc was understood by members of the cabinet as a signal of the Arrow’s eventual demise seems likely; the choice was undoubtedly a gesture of cooperation with the Americans. Given the cabinet’s immediate focus, the accompanying implication that the weapon might be armed with atomic warheads was noted without apparent concern.
Pearkes told cabinet that he had previously supported completion of the Arrow, but that its high costs, coupled with the declining threat from bombers, had led him to change his mind. His recommendation “meant that the government would have a year to decide whether it should re-equip air defence fighter forces wholly with the BOMARC, or an alternative aircraft, or a combination of both. Within that time there should be a better understanding of Soviet intentions as to whether they were likely to introduce more or better bombers, or go completely into missiles.” Other ministers warned that “the most serious aspect of the proposal” would be the loss of more than 25,000 jobs. On the other hand, maintenance of the Arrow program would add $400 million a year to the defence budget, increase both taxes and the deficit, undermine the government’s credit, and stimulate inflation. The dilemma was profound: military and financial considerations pointed to cancellation, but abandoning a Canadian aircraft to purchase an American replacement “would be a serious political mistake.”132
Before the cabinet’s second discussion of the subject, Diefenbaker, Pearkes, and Fleming met with F.T. Smye, the vice president of Avro Aircraft, and John Tory, a director of A.V. Roe. They recommended maintenance of the Arrow and Iroquois programs, but cancellation of the missile and fire control systems in favour of American alternatives. They pointed out that Avro had opposed the original RCAF recommendation of those systems. Production of one hundred CF-105s over the next four years would give the company “a reasonable opportunity” to find other business, but cancellation would mean the loss of 25,000 highly skilled jobs and dispersal of many employees to the United States, “never to return.”133