Leading Article: Press comment and trade are unrelated

YESTERDAY'S serious slump in relations with Malaysia proves once more that it does not pay to adopt dubious means to achieve desirable ends. To use pounds 264m of aid funds - for a dam project condemned by senior advisers as an unequivocally bad buy - to help secure a pounds 1bn deal to buy British arms was a breach of official policy and wrong in almost every way. Press criticism of the deal, of the secretive manner in which it was reached and of official attempts to cover up the link between aid and arms has been entirely justified. As Labour's foreign affairs spokesman, Jack Cunningham, rightly said yesterday, if British trade and jobs are now at risk, it is thanks to abuse of government by Conservative ministers.

The Malaysian government's reaction - to exclude British contenders from the running for its own contracts - owes everything to emotion and nothing to logic. It is true that Malaysia's own press is controlled and largely subservient. But does the country's thin-skinned prime minister, Mahathir Mohamad, really believe that the British government controls the British press? If so, he must be struck by its high level of tolerance. Should he and his ministers feel their honour is impugned by suggestions that they have accepted bribes, they should have recourse to British courts through this country's notoriously tough libel laws.

To punish British business for the perceived calumnies of the British press is likely to be self-defeating. The traffic is not one-way: last year Malaysia exported goods worth pounds 1,396,413,000 to Britain, while British exports to Malaysia were worth pounds 964,985,000, a much smaller proportion of overall trade. It must also be in Malaysia's interests to maintain a good range of trade partners. Unlike countries such as China, Japan and Korea, which are potentially a threat in various ways as well as rivals, Britain poses no dangers to Dr Mahathir's country.

Yet, bizarrely to anyone under 50 here, England's imperial past still sticks in the collective Malaysian gullet, to judge by yesterday's remarks from the deputy prime minister, Anwar Ibrahim. His emotional references to patronising attitudes in the British press and suggestions of corruption and incompetence were clearly deeply felt.

When Lord Carrington went to Kuala Lumpur in February 1982 to attempt to reverse the policy of Buy British Last, post-imperial arrogance by Britons towards Malaysian officials was on the schedule of grievances to be redressed. Top of the list was higher fees for foreign university students - of which Malaysia is today the largest single source - followed by inadequate landing rights for the national airline.

Lord Carrington was not very successful, and it took Margaret Thatcher to restore Britain's trading relationship with its rubber-rich former colony. It is now back to square one, the very deal that capped the Thatcher triumph having proved more snake than ladder.

By a further irony, the extent of trade revealed to be at risk points up the unwisdom of the original Pergau dam aid 'sweetener' for the arms deal. If Malaysia is so prosperous and able to afford so much military hardware, why did it need aid?

Britain's development aid is intended to promote many aims, including good government, the reduction of poverty, an improved environment and the status of women. Strong armed forces are not and must not be on the list.

Placating the Malaysians will not be easy, and it seems unlikely that Britain's European competitors will hold back in a show of solidarity. If China were, out of pique over Hong Kong, to follow Malaysia's example, the effects could be severe indeed. South-east Asia as a whole is the world's fastest developing economic area. Nowhere else is the competition for infrastructure contracts fiercer. By diplomatic and other means, the Malaysians must be convinced that press reports and trade are two very different matters. They should no more be entangled, to use Douglas Hurd's word, than aid and arms.