Tiny Coco Islands weigh independence but lean toward joining Australia

The Coco Islanders - all 300 of them - are debating whether their Indian Ocean homeland should become the world's tiniest independent country.

The territory's history is the stuff adventure stories are made of - but most people know it chiefly as a supplier of coconuts. One chartered aircraft calls each month. A tourist industry is a possibility for the future, although the distance from the mainland could push costs too high.

Recently the islets have taken on some significance in military terms. United States military planes en route to the big Diego Garcia base in the Indian Ocean stop in the Cocos to refuel, and the islands may play a more important role in Western defense strategy in the future.

The 27 islands that make up the Cocos are populated by Malays, but until recently were dominated by one white British family. Their best-known inhabitant , John Clunies-Ross, is a descendant of that family. The Clunies-Ross's received the islands, which together total less than nine square miles located 1,700 miles west of Perth, Western Australia, as a gift from Queen Victoria. The family extended its fortune by developing cotton plantations and exporting copra. The Malays were brought in to tend the coconuts.

But the Malays, the chief inhabitants, do not see much romance in their islands. They say the Clunies-Rosses gave them no say in running the islands. They were provided with housing, medical attention, and some education, but were forced to use the family's plastic coins as a means of exchange and could buy goods in only one place - the Clunies-Ross family store.

By and large, Malays say conditions did not improve much when Australia took control of the territory in 1955 for a price of about $6 million.

Stories of poor living conditions continued to abound, and in 1978, Canberra moved to improve conditions before it met international criticism. Australian officials now say children of the Cocos are growing bigger than in earlier times.

Malays concede there has been improvement. Two hundred Australian government contract workers live on the Cocos to run a quarantine station for animals, and a weather station, and other facilities. The facilities also have generated work for several dozen Malays.

A Malay cooperative has taken responsibility for copra production, formerly the preserve of the Clunies-Ross family. The Cocos Islands Council, a representative body of Malays, makes local government decisions and advises the Australian authorities on major issues.

But the Malays themselves are deciding whether to become independent - or to choose one of two other options, free association with Australia or integration with Australia. Free association would give them much the same status they have now, with Australia controling defense and foreign policy. Integration with Australia would probably mean the new voters would legally become part of the Australian Capital Territory, the piece of land on which Canberra, the capital, is situated.

At this time island leaders say they are leaning toward integration with Australia. But under that status the islanders would insist on continuing to run their own affairs. Australia will seek UN approval for whatever arrangement is worked out because the Cocos Islands situation comes within the framework of decolonization, which Australia supports.

Mr. Clunies-Ross remains the most well-known island figure. He has been called ''King of the Cocos'' and pictured barefoot on the beach with a knife in his belt. He lives in a huge residence and buys copra from the Malay cooperative , marketing it in Singapore. He also has other overseas business interests.