E (PD) (37) 3 (extract) LONDON, 21 May 1937
At the first meeting of principal delegates on 19 May 1937 the U.K. Foreign Secretary, Anthony Eden, introduced the discussions on foreign affairs in a speech outlining British policy. He explained that it was undesirable to adopt an attitude of disinterest in the Central European area for that 'would most certainly invite aggression'. Nor was it feasible to declare readiness to fight for Czechoslovakia or Austria should they be victims of aggression. British policy, as outlined in recent speeches, followed a third course, 'namely that without undertaking any military commitment we should make it clear that we were interested in events in Central Europe'.
At the third meeting R. G. Casey spoke on this question for the Australian Delegation.
MR CASEY felt Sure that all the Principal Delegates must feel under a great debt of gratitude to Mr Eden for his very clear description of the European situation and for his masterly compression of so vast and complicated a subject. The Dominion Delegates must also feel considerable diffidence in commenting upon Mr Eden's statements, more particularly as none of the Dominions had entered into specific commitments vis-a-vis foreign policy in Europe. At the same time all must be impressed by the great gravity of the situation, and any comments that he had to make would be for the purpose of elucidating points of doubt rather than of formulating definite criticisms.
The supreme aim of Great Britain, and it might be hoped the supreme aim of the whole Commonwealth, was to preserve peace in Europe. The main factors in the preservation of European peace related to Germany and Italy and to the potential dangers which the Berlin-Rome axis had created. So long as Germany and Italy continued closely to co-operate as at present, so long would this nightmare, namely the fear that such co-operation involved a definite anti-British trend, continue.
It was, of course, realised that the domination by Germany of Austria was specifically prohibited by the Treaty of Versailles, and that at Stresa, Great Britain had announced that the continued independence and autonomy of Austria was a matter of importance to her. Mr Eden had mentioned that Hitler's minimum objective appeared to be the reinclusion in the German Reich of all the German-speaking elements in Europe. This involved qua Austria the 'Anschluss.' It concerned the 3,000,000 Germans in Czechoslovakia and the Germans in Dantzig, Memel and other localities.
As regards Austria, a conceivable solution might be that Great Britain should cease to offer any further opposition to the realisation of the 'Anschluss' provided always that Germany could attain this objective peaceably and without the shedding of blood.
One great advantage would be that Italy and Germany would be at once divided. Germany at the Brenner would be very little to Italy's liking, and instead of sharing a common axis, each of them would be at the other's throat.
It must, of course, be realised that the absorption by Germany of Austria would lead to a claim by Germany for a port on the Adriatic which, no doubt, would be Trieste. Would the transfer to Germany of Trieste create a very grave danger to the United Kingdom and the rest of the Commonwealth? Doubtless Germany might be expected to become more arrogant and difficult, but she would have to count on the opposition of Yugoslavia and the other Eastern and Baltic States.
There were great difficulties in the way of any solution, but this proposal might possibly be the lesser of two evils, and it was very much to be feared that unless Germany was given some let-out of this kind that she might, within the next two years, take the law into her own hands.
The clear statement of the United Kingdom commitments in Europe contained in Mr Eden's Leamington Speech had been very well received in Australia. Then came the Bradford Speech, and doubts were expressed whether the very definite limitations laid down at Leamington had not been, to some extent, qualified at Bradford 
It seemed clear that if Czechoslovakia was menaced by Germany, Great Britain would not be prepared to go to war in defence of the independence of Czechoslovakia. If this was the true position, would it not be very much fairer to the smaller countries, and particularly to those in Central and Eastern Europe that the position should be explained to them without possibility of misunderstanding? He hoped that at a later stage Mr Eden would be able to comment on his suggestion that Germany should in future be allowed a freer hand in Europe, particularly in regard to the 'Anschluss' with Austria.