123 Memorandum by Mr T. Elink Schuurman, Netherlands Consul- General in Australia

Memorandum 2 April 1940,

STRICTLY CONFIDENTIAL

The Netherlands Government have been advised from Lisbon that the Japanese Minister in that capital [1] last week had a long interview with the Portuguese Minister for Colonies [2], during which the former offered improved shipping services between Japan and Portuguese Timor provided facilities could be granted to Japan for a share in mining and agricultural development in that colony.

Although it is not quite clear whether the Australian High Commissioner in London has been aware of this proposal, the information states that Mr. Bruce has been in touch with the Portuguese Embassy in London and there has pointed out the danger of this attempted Japanese penetration in Portuguese Timor. This has not had the desired effect, apparently because the British Government does not seem to be very much interested in the question, which is regretted in Lisbon. The Portuguese Minister for Colonies is strongly opposed to Japanese penetration in Timor, but the Portuguese Prime Minister [3] seems to underrate the danger. The former regrets the aloofness shown by the British Government and the vagueness of the Netherlands proposals regarding economic assistance.

(With regard to the latter point it may be mentioned that the Netherlands Indies Government, after a full investigation into the economic structure of Portuguese Timor, regretfully came to the conclusion that there was very little scope for any assistance, aiming at an immediate increase of the agricultural or mining production or an improvement in the existing shipping connections of that Colony.) The Netherlands Government considers the foregoing information of urgent importance and would like to obtain the Commonwealth Government's views on the matter. [4]

1 Kikuji Yonezawa.

2 Dr F. J. V. Machado.

3 Dr A. de O. Salazar.

4 Elink Schuurman forwarded this memorandum to Lt Col W. R.

Hodgson, Secretary of the External Affairs Dept, with a covering- letter dated 2 April 1940 (on the file here cited).

[AA: A981, TIMOR (PORTUGUESE) 20]