JAPAN You will no doubt have heard from the Washington Legation of Lothian's  interview With Welles  on 20th June when the latter, after hearing Craigie's  reports, agreed with his view that there was a risk of the Japanese Army making a move in Indo- China. 
With regard to proposed declaration by the United States (my telegram No. 450 ) Welles said that his Government could not at present go beyond declaration made some time ago in connection with the Netherlands East Indies. He thought that better method was for the United States to show its immediate interest in the situation through activity of Grew  with Tokyo Foreign Office, and that public declarations should be avoided.
With regard to U.S.S.R., and possible pressure from the United States Government, Welles said he thought that the Soviet[s] were so alarmed by the German situation that it was unlikely that they would at the moment make any move which would cause trouble for them with Japan.
No comment has yet been received from Washington with regard to what course the United Kingdom should follow if Arita  presents demands regarding supplies through Burma and withdrawal of troops from Shanghai. Craigie has urged that the time is rapidly passing when diplomatic support from the United States in connection with Shanghai issue will be of much use and that what is wanted- urgently-is an assurance from the United States that should the United Kingdom maintain troops in Shanghai and thereby become involved in trouble with Japanese they may rely on America's armed support.
The French Ambassador at Tokyo  considers that campaign against Great Britain will become greatly intensified and that unless we can be sure of full American solidarity in regard to troops and Burmese trade we should be well advised to meet the Japanese as far as possible on these questions.
Consideration is now being given here to what the United Kingdom attitude would be in the event of attack on Indo-China.