MELBOURNE, 6 August 1941
FAR EASTERN SITUATION In referring to the Far Eastern situation, the Prime Minister  said that the following steps had been taken in connection with economic sanctions:-
(i) Import and export control to be established by licensing (this was already in existence in Australia);
(ii) Notice had been given of the denunciation of the commercial treaty with Japan. 
The urgent need for uniformity in the principles of the licensing systems was apparent, and there were a few signs of weakening on the part of the U.S.A. which might give encouragement to Japan to go into Thailand. Pressure was being exerted on the U.S.A.
Government to define its position and to co-operate in a joint statement to Japan regarding the consequences of going into Thailand. No clear statement had been evolved so far.
2. The Prime Minister said that he could not describe the situation as satisfactory, as the U.S.A. Government would not make any statement in advance as to its course of action, for constitutional and local political reasons. However, though the U.S.A. would not make any statement before the Japanese entry into Indo-China, they had nevertheless taken drastic action. it was important to keep in line with the U.S.A.
3. Mr. Curtin  referred to the position between the United Kingdom and Australia as regards Japan. Japan's action in Indo- China had been based on pressure by Hitler to give some token of her adherence to the Axis. He did not necessarily consider that Japan was involved with the Axis to the extent that might appear to be so. Japan was still susceptible to a face-saving arrangement, and Government should talk to Government in a frank manner to ascertain if a solution was possible. Hitler was aiming at involving Japan, the British Empire and the United States in a naval war in the Pacific, and if this happened he would turn south, towards Suez. The effect of such a war on the battle of the Atlantic was not hard to see. It was alleged against us that we went into Syria, yet we would not allow another Power to combine with Japan for the defence of Indo-China. It was to our interest to appear weak to Japan in order to concentrate our massed strength against Germany, particularly now that Russia had entered the war. Mr. Curtin suggested that the Australian Government might suggest to the United Kingdom Government the wisdom of British Ministerial consultations, with or without the U.S.A., with the Japanese Government, in an attempt to delimit by agreement the expansionist policy of Japan.
4. The Attorney-General  said that attempts to arrive at an understanding had been made. Japan's policy was only limited by her power to give effect to it, and she knew that the United Kingdom and the U.S.A. were the barrier that stood in the way of the achievement of her ends.
5. Mr. Curtin said that diplomatic discussions were not adequate.
There was a division of opinion in Japan, which was representative of influential sections of the community. The Japanese believed that their action in Indo-China was legitimate, because it was carried out by agreement with the Vichy Government. If an agreement were possible with Japan, it would preclude demands being made on our already overtaxed naval power. Support by the U.S.A. would not be as great as the extent of Japanese opposition.
There also remained the possibility of the use of the Vichy fleet, if an arrangement were made with the Germans.
6. The Prime Minister stated that our inability to give Thailand material help and the unwillingness of the United States threatened to throw the Thais into the arms of Japan. Thailand had accepted Japanese mediation in the Indo-China dispute, and Japan would no doubt tell Thailand what she wanted, and Thailand would agree, though unwillingly.
7. Dr. Evatt  stated that cablegrams received on the Far Eastern situation had not been circulated to members of the War Council, nor read to them at the meeting. In consequence, a lack of information prevented the non-Government members from giving advice on this subject. He enquired whether the occupation of Thailand by Japan was to be considered grounds for war.
8. Mr. Curtin stated that if war with Japan was considered to be inevitable, we should bring pressure to bear on U.S.A. to knock Japan out now. If not, we should not be pushed into war when it is to our great prejudice in other theatres. He urged the importance of frank discussion with a view to drawing a chalk line to mark the limit of Japan's southern advance. To draw the line in advance would be to prejudice the possibility of a satisfactory discussion. The Attorney-General doubted whether any arrangement with the Japanese could be taken seriously, in view of the demands made by them on China in the last war. Mr. Curtin did not agree with these views, and cited the Anglo-Japanese treaty' as an indication of the trustworthiness of the Japanese word. He also said that the treaty with the Axis  had been honoured in the same manner.
9. The Prime Minister stated that the Japanese Minister to Australia  had suggested to him that he should go to Tokyo in an endeavour to check the drift of the situation. He recalled, however, Mr. Chamberlain's  visit to Munich and the consequent criticism that he ultimately incurred for appeasement. The Prime Minister observed that the present discussions were parallel to those he had had in London with the Foreign Office when he had strongly disagreed with the negativeness of a policy which believed in the inevitability of war, and had suggested:-
(i) The vital importance of a discussion with Japan on the situation in the Pacific;
(ii) The need for agreement with the U.S.A. Government as to what the British Empire and the U.S.A. agreed were their vital interests which must be defended in this region.
(Upon the resumption of the discussion on the Far Eastern situation, the Minister for External Affairs  and Sir Frederic Eggleston, Australian Minister to China, were present.)
11. The Minister for the Army  enquired of the Minister for External Affairs whether he had had any discussions with Mr.
Kawai, the Japanese Minister, in recent times. Sir Frederick Stewart stated that he had not. The Prime Minister added that he was seeing Mr. Kawai at 5.30 p.m. that day.
12. Reverting to the question of whether special discussions between the United Kingdom and Japan would serve a useful purpose, the Prime Minister said that he did not see why it should not be said:-
(i) We are not engaged in appeasing you, but we are prepared to take action in the event of Japan taking steps A, B, and C, which would be specifically defined;
(ii) With this being understood, if there are points in our policy that mystify you, there are similarly aspects of your policy which we would like clarified, but we do not abate our right to do what we think we should do to safeguard our interests.
Mr. Curtin agreed with the statement of the Prime Minister.
13. The Minister for External Affairs did not consider that this proposal could be explored without the concurrence of the U.S.A.
14. The Prime Minister said that it was unlikely that either the United Kingdom or the U.S.A. would agree. He recalled the discussions at the time of the re-opening of the Burma Road when the U.S.A. Government would not agree to intervene, though it was entirely American trade that was being transported along this road. The High Commissioner, London , had sought to get the United Kingdom Government to seek a basis of settlement with Japan without success. The Prime Minister referred to his own discussions in London. The important point made to him was that an International Conference should not be called on a matter of vital importance unless it was likely to succeed. If it proved to be abortive, the effect was worse than if no conference had been held.
15. Mr. Curtin enquired whether it could not be conveyed to Japan that if she were to call a conference the United Kingdom Government would agree to it. He pointed out that the Japanese were in a cleft stick. If we could separate Japan from the Axis it would be all to the good. He certainly distrusted the British outlook on Far Eastern policy and referred to the influence that had been exerted on Australia on the trade diversion policy to the detriment of Australian interests. In regard to Russia, it would be to her advantage if some relief could be afforded her from a potential threat against Siberia. He considered the reasons for Japanese activity to be firstly that something must be done for the Axis in view of her treaty obligations and, secondly, she desired to present the victorious powers with a fait accompli for subsequent bargaining purposes. If Japan were to come into the war, the U.S. naval forces made available might not be sufficient to preserve the lines of communication between Australia and the Middle East and to safeguard our shores. If the Prime Minister spoke for Australia, the United Kingdom Government must take notice of his representations, as Australian interests in the Far Eastern situation were very great.
16. Mr. Curtin added that he was not confident of fighting power in the U.S.A. and was of the view that American strategy was founded on the protection of jumping-off places which were an advantage to them in their own defence and which it was essential to deny to an enemy. If necessary, the United Kingdom and Australia should take up the matter alone with Japan.
17. The Minister for the-Army referred to the danger in acting alone without the U.S.A.
18. Mr. Beasley  said that he was impressed with the statement that the U.S.A. will take strong measures in regard to Japanese aggression against the Netherlands East Indies. He enquired whether the consultations between the U.S.A. and N.E.I. had been closer than with the United Kingdom and U.S.A., in view of the N.E.I. decisions regarding sanctions. The Dutch Foreign Minister  when in Australia stated that he did not consider that Japan could be alienated from the Axis.
19. The Minister for the Army reiterated his fear of the danger in moving without the U.S.A. and N.E.I.
20. Dr. Evatt referred to the telegram from the British Minister in Bangkok regarding the appeal of Thailand for assistance in the event of aggression by Japan.  He desired to know whether Thailand was to be the point of resistance against further Japanese advances, and if the U.S.A. will not resist Japan in such event, did the United Kingdom Government propose to do so.
21. The Minister for the Army observed that the United Kingdom Government could not give a guarantee without the co-operation of the U.S.A.
22. Dr. Evatt was in agreement that an understanding between the United Kingdom and the U.S.A. was necessary for discussions with Japan. Subject to this, he concurred in Mr. Curtin's views and observed that, on the statements of the Prime Minister from the cablegrams , there was not even agreement between the United Kingdom and U.S.A. Governments on sanctions.
23. Mr. Forde  was of the opinion that the British Empire should not act independently.
24. Dr. Evatt did not think that Japan would move into Thailand, Burma, or the Netherlands East Indies.
25. Mr. Curtin suggested that a question should be addressed to the U.S.A. Government as to what is being done about sanctions and what reassurances can be obtained from the U.S.A. in the event of the sanctions leading to aggression by Japan. Unless Australia had definite guarantees on this point we were in danger of becoming another Syria. If the views expressed by the Attorney-General were right, the A.I.F. should return to Australia from the Middle East.
26. The Minister for External Affairs, referring to the degree of trust to be reposed in Japan in any agreement that might be reached from discussions, referred to evidence that had been received by spying by Japan and the propaganda to retard the despatch of A.I.F. forces to Malaya.
27. Mr. Curtin referred to the A.I.F. position in the Middle East and to the large supplies which we are sending overseas to the Central Provision Office, New Delhi, yet we were faced with the prospective entry into the war of Japan which will be active in areas in which we are vitally interested. He did not think that the U.S.A. would move until the Netherlands East Indies was attacked by Japan. He thought the Japanese blow would fall on Siberia and that Japan's threat to the south was an attempt to immobilise Australia's co-operation with the other parts of the British Empire in the war against Germany and Italy. Though the U.S.A. might ultimately come in, enormous damage would have been done by Japanese raids. The A.I.F. would be away from the country and a state of affairs would arise which would be politically unmanageable. It was just as easy for the United Kingdom Government to make an agreement with Japan at this stage as it was for Japan to make one with Russia. Furthermore, once the impression was formed in the U.S.A. that we were easing up on Japan, it would be fatal to American co-operation. The Minister for External Affairs observed that for this reason it was important that any overtures should come from Japan.
28. Messrs. Forde, Makin  and Beasley agreed that it would be a sign of weakness to make any separate overtures to Japan.
29. The Attorney-General said the situation was exactly the same as in the last war when the U.S.A. for constitutional reasons kept on saying that she would not become a belligerent, but ultimately she did.