Your 344  and 347 . Portuguese Timor Surrender.
1. We note your concurrence in our proposal that surrender be taken by an Australian force and arrangements have now been made with Lord Mountbatten for this purpose.
2. Suggestion in paragraph 6 (C) of our 256  arose from our wish to anticipate difficulties of a confused situation. We foresee a need for some assistance to the Portuguese until effective Portuguese control is re-established and wish to avoid any subsequent misunderstanding with Portuguese in connection with this. Australian operations in Timor during 1942 have given us special knowledge and experience of local conditions. Surrender and handing over should be regarded as logical sequel of Australian military activities in Timor. To the best of our knowledge Portuguese are not in a position to re-establish effective civil control immediately. Moreover there is already evidence of war crimes committed in Timor and we should be in a position to secure investigation and other necessary measures.
3. We would therefore propose that the withdrawal of our force should not take place immediately after the surrender but when Portuguese authority has been effectively established.
4. Portugal has not been at war with Japan and has no claim to accept or participate in acceptance of surrender. We are however willing that the Governor  should be present at the surrender formalities as representing Portuguese civil authorities.
Portuguese armed forces have taken no part in the war and there is no reason for their association with the surrender. Their role now should be confined to taking over from our force at a time to be fixed by mutual agreement. It would be highly incongruous if Portugal, which has been an acquiescent spectator in the Pacific War, were to be more than a spectator at the surrender to a victor state. Prestige of victorious powers must wherever possible be re- established by overt acts throughout the Pacific. The arrangements in respect of other territories in this area suggested to us by Mountbatten's representative are designed with this end in view.
5. We originally sent forces into Portuguese Timor at your request and when the Portuguese protested we allowed the objection to be directed against Australia in order to help you in Europe.  Further, in order to help in connection with the Azores Agreement, we acquiesced in the recognition of Portuguese sovereignty, but this was on the distinct understanding that there should be conversations between Portugal and Australia with a view to defence and economic arrangements respecting Portuguese Timor.  There would be complete lack of justice and frankness if these conversations were postponed indefinitely instead of being taken up immediately.
6. As you will be aware from earlier communications it is our view that Portuguese vacillation and timidity in the face of Japanese aggression have shown them to be unfit to be entrusted with defence of territory so important to the security of this area. In our opinion there is much to be said for this solution of placing this territory under the Trusteeship system of the United Nations with emphasis on the security clauses of that system. The consent of Portugal to this course would be necessary but it should be obtainable since there would be no derogation from the sovereignty of the parent state. We suggest these questions can be discussed fully with Evatt after his arrival in England.
7. For these reasons we think you should help us to resist any action for precipitate re-establishment of the mere status quo without regard to our bitter experiences in the Pacific war. We are prepared to delay temporarily departure of our force, provided you also delay movement of Portuguese forces. The representative of the victorious powers should not be embarrassed by the untimely arrival of these forces which we recollect left Lourenco Marques in 1942 to assert Portuguese sovereignty but retreated as soon as they ascertained that the operation would be difficult.  Nor should any delay on our part permit the Japanese by handing over to the Portuguese to save face and support their pretence that they occupied Timor only to protect the Portuguese.
8. We are most anxious that your approach to the Portuguese Government should conform with the above and would appreciate earliest possible advice so that surrender can be taken by Australian force within the next few days. Meanwhile our military preparations are complete.