1. The Spanish Committee completed its report late last night reaching complete unanimity except on two points. Brazil reserved its position on the principle involved in one of the recommendations and Poland entered a reservation regarding a point of legal argument.
2. The Committee's report, after recording the previous United Nations decisions establishing that the Spanish Question is a matter of international concern  and the Committee's own agreement that the facts established before the Committee go far beyond the questions of domestic jurisdiction, objectively [examines]  the relevant facts, it establishes that in organization, nature, structure and general conduct the Franco Regime is fascist and was established largely as a result of aid from Hitler and Mussolini, that Franco gave wartime aid to our enemies arid entered into the conspiracy against the United Nations. Extensive evidence regarding persecution of political opponents and police supervision is recorded as characteristic of fascist regimes and as being inconsistent with the principles of the United Nations concerning respect for human rights and fundamental freedoms. Examination of evidence regarding military questions leads to the conclusion from the facts that although it cannot be found that Spain is at the present time preparing for an act of Aggression or threatening the peace, it is a potential danger to peace. Particular attention is also given to the international action regarding Franco Spain expressed in various United Nations resolutions and declarations, particularly the declaration by France, the United Kingdom and the United States of 4th March last , and the breaking off of Diplomatic relations.
These facts are taken to establish the existence of international friction.
3. The report then examines the jurisdiction of the Security Council and its power to take action under Chapter VII of the Charter as requested by the original Polish resolution.  The report points out that a positive and affirmative finding under Article 39 must be taken before any of the series of enforcement measures set out in Article 41 and 42 can be directed by the Security Council and the opinion is expressed that on the present evidence the Security Council cannot make the determination required by Article 39. Attention is then directed to Chapter VI and particularly Articles 34 and 36 and the Committee expresses its conviction that the situation in Spain has led to international friction and that its continuation is likely to endanger the maintenance of international peace and security. The Committee also points out the power of the General Assembly to deal with such situations under Article 14 and under Article 10 read in conjunction with Article 1(2). At this stage of the argument close attention is directed to the explicit Terms of Three Power Declaration of the 4th March, both as evidence of the potential danger to peace and of existing friction and as pointing the way towards possible action.
4. The following conclusions are reached.
'(A) Although the activities of the Franco Regime do not at present constitute an existing threat to peace within the meaning of Article 39 of the Charter and therefore the Security Council has no jurisdiction to direct or to authorize enforcement measures under Articles 41 or 42 nevertheless such activities do constitute a situation which is a potential menace to international peace and security and which therefore is a situation likely to endanger the maintenance of international peace and security within the meaning of Article 34 of the Charter.
(B) The Security Council is therefore empowered by Article 36(1) to recommend appropriate procedures on methods of adjustment in order to improve the situation mentioned in (A) above.'
5. The Committee finally makes the following recommendations:
'After considering what would be effective and appropriate measures to meet the situation and having regard to the important powers of the General Assembly under Article 10 the Committee recommends- (A) The endorsement by the Security Council of the principles contained in the declaration by the United Kingdom, United States and France, dated 4th March 1946.
(B) The transmitting by the Security Council to the General Assembly of the evidence and reports of this Committee, together with the recommendation that unless the Franco Regime is withdrawn and the other conditions of political freedom set out in the declaration are in the opinion of the General Assembly fully satisfied the resolution be passed by the General Assembly recommending that Diplomatic Relations with the Franco Regime be terminated forthwith by each Member of the United Nations.
(C) The taking of appropriate steps by the Secretary-General to communicate these recommendations to all members of the United Nations and all others concerned.
In the event of the General Assembly being satisfied that all the conditions set out in the Declaration have been complied with, including the withdrawal of the Franco Regime, Political Amnesty, the return of exiled Spaniards, freedom of Political Assembly and Association and Free Public Elections the sub-Committee suggests that it would be appropriate for the organization to consider favourably an application by a freely elected Spanish Government for membership in the United Nations.' 6. The features to be noted about the report are its objectivity which is in keeping with the judicial manner in which the Committee has proceeded throughout its work. At the same time its recommendations are politically practical and the reference of the situation to the General Assembly, besides being a sound application of the intention of the Charter and in keeping with the previous continuous interest in Spain by the United Nations during the past twelve months, is in fact likely to produce results more certainly than any attempt by the Security Council to pass recommendations. The responsibility of dealing with what is regarded to be a situation which is a potential danger to the peace and which also militates against the smooth and efficient working of the United Nations itself is thus thrown upon the whole body of members. These charges against Franco which could not be substantiated by convincing evidence have been found not proven and the Committee has also rejected the original Polish proposition that there is an existing threat to the peace. This decision is in keeping with the general United Kingdom views. At the same time evidence of friction and a potential danger to the peace is conclusive and does appear to require firm action by the Security Council both to remove the potential danger and the existing friction and to maintain the interest and discharge the responsibilities of the United Nations. We believe that this report, if adopted by the Security Council, will do much to re- establish the standing of that body which has been deleteriously affected by its recent failures to face up to the issues before it.
7. The reservation by Brazil concerns the principle involved in recommendation (B), their Government being at present doubtful whether or not this involves interference in domestic jurisdiction.  The rest of the Committee are completely satisfied on this point. The Polish reservation concerns the legal argument regarding whether or not the 'Threat to peace' mentioned in Article 39 was an imminent threat to peace or a long-term threat to peace and whether in consequence of a determination on that question the ability of the Security Council to take action is limited.
8. The course adopted in the report is a middle one steering between drastic sanctions which would be favoured by Soviet and Poland and complete inaction which would be destructive of the hopes of the Labour Movement throughout the World.
9. The Security Council will not deal with the report for some little time but it is quite probable that substantial majority will approve of it particularly as the Assembly will be the ultimate determining authority. 10. The Minister especially asks that the Prime Minister be given a copy of this cable forthwith and that a copy also be transmitted immediately to Mr. Fraser through the office of the New Zealand High Commissioner, Canberra.