Peace Treaty With Japan
As Lord Montgomery is coming to discuss various matters with the Australian Government, I suggest that it would be a good idea to discuss with him the strategic aspects involved in the drafting of the Peace Treaty with Japan. 
Owing to the relative failure of the United Nations on questions of war and peace on account of the use of the veto by the Great Powers, the strategic aspects of the Japanese Peace Settlement are of the utmost importance, and the very best advice we can get seems desirable.
It is quite possible that Lord Montgomery has not given much consideration to this matter, but, in that case, it might be well to raise it in his mind so that the General Staff in Gt. Britain can give the question some consideration.
The most important strategic question involved in the Peace Treaty with Japan is as to the role which Japan will play in the balance of power in the Pacific. For the last forty years, Japan has played a crucial role in the Pacific. She proved her efficiency in the Sino-Japanese and Russo-Japanese Wars. The balance of power in the Pacific was always somewhat precarious. The European Powers interested in that area, viz., Russia, Gt. Britain, France and Germany, exercised an influence which, for the last forty years, has been potential rather than real. Japan was the only Power with her strength in the area and was only restrained by the prestige and potential power of the others. She ultimately decided to risk it and found that the[ir] potential power was real enough to defeat her. The interest of European Powers fluctuated according to fluctuations in European tensions. They tended to withdraw from the Pacific as tensions grew in Europe, and the actual defeat of Japan had to be left to the United States of America.
In some respects, Japan's role in the Pacific may be compared with that of Germany in the European balance of power. The effect of the defeat of Japan is very similar to the defeat of Germany. In each case, an important factor which helped in the equilibrium of power has been destroyed, and this has led to the immense increase in the strategic power of Russia, both in Europe and in the Pacific.
Now, Japan was always conscious of this position and she was exceedingly astute in calculating what course would be most to her advantage. She was somewhat like the man who stands up in the centre of a see-saw and can depress one side or the other at will.
She made the Alliance with Great Britain when Russia was menacing her in Manchuria, but, within three years of her defeat of Russia, she formed a fairly close Entente with her in that area. And, at the beginning of World War II, it was quite obvious to her that she could gain much more profit by attacking the Western Powers, and she took advantage of the situation and allied herself to Germany. While Russia had her non-aggression pact with Germany, Japan, under Matsuoka, virtually joined it. 
The importance of this is that, at the present time, a great many people are urging that it is desirable to restore Japan so that she can take part in the balance of power in the Pacific which she took before the war, and they are willing to go to great lengths in this direction. Some of them would be prepared to allow Japan to re-arm; others consider that we should relax the control of Japan as soon as possible.
I suggest that such a course is exceedingly dangerous. The main reason for this view is that we cannot know and cannot control the part which Japan will actually play in the future in relation to Russia. If her history is any guide, she is just as likely to play with Russia as against her. On the one hand, she is perfectly capable of coming to an arrangement with Russia in which the two countries will share the fruits of a Pacific adventure, and, on the other hand, she may be so afraid of Russia that she will feel compelled to come within the orbit of Russia.
The arguments of those on the Allied side for building up Japan contain a good many inconsistencies. For instance, they say that Japan cannot be a danger because we can control her external trade and we can see that she does not remilitarise. I suggest that this is not the case and that Japan can always be assisted by Russia who is far nearer to her; trade between Russia and Japan cannot be stopped by the Western Powers. If we keep Japan demilitarised, she will be the prey of Russia at any time Russia wishes to attack her, unless we maintain bases so near to Japan that we can prevent such an attack.
These views lead the Committee , of which I am Chairman, to adopt the attitude that the control of Japan for some considerable period is necessary. The military aspect of this control might be carried out in one of three alternative ways, viz.:-
(1) Occupation of Japan generally;
(2) Occupation of defined garrison points only; or (3) Occupation of a key base near, but outside, Japan.
Field-Marshal Montgomery's views on the choice between these alternatives would be of value.
To sum up this view, if we predicate policy on the possibility of a Russian emergence into the Pacific in force, the reliance on Japan is a rotten reed. The Western nations who are afraid of Russia cannot escape the risks by any reliance on Japan.