380 Department of External Affairs to Embassy in Washington

Cablegram 38 CANBERRA, 10 January 1947, 5.20 p.m.

SECRET

Your FEC 3. [1]

See my immediately preceding telegram addressed to Dominions Office.

As indicated previously we are opposed to any action which would tend to evade the jurisdiction of the F.E.C. We would be reluctant to accept the U.S. proposal unless it were clear that the deadlock on external assets could not be resolved in F.E.C. We could not agree that such a situation existed unless the matter had been tested by vote in the Commission.

The State Department should be advised that Australia would be willing to cooperate with the United States Government in the preparation of interim directives. Australia, however, requests- (a) that the Soviet attitude on external assets be clearly established by pressing the issue to a vote in F.E.C.;

(b) that F.E.C. determine the levels of industry for Japan before detailed decisions on reparations allocations are made;

(c) that a majority of F.E.C. member countries should agree to participate in the U.S. plan;

(d) that the U.S. Government should agree to a procedure for the consequent discussions whereby decisions reached by a substantial majority of participating members will be given effect to. [2]

1 Dispatched 3 January. It proposed an aide-memoire objecting to reported US plans to formulate interim directives on reparations.

The aide-memoire, expressing the hope that the United States would not by-pass the jurisdiction of the FEC, was presented on 6 January.

2 The substance of this cablegram was presented to the US Government in a aide-memoire dated 15 January.

[AA : A1838,479/10/1]