296 Department of External Affairs to Embassy in Washington

Cablegram 911 CANBERRA, 1 November 1948, 5.55 p.m.

SECRET

Your 1130.

SOVIET PROPOSAL ON JAPANESE INDUSTRIAL LEVELS

2. Whilst it can be assumed that Panyushkin's resolution is designed mainly for subsequent propaganda purposes, it is outwardly innocuous and unobjectionable as regards its professed intention. Its general sentiments are difficult to argue with, and it accordingly seems to us that for other F.E.C. countries to obstruct it, whether from suspicion of Soviet motives or merely because of its imprecision, might be to invite the result which the F.E.C. and in particular the United States apparently fear. If the Soviet Government intends to use the resolution as propaganda, it will undoubtedly do so whatever happens in F.E.C. The Soviet Government will almost certainly allege obstructionism by F.E.C.

in such a way as to increase its propaganda value. The resolution is admittedly vague and obscure in parts, but it is doubtful whether any purpose will be served by trying to obtain clarification from the Russians. In fact we feel it might do no harm for F.E.C. to accept the resolution broadly as it stands, while at the same time making it clear that 'peaceful industry' and 'war industry' are virtually meaningless, in the absence of closer definition, and that specific levels for certain war- supporting industries, together with security controls to police them, still have to be worked out.

3. Glad of your comments.

[AA:A1838/283, 479/3/1/1]