Your 1021 [2] and 1022. [3]

Our 1009 to you [4] was despatched before receipt of your 1021
specifying draft counter proposal of Hull [5] to Kurusu. [6] The
temporary modus vivendi suggested in your 1021 seems to us to
correspond in principle with the suggestion in our 1009, namely
that as Japanese aggression in Indo-China occasioned the economic
restrictions, those restrictions might be lessened in return for
Japanese withdrawal from Indo-China, providing that we also
obtained general guarantees against Japanese aggression elsewhere
and understanding as to negotiating subsequent Pacific settlement
at a later time. On whole this would be Japanese diplomatic
retreat, but it should be possible to give Japan chance to retreat
without inflicting unnecessary humiliation. Our action is not
appeasement but merely strategic expedient at crucial period in
war.

In circumstances we favour Hull making a counter proposal rather
than his rejecting Japanese proposal outright. We agree with
Dominion telegram M380 [7] that our demands in counter proposal
should be pitched high and something approximating to paragraphs
11 and 12 of Dominion telegram M380 might well be accepted by Hull
and his counter proposal redrafted. Those paragraphs suggest inter
alia total withdrawal from Indo-China, not merely of troops but of
all naval, military and air forces.

At present we are not a party to the Hull-Kurusu talks, but
paragraphs 6 and 8 of Hull's suggested counter proposals would
make it easier to widen discussions with a view to a more general
Pacific settlement. The occasion seems to us a favourable one for
elaborate negotiation even in relation to temporary modus vivendi,
especially as we agree with United Kingdom that it is not
practicable at this stage to give carte blanche to diplomatic
representatives, so far as concerns easing of economic
restrictions. It is so important to have the matter fully
considered and to gain time that you should arrange to see
immediately telegram addressed to us as M380 which contains text
of telegram to British Ambassador Washington [8] from United
Kingdom Government dated 24th November and starting: 'The Japanese
proposal is characteristic and confirms the view, etc.'
We are repeating to United Kingdom and Bruce our wire to you No.

1009 as well as this wire.