1. MY 388. [1] Your No. 221. [2] Although swift British-United
States reaction following the Japanese entry into South Indo-China
has, I believe, disturbed the Japanese Government and may cause
them to hesitate to make a move on Thailand, I think that we need
to decide now what action should be taken in the event of such a
move and should make every effort by diplomatic means to prevent
it.

2. As it appears to me four matters require to be taken into
account:-

(a) Japanese intentions: If the Minister for Foreign Affairs [3]
can be believed, these (my telegram No. 388) as regards Thailand
are at present economic and concern especially supplies of rubber
and rice.

(b) United States Policy: I gather from Casey's telegrams
following Prime Minister's telegram No. 9, and ending with Casey's
No. 40, that United States warning does not apply to an advance
into Thailand not continued into other territory. [4]

(c) Thailand Policy: Latest reports indicating a stiffening and an
inclination to resist an attack might be with advantage strongly
approved of by a public statement in London.

(d) Our strategical requirements: Can we without imperilling the
security of Burma and Malaya, and possibly ourselves, allow the
Japanese to establish themselves in Thailand, or in the event of
their entering Thailand, must we first forestall them in certain
localities.

3. Assuming that our policy is to keep Japan out of the war, I
think from (a) we should draw the conclusion (especially since
trade from Japan to Germany is no longer possible) that for the
time being we should resign ourselves to the Japanese drawing
considerable supplies from Thailand and limit our efforts to
obtaining what we really need for ourselves.

4. If the answer to (d) is that we must meet this and the
Japanese, then in my opinion: (1) we and the United Kingdom should
frankly tell the United States so and express the hope that if, in
such an event, hostilities resulted they would regard the
Singapore life-line as threatened and come to our assistance; (2)
United Kingdom should tell Thailand that if they resist, all
possible aid will be given, and the twelve aeroplanes they have
asked for, at once as a token of security; (3) and perhaps most
important, as might prevent Japan taking a step from which they
could not withdraw without loss of face, United Kingdom should
give some definite but informal warning to Japan of what the
result of their entry into Thailand will be but assure them that
provided they do not go in we have no intention of doing so.

LATHAM