Portuguese Timor. Commonwealth Government in recent years has
taken increasing interest and some practical measures in
Portuguese Timor with the object of checking and preventing an
extension of Japanese influence there.

In this respect we have previously assisted in keeping oil
concessions in Australian or British hands. Last January the
United Kingdom and Commonwealth Government, in concert, secured
the eastern oil concessions for the major oil companies. A link
between Australia and this colony was established when Dilli was
included as a regular stopping place on the Darwin-Singapore
service. An official representative of the Commonwealth Government
[1] has since been stationed at Dilli, to make contact with the
local Portuguese Administration, report on Japanese activities and
generally assist in promoting commercial relations with Australia.

The above policy has so far achieved the object of preventing
undue Japanese penetration into Portuguese Timor by ordinary
means. There is nothing in the measures taken however which would
be effective in preventing an actual Japanese occupation of the
territory, either with or without prior agreement with the
Portuguese, should Japan at any time decide the circumstances were
propitious for such a move. In view of the obvious strategical
threat which a Japanese occupation of Timor would imply both to
the Netherlands East Indies and ourselves and of the difficulty of
driving the Japanese from a foothold in the territory once it was
secured, we think it advisable that consideration should be given
now to means of forestalling a move of this kind should it seem
likely to occur.

The contingency might arise in one of three ways (a) German
occupation of Portugal, encouraging Japan to take Portuguese Timor
under 'protective custody'; (b) the possibility at any time in
existing circumstances of a Japanese landing in Timor with little
or no warning (cf. Batavia telegram 172 of August 23 to Foreign
Office [2]); (c) in the event of war with Japan.

In all these cases it would seem essential for the three
Governments concerned, ie., the United Kingdom, Netherlands and
Commonwealth Governments, to agree beforehand on what preventive
action is feasible.

We accordingly suggest as a preliminary, if you concur, that these
questions should be discussed with the Netherlands Government at
the earliest opportunity with view to reaching agreement in
principle on action to be taken.

Whether a preventive occupation of Portuguese Timor should be
undertaken by a joint or a separate force would naturally depend,
especially as regards contingency (c), on the degree of political
commitment in the Western Pacific existing at the time with the
Netherlands Government. In this latter respect we have your
telegram M.295 of 6th September [3] in mind.