PEACE SETTLEMENT WITH JAPAN

Reference is made to your memoranda dated 24th March and 23rd May,
in which you sought the views of this Department, on strategic
aspects of the peace settlement with Japan. The matter has been
examined by the Defence Committee and I am attaching copy of the
Report of the Committee (Minute 220/1947) which has been endorsed
by the Acting Minister for Defence.

2. It will be noted that in paragraph 18 (f) of its Report the
Defence Committee has made some observations on the proposal
(contained in the draft Australian Policy Paper forwarded by your
Department) [1] that after the signing of the Peace Treaty small
garrisons of the Allied Supervisory Commission should replace
S.C.A.P. Occupation Forces and be stationed in main areas in
Japan, and that a key base for the forces of the Supervisory
Commission should be stationed in an adjacent island, e.g.,
Okinawa. The Defence Committee has commented that it is not aware
what is implied by 'small' garrisons, but has expressed the
opinion that the Forces in Japan should be adequate to ensure that
the directions of the Supervisory Commission are complied with.

Regarding the key base which it is proposed to establish on an
island adjacent to Japan, e.g., Okinawa, the Defence Committee has
observed that this island is some 800 miles distant from Tokyo,
and in any case, is to be ceded to the U.S.A. by Part 11 of the
Treaty. The Defence Committee did not consider that a force
stationed at Okinawa would fulfil the requirements of the force
needed to provide adequate support for the Supervisory Commission
in Japan. The Defence Committee has proposed amendments to the
draft Policy Paper to cover the above points. [2]

3. The above observations of the Defence Committee represent a
military opinion on the question of occupation forces. It is
observed from your memo of 4th July (P.47/10/61) that the proposal
in the draft Australian Policy Paper is in line with the views of
General MacArthur as conveyed through Mr. Macmahon Ball, and it is
appreciated that considerable weight must be give to such views.

4. As stated in paragraph 16 of the Defence Committee Report, the
question of control of Japanese industry (including merchant
shipping, shipbuilding and ship repair) is now under detailed
examination by the Committee in accordance with your memorandum
dated 26th May, (your File E.R. 47/31/21) and your teleprinter
message No. 425 dated 24th June. It is expected that the report of
the Committee on this subject will be finalised at an early date
when you will be further advised.

Attachment

Defence Committee Minute 220/1047 (extracts) 24 June 1947

AGENDUM NO. 103/1947
PEACE SETTLEMENT WITH JAPAN

GENERAL STRATEGIC ASPECTS OF THE PEACE SETTLEMENT

Balance of Power in the Pacific-The most important single
strategic question affecting Australia's security in the Pacific
is the continuance of the present favourable balance of power in
the Pacific brought about by the United States participation in
the occupation of Japan and her control of the former Japanese
mandated islands in the Pacific. U.S.A. is the major power in the
Pacific, and it is in Australia's interest that this situation
should continue indefinitely.

South East Asia-South East Asia is an area of great strategic
importance to Australia and, providing U.S.A. remains in control
of the Pacific, would be the only practicable route of attack on
Australia by any potentially hostile power at present. It is,
therefore, of great importance that a situation favourable to
Australia be created in South East Asia and any potentially
hostile power should not be permitted to obtain power or influence
there.

The Indian Ocean-The security of Australia's external sea and air
communications to the United Kingdom, Middle East and North
America is an essential part of the strategic concept for
Australia's defence. As these communications run through both the
Pacific and the Indian Oceans, the situation in the countries
bordering the latter ocean, must also be taken into account when
considering Pacific security. In this regard, Australia's future
relationship with India and Ceylon will be of great importance, as
an unfriendly India and/or Ceylon, would represent a potential
threat to the security of communications running through the
Indian Ocean.

PARTICULAR STRATEGIC ASPECTS OF PEACE SETTLEMENT

Japanese Home Islands-The Japanese Islands occupy an important
geographical position in relation to continental Asia and would
provide valuable bases for any Power aspiring to domination of the
Pacific. Possession of these facilities by a potentially hostile
power or combination of powers, would be a continual threat to our
security. In this we have borne in mind the resumption of Russian
control of Southern Sakhalin, her possible domination of Port
Arthur and Dairen, and her annexation of the Kuriles. As a result
Russian influence is growing in Northern Japan. Russia has also a
strong hold on Northern Korea and, unless adequate measures are
taken to ensure Korea's independence, will dominate the whole
country. This places Russia in an advantageous position to seek
control of Japan should she be so minded. In this event, though
the possibility may be remote at present, the whole strategic
balance in the Pacific would be at once altered to our
disadvantage.

It is, therefore, in our interests that Allied control of Japan
should continue indefinitely. In this control we consider that
U.S.A. must continue to play the major part in accordance with our
conception of the measures necessary to ensure our security. This
does not mean that Australia should withdraw from direct
participation in the control of Japan. On the contrary, continued
participation by Australia is essential in order to maintain
cooperation with the United States which is of vital importance to
future defence arrangements in the Pacific. Such participation
would also safeguard our right of access to Japanese facilities
and be a token of our acceptance of a share of the responsibility
in the control of Japan.

Former Japanese Mandates and Other Islands-The United States
Trusteeship of the former Japanese Mandates is greatly to our
advantage in protecting the Southern Pacific region. It is also
most desirable that the United States should acquire sovereignty
or predominant influence in the Ryukyu, Bonin, Volcano, Spratley
and Marcus Islands.

Destruction of War Potential-Japan as a strong nation would be a
constant threat to the security of our Pacific interests and it is
essential that she be stripped of all military power. In
destroying Japan's ability to make war and thus to upset the
Pacific balance, complete disarmament and destruction of her war
potential is essential. This is now in train, but the physical
control of Japan must continue until not only the destruction of
war material (including means of production) and military and
paramilitary organisations is completed, but also the will of the
Japanese people to wage aggressive war (which must be accounted a
strategic factor) is rendered impotent. The conclusion of a peace
settlement does not in itself alter the necessity for continued
control. The disbandment of military and ancillary organisations,
should not affect the civil police force since such a body will be
required under Allied control as an organ of public order and
security.

The Japanese Home Islands, which now exclude Southern Sakhalin and
the Kuriles, lack those raw materials necessary to wage a major
modern war and Japan is now, because of her defeat, denied direct
access to these resources. A major factor in preventing Japan's
military resurgence is, therefore, the continued control of these
necessary raw materials. Such control should not be so severe as
to cause continued economic depression in Japan as this would
seriously affect the task of the liberal education of the Japanese
people, would intensify latent hostility and open the way for
combination with any power which, for its own ends, offered Japan
an opportunity for renewed strength. Control of raw materials
should therefore be such that while the extent of imports is
sufficient to maintain life at a reasonable level, it is
insufficient to permit re-growth of military power. The drastic
restriction of Japanese merchant shipping will play a vital part
in this control.

The question of control of Japanese Industry (including merchant
shipping, shipbuilding and ship repair), referred to in paragraphs
14 and 15 above, is now under detailed examination by the Defence
Committee in accordance with a request from the Department of
External Affairs and will be the subject of a further report at an
early date.

AUSTRALIAN OBJECTIVES IN THE PEACE SETTLEMENT FROM THE STRATEGIC
VIEWPOINT:

Based on the considerations stated above, the Australian
objectives from the strategic viewpoint should be:

(a) Retention of the present favourable strategic situation in the
Pacific.

(b) Continuance of Allied control in which the United States plays
the major part and Australia participates, until such time as
Japan is considered unlikely to endanger the peaceful aims of the
United Nations.

(c) Prevention of the spread of Russian influence in Japan and
former Japanese territory.

(d) Safeguarding of our military interests by ensuring our right
of access to facilities in Japan required for the establishment of
bases, in accordance with Articles 43 and 45 of the United Nations
Charter.

(e) Destruction of Japanese war potential which should include the
following measures:

(i) All Japanese Armed Forces of whatever kind, General
Headquarters, staffs and organisations, of military or
paramilitary nature, including secret police organisations, should
be disbanded and remain so.

(ii) All military equipment of whatever kind should be destroyed.

The use of existing installations or construction of new
installations by the Japanese for military purposes, should be
prevented. Such installations as are not required for Allied
control purposes, should be destroyed.

(iii) The manufacture or production of any article designed for
the equipment, maintenance or use of any military force or
establishment should be prohibited.

Note: The question of the control of Japanese industry (including
merchant shipping, shipbuilding and ship repair) will be the
subject of a separate report by the Defence Committee at an early
date.

(iv) Japan should not be allowed to have an aviation manufacturing
industry nor to possess or operate aircraft including gliders and
lighter-than-air craft.

(v) The way of life of the Japanese people should be so altered by
the introduction of democratic governmental, social and economic
measures as to strengthen democratic tendencies and eliminate
militarism.