We have just finished the Inter-Dominion Conference on the
Japanese Peace Settlement and it has gone off very well indeed.

The organisation was quite good and the Delegates seemed very
satisfied. There was a notable outpouring of good feeling, but, of
course, this does not mean much. I have been to six international
conferences at each of which the Members parted with their arms
round each other saying that they had made life-long friendships,
but between each conference the international situation
deteriorated.

The fact is, of course, that at conferences of this kind the
Members do not approach the crucial issues. They seem to steer off
them by a kind of protective instinct. I think the opportunity
should be used at such conferences to bring out these difficult
points so as to get opinion on them and then for each to decide
what his policy shall be. To agree on negatives is a waste of
time.

[matter omitted]

I have been very interested in several of your telegrams recently
and, if you will allow me to say so, I think they are extremely
valuable. Apparently you are able to get some information at
Moscow, and I gather that you have made excellent use of some of
your dear colleagues. Your telegram of 22nd August (No. 271)
applies the method of appreciation of the situation, which I think
is very valuable indeed. [2] This, as you say, is made without any
definite information except for official statements, but there are
one or two things in it which are exceedingly important, and I
should be very glad if you could expand one or two points.

In paragraph 3, you say 'As assembled in confidential American
views here, the United States appear to regard Asia as the logical
and the most profitable ground for Communist expansion, largely
because the standard of living of under-privileged classes in Asia
is so low that the present low Russian standard accompanied by
full employment seems attractive'. And, at the end of the
paragraph, you say,'...they seem to assume that the main pressure
will be in the Far East,though perhaps only by way of infiltration
with remote control'.

Have you any more concrete evidence of this than the American
appreciations on the subject? It is, of course, of the greatest
importance in connection with the Peace Treaty with Japan. The
Yalta Agreement has altered the balance of power so strongly in
Russia's favour that it is difficult to see how any method of
control of Japan can be devised by the Allies which could not be
twisted to its own ends or absolutely dominated by Russia. The arc
around from the thirty-eighth parallel to Vladivostock and then on
to the Kuriles can be denied to any other force. This brings Japan
within fifteen miles of Russian possessions and prevents any
active operation by the Allies. The only possible counter-balance
to this is the group of Islands to the south of Japan which are
now occupied by the United States, but I suggest that island bases
of this kind cannot be compared for effectiveness with continental
bases.

The Military people here seem to think that the United States may
be able to establish air supremacy from their islands, but I would
suggest that that can only be temporary. The statement in your
telegram has to be lined up with the evidences of Russian and
American policy.

As to American policy, they framed all their plans, when they
entered Japan, for a twenty-year occupation, but are now convinced
that they will not be able to carry on for that period of time. In
fact, they contemplate an evacuation when the Peace Treaty is
signed. We, here, were always in favour of a long occupation. We
did not believe that the Japanese could be converted within a
short time. In this view, we were supported by Defence, but
Defence have now changed round and state that it is important to
retain the goodwill of Japan and that, if occupation continues
after the signing of the Peace Treaty, the Japanese people will
immediately become hostile and almost impossible.

There may be good reasons for all this, but I claim that until a
feasible scheme for maintaining the balance of power in East Asia
is worked out the occupation should go on, or control should be
exercised from the nearby islands. At any rate, it would be wrong
at the present time to come to any agreement among ourselves that
a long occupation is impossible until all the possibilities are
explored.

Now, as to Russia's intentions. Here, my information rather cuts
across your appreciation. There is no evidence, so far as I can
see, of any intensifying pressure by Russia in the Far East. I
will leave [a]side the question of Korea for the moment. You will
remember that, by the Yalta Secret Agreement, it was agreed that
the rights of Russia, which were taken from her by the treacherous
attack of Japan, should be restored to her, and Railway Agreements
and Agreements as to Port Arthur and Dairen were set out. This
Agreement was implemented by an Agreement between China and the
Soviet on 14th August, 1945.

Now, it is noticeable that, in this Agreement, the Russians did
not exact the full position which they held in 1903. They then had
full and exclusive control of the two Railways. They now have
joint control. in the second place, they have not got full control
over Dairen or Port Arthur. They have joint control and the
Agreements are in several respects less onerous on the Chinese;

for instance, there is no provision for troop movements except
during war with Japan. But still more remarkable is the fact that,
since the war terminated, the Russians have not even secured
control of the Railways and are not insisting upon it. Copland's
information is that the Chinese Communists run the Chinese Eastern
Railway across the north of Manchuria, and that, when the South
Manchurian Railway is run, the Chinese Government operates it.

They have deliberately squeezed the Russians out. I cannot imagine
this, but this is my information.

Port Arthur and Dairen are occupied by 35,000 Russian troops, but
the Russians do not occupy the area that was allotted with these
ports; it is occupied mainly by Chinese Communists.

There are two other things about the Agreement which are not
[settled] [2] for instance, it has not been decided what
properties go with the Railways, and it seems that both China and
Russia are [sparring for] time over these Agreements. If the main
pressure of Russia were to be exerted towards the Far East, it
seems rather remarkable that they have not so far exerted it in
Manchuria. On the other hand, of course, they have exerted it very
strongly in Korea and their hold on the north of Korea is complete
and absolute. They have a large army there and have trained a
Korean Army of 250,000 men. So that they may believe that, as long
as they hold the north of Korea, their hold on the Far Eastern
balance of power is sufficient and they are willing to maintain
that position for the present.

This may be due to their feeling that pressure in Europe is likely
to be more dangerous to Russia or it may be merely a waiting
policy until it is disclosed what America proposes for the
occupation of Japan. Of course, there are other places where
Russia can break out, such as Afghanistan and Persia. I am told on
very good authority that the Pakistan people were unable to make
an Air Agreement with Afghanistan because Russia had forestalled
them.

I have tried to sketch the situation as it appears to me. I have
the greatest apprehension as to what will follow the evacuation of
Japan, demilitarised and helpless, with Russia occupying a key
strategic position in the area. Yet, so far as one can see, Russia
has not put her main pressure on this area, and it does not seem
to be contemplating any step in the immediate future.

If you could give us any further information you have on these
points, we should be very glad indeed to receive them.