Thank you for your letter of 29th December 1948 [1] and the
attachment containing the comments of the United Kingdom Chiefs of
Staff [2], on the two Council of Defence memoranda of 20th April
1948. [3]

2. Subject to anything you may wish to add in reply to my letter
of 10th December 1948 [4], with which I forwarded the Defence
Committee's comments [5] on PMM(48) 1-The World Situation and its
Defence Aspects [6]-it would appear that there is agreement
between our two Governments with regard to:-

(a) Strategic planning by the Australian Higher Defence
Organisation,in conjunction with the United Kingdom and New
Zealand, in a zone of strategic planning, the boundaries of which
have yet to be determined.

(b) Examination, in conjunction with United Kingdom and New
Zealand Liaison Staffs, by the Australian Higher Defence
Organisation of the basic objectives of British Commonwealth
defence policy and strategy, and a suitable basis for the
distribution of strategic responsibility and war effort.

3. In my letter of 10th December 1948, I stated in relation to
Australian consideration of the questions referred to in paragraph
2(b) above that:-

'The Defence Committee consider that "it is an essential pre-
requisite to a study of these subjects in Australia that the
United Kingdom views be made available".'

I note that United Kingdom views on Defence Policy are stated in
the comments by the British Chiefs of Staff on the major military
aspects of my letter of 24th May 1948 [7], and that these views
have the United Kingdom Government's endorsement.

4. The interpretation in paragraph 3 of your letter of 'the
Australian Zone of strategic responsibility' to be the region in
which Australia would assume the initiative for defence planning
in peacetime, is correct. The Council of Defence in April 1948
authorised the development of 'strategic planning', but, as
indicated in my letter of 24th May, the fullest reservations were
made regarding any implications of commitments involved in
'strategic responsibility', without the specific approval of the
Australian Government. Your observations on the relation of
planning to executive control in peacetime and the maintenance of
the United Kingdom Command in the Far East either in peace or war,
are noted.

5. In the light of the foregoing information received so far, it
is proposed to proceed on an official level, through the agreed
machinery, with an Australian examination (in conjunction with the
United Kingdom Service Liaison Staff in Australia, and, if their
Government wish them to participate, the New Zealand Joint
Services Liaison Staff), of the matters referred to in paragraph 2
above. As indicated in cablegram No. 339 of 24th December, the
Australian Government's approval of recommendation number six of
the meeting of Commonwealth Prime Ministers in October, relating
to machinery for consultation on Defence, is to be read as
expressed in the detailed views in its memorandum of 23rd May 1947
on Cooperation in British Commonwealth Defence [8], and my
subsequent letters of 24th May and 10th December 1948.

6. If the development of this work should later indicate that any
increase in strength in the United Kingdom Liaison Staff may be
desirable, either in regard to the nature or volume of the work
involved, this could no doubt be raised on the official level.

7. I would also refer to the relation of United States plans in
the Pacific to Australian and British Commonwealth planning, which
was originally mentioned by me at the Prime Ministers' Conference
in 1946 and referred to in paragraph 3 of the conclusions of the
Council of Defence in April 1948 [9], in paragraph 4 of document
PMM(48)1, and in paragraphs 4, 5, 15, and 26-28 of the Defence
Committee's report on document PMM(48)1. Though the Defence
Committee's examination under 2(b) above will enable the
Government to determine the broad basis on which the general
outline plans to meet immediate and long term dangers will be
prepared, it will be essential, before the Government can consider
and accept such plans as envisaged in paragraph 15 of PMM(48)1, to
have something more concrete than the statement of the United
Kingdom Chiefs of Staff in the attachment to your letter that 'we
consider that the threat in the Pacific can be adequately matched
by American naval and air strength'.

8. Copies of the Australian memoranda of 20th April 1948 to which
you refer in paragraph 5 of your letter of 29th December 1948 were
forwarded on 24th May 1948, simultaneously to you and to the New
Zealand Prime Minister. I am forwarding to Mr. Fraser, at your
request, a copy of your letter of 29th December 1948 with a copy
of this reply.