Karachi, 30 December 1950

338. Top Secret Immediate

Fadden¹ for Self and Spender from Menzies.²

Following is summary of my talks in India on the subjects of Korea, China and Formosa.

Nehru, who claims to have good source of information, is strongly of the opinion that:

1. The Chinese People's Government is powerful and well established in China, has created real central authority, and cannot be refused recognition and a seat on the Security Council except at the price of driving it completely into the hands of the Soviet and making it certain that we shall be forced to make the choice of being driven out of Korea or engaging in a full scale war with China.

2. Chiang Kai Shek owns no real allegiance in Formosa, has an army which has in cold fact shown no fighting qualities, and is clinging to the hope of a general war as his one shady chance of returning. To [support] him, therefore, [is]³ positively dangerous.

3. The recognition of Mao involves cession of Formosa under the Cairo and Potsdam Agreement.⁴

[matter omitted]

6. It might not be impossible to make some arrangement with the Chinese in relation to a measure of demilitarization in Formosa as that island may not be thought to be strictly relevant to the defence of China but is seen by the Chinese rather as a possible base for attacks on them.

I also had a long talk to an exceptionally humane and wise statesman, Rajagopolachari,⁵ who, now that Patel⁶ has gone, moves into the de facto position of Chief Advisor to Nehru.

[matter omitted]⁷

Am passing all these views to you for your consideration and criticisms which I would be glad to have in London. Meanwhile, the current of my own opinion is that the Democracies have got into a mess about the recognition of China, and that it is of importance to get out of it.

I think that we should recognise and so conjointly rid the dangerous impression which appears to exist in the Eastern mind that we are really propping up Chiang Kai Shek's regime. I think that if all Prime Ministers meeting at the London conference turn out to hold this view we should at once devise some means of discussing the matter with the United States Administration because creation of a gulf between American policy and overall British policy would be disastrous. I know that it will be said that to recognise under the present circumstances will be appeasement, but I have no sort of belief that without the most colossal military efforts we are going to clear the enemy out of Korea; and if we do, that will not be the end of the problem but will merely be the beginning of its second phase.

Spender's observation that Chiang Kai Shek has a vested interest in war and therefore is terribly dangerous seems to me to be utterly true. We should have it in mind when we are considering whether we are just to allow the matter to drift and so appear to support Chiang, or face the facts of life and recognise Mao's claim[. A]s⁸ to Formosa we ought really to clear our minds as to whether there is some strategic aspect of Formosa which renders it vital to keep it out of Mao's hands. Unless we are satisfied on this point we should concentrate efforts therein discovering whether Chinese sovereignty can be combined industrially⁹ either permanently or for a period of time covering the immediate crisis.

[matter omitted]

[NAA: A1838, TS852/20/4/2, i]

1 Arthur Fadden, Treasurer and Acting Prime Minister.

2 Menzies visited Singapore, India and Pakistan en route to the Commonwealth Prime Ministers' Conference, which was held from 4–12 January 1951.

3 Additional words are handwritten.

4 The Potsdam Proclamation was issued on 26 July 1945 by Truman, Attlee and Chiang Kai–shek. It stated, inter alia, that 'the terms of the Cairo Declaration shall be carried out and Japanese sovereignty shall be limited to the islands of Honshu, Hokkaido, Kyushu, Shikoku and such minor islands as we determine'.

5 Presumably, Shri C. Rajagopalachariar, Indian Minister without Portfolio from May 1950.

6 .V.J. Patel, former Indian Deputy Prime Minister and Minister for Home Affairs and States.

7 Rajagopalachariar said, inter alia, that the United Nations should withdraw from Korea, stating that the world organisation had hoped to limit the dispute–but had failed to do so because of Chinese intervention–and offering to invite the PRC into the United Nations.

8 Punctuation missing in the original.

9 A handwritten note here reads, 'with demilitarisation?'