Canberra, 2 January 1951

4. Top Secret Immediate

For Prime Minister from Spender.

Your 338.¹

The most convenient way to pass my comments on the views expressed is to follow the order of your own cable. Nehru no doubt has very good opportunities for information but if his source is Pannikar,² it needs to be subjected to careful scrutiny. I make the following observations on Nehru's various points of opinion.

(1) The Chinese People's Government is firmly entrenched. If there is likely to be any alternative Government, and I do not see one in the foreseeable future, it cannot in my judgment be Chiang Kai Shek's. Mao's Government accordingly must ultimately be recognized and afforded a seat on the Security Council. The question is whether this should be done now. You will remember the views I expressed on this before your departure. Apart from any objective consideration, is it likely that we can persuade U.S.A. to do now under the pressure of Chinese aggression what she had refused to do before? We would be wise to keep in mind the possible reactions in U.S.A. if, failing our being able to persuade her on this matter, the Commonwealth countries agreed upon a course of action contrary to that on which U.S.A. official and public opinion is committed. For my part I would like to repeat my proposal that we proceed by two stages (a) derecognition now of National Government and (b) at a later time proceed to recognition of People's Government. Step (a) which would greatly relieve tension and effectively counter the view that we are 'propping up' Chiang's Government could, I believe, be sold to U.S.A. though even that is not without difficulty.

I do not accept the view that unless we do as Nehru suggests we will drive Mao completely into the hands of the Soviet. To give her now repeat now all or practically all she is seeking will not only persuade her that aggression pays but also will be likely to convince her that association with Soviet is profitable. She will know that what we do is done out of weakness and for no other reason. Whatever view may be held as to past policy, I hardly think that to follow this course is going to reduce aggression in Asia or advance the ultimate peace of world.

(2) I can offer no comment on Nehru's second observations, other than to repeat my views on Chiang which are already known to you and which apparently accord with his.

(3) It is a non–sequitur to argue that recognition of Mao involves cession of Formosa under the Cairo and Potsdam agreements.³ His proposition certainly does not, in my view, apply to countries not parties to either agreement notwithstanding their signature of Japanese instrument of surrender. I have never accepted proposition that the great powers were capable of binding other nations by their various wartime agreements and declarations. In any event assuming we were all bound by Cairo and Potsdam agreements as if we had been parties to them, I think there is a good deal to be said for the arguments that:

(a) The agreements have been frustrated by intervening circumstances;

(b) They are subordinate to the provisions and obligations of the U.N.
Charter;

(c) They are subject to final peace treaties.

[matter omitted]

(6) This point is speculative.

[matter omitted]

As to the conclusion which is involved in [Rajagopalachariar's]⁴ point (e)⁵ I can only record my view that the course he advises would be disastrous. It would be tantamount to a complete surrender to aggression, would deal a serious if not irretrievable blow to Western prestige in Asia, and would have the most far–reaching and adverse consequences not only in Asia but in Europe and the Middle East. For Australia, it would be particularly serious. It is not out of place to emphasise that on this and related matters the Indian viewpoint, which would like to see all Western influence from Asia including Japan withdrawn, is not likely always to be consistent with Australian interests. In the past twelve months I have learned that Australia has very special interests which she must always be prepared to put forward.

[matter omitted]

To sum up, the Indian proposals, as I see it, boil down to this.

(1) Get out of Korea.

(2) Recognize Mao's Government.

(3) Cede Formosa to China.

(4) Invite People's Government to take its seat in U.N.

(5) Abandon–if not completely then at least for the time being–our aim of establishing an independent Korea:

and to take these steps now.

I have expressed my opposition to this proposal. It is necessary however to consider what things we may or may not do.

[matter omitted]

On the Political side:

(1) Notwithstanding possible consequences of defection and trouble in Formosa we should, of our own volition and I should hope in agreement with U.S.A., forthwith withdraw recognition from Chiang Kai Shek's Government. This, it must publicly be made clear, does not automatically involve the recognition of the People's Government or their acceptance into the United Nations, which must await some earnest from that Government that it proposes to abide by established rules of international conduct and to support the principles of the United Nations Charter.

(2) We must immediately determine whether or not Formosa is strategically vital to the Western Powers and if so why, and to what extent. This question is, as you know, one which in my opinion is at the very heart of the problem of Formosa. For, Cairo and Potsdam notwithstanding, if it is strategically vital that we should hold it either indefinitely or for a limited period, or that it should be denied to the Chinese, then it must be so held or denied. If on the other hand our strategic interests may be preserved by some effective measures of demilitarization, the position and our scope for political action is altered accordingly. Further advice on what should be done in relation to Formosa must await decision on matters above referred to. (See my recent cable to Harrison on this matter.)⁶

(3) Having agreed upon our military objectives in Korea, consideration should be given to the U.N. stating them publicly and with clarity.

[matter omitted]

Postcript:

I have had an opportunity of discussing fully with Artie⁷ the above cable and he desires me to inform you that he agrees both with your proposal on Kashmir and with the views that I have expressed in relation to the Indian suggestions.

[matter omitted]

[NAA: A1838, TS852/20/4/3, i]

1 Document 27.

2 K.M. Pannikar, Indian Ambassador to the PRC.

3 See footnote 4, Document 19, and footnote 4, Document 27.

4 Editorial insert.

5 The thrust of point '(e)' is contained in footnote 7, Document 27.

6 Presumably, Document 19.

7 Arthur Fadden.