17 August 1938

LEAGUE OF NATIONS ASSEMBLY, SEPTEMBER 1938: PROPOSALS OF UNITED
KINGDOM GOVERNMENT REGARDING REFORM OF THE COVENANT

1. The Report of the Special Committee of Twentyeight appointed by
the League Assembly, after the failure of the application of
sanctions in the Italo-Abyssinian dispute, to consider proposals
for the reform of the League Covenant, will come up for
consideration at the next Meeting of the Assembly, which opens at
Geneva on the 12th September. Australia was not represented on the
Committee, and has had no share in its deliberations. Discussions
at the final Meeting of the Committee, held at Geneva in January
and February of this year, centred around a report submitted to
the Committee by Viscount Cranborne [1] on the 8th September,
1937. In this report three possible types of Leagues of Nations
were envisaged, viz., a 'coercive League', a 'non-coercive
League', 'and a League of an 'intermediate' type. Members of a
'coercive League' would be bound to impose military or economic
sanctions in certain circumstances, whereas Members of a 'non-
coercive League' would be obliged merely to consult when an
international crisis arose, and would endeavour to settle disputes
by pacific means. Members of a League of the 'intermediate' type
would have the 'faculty' but not the 'obligation' to use coercion.

They would consult when a crisis occurred, and might or might not
agree to impose coercion on a recalcitrant State.

2. A telegram dated the 30th July (Annexure 'A') [2] has been
received from the Secretary of State for Dominion Affairs stating
that the United Kingdom Government is of opinion that the question
of the reform of the Covenant is the most important item on the
agenda of the Assembly, which 'will be faced with the necessity of
coming to a decision affecting the whole of the future of the
League'. The telegram sets out certain proposals of the United
Kingdom Government for the reform of the Covenant and invites the
Commonwealth Government and the respective Governments of the
other Dominions to indicate how far their views are in agreement
with those of the United Kingdom Government.

3 POLICY OF COMMONWEALTH GOVERNMENT, 29TH SEPTEMBER, 1936
The proposals of the Commonwealth Government concerning the reform
of the Covenant were stated by the Attorney-General in the House
of Representatives on the 29th September, 1936, [3] and may be
summarised as follows:-

(i) Article XVI (Sanctions)
Under Article XVI, military sanctions are permissive and not
mandatory, as it is the duty of the League Council only to
recommend to States Members what effective armed forces shall be
contributed. The Commonwealth Government desires no change in the
Covenant in this respect.

So far as financial and economic sanctions are concerned, the
Commonwealth Government holds the view that, upon a Declaration by
the Council that a Member State is an aggressor, the following
sanctions should be automatic:-

(a) Prohibition of export of arms and munitions of war of all
descriptions;

(b) Prohibition of export of raw materials used for military
operations and manufacture of war material including metals and
oil;

or alternatively to (a) and (b)-
Prohibition of all exports to the aggressor State;

(c) Refusal of all loans and credits facilities;

(d) Prohibition of all imports from the aggressor State.

To meet the objection, however, that a Government in power might
have to carry out an obligation which it had not itself accepted,
the Commonwealth Government desires the incorporation into the
Covenant of number 4 of the Interpretation Resolutions adopted by
the League Assembly on the 4th October, 1921, viz.:-

It is the duty of each Member of the League to decide for itself
whether a breach of the Covenant has been committed.

The fulfilment of their duties under Article XVI is required from
Members of the League by the express terms of the Covenant, and
they cannot neglect them without breach of their Treaty
obligations.

(ii) Regional Pacts
The Commonwealth Government supports the principle of the
negotiation of regional pacts not inconsistent with the provisions
of the Covenant.

(iii) Article XI (Threat of War affecting Members or non-Members)
Article XI declares that any war or threat of war is a matter of
concern to the whole League, and provides that 'the League shall
take any action that shall be deemed wise and effectual to
safeguard the peace of Nations'. The Commonwealth Government is of
opinion that the unanimity rule should not apply to this Article,
so that the Council may be able to make recommendations under
Article XI without the consent of States which are parties to the
dispute.

(iv) Article XIX (Re-consideration of Treaties, etc.)
Article XIX was designed to facilitate peaceful re-consideration
of Treaties, the provisions of which had become inapplicable, and
also the consideration of international conditions whose
continuance might endanger world peace. The Commonwealth
Government believes that the Article is too uncertain, that it
should be regarded as a specific Article for the remedying of
grievances, and that provision should be made for the periodical
investigation of, and report on, alleged grievances.

(v) Severance of the Covenant from the Peace Treaty
The Commonwealth Government is of opinion that the Covenant should
be revised in such a manner as to make possible the separation of
the Covenant from the Treaty of Versailles.

(vi) Consultation with non-Member States
The Commonwealth Government desires that proposed amendments to
the Covenant shall be discussed with non-Member States in order to
ascertain their views on the points in question.

4. IMPERIAL CONFERENCE 1937
The question of the reform of the Covenant was discussed
confidentially at a Meeting of the Imperial Conference on the 4th
June, 1937, when the views of the Commonwealth Government were
stated by Mr Bruce. [4] Representatives of the United Kingdom,
Canada, and South Africa in effect supported the view that the
exercise by the League of Nations of its coercive functions was at
present impracticable, and that attention should be concentrated
on its consultative and conciliatory functions and on the work of
its technical organisations. The representative of New Zealand,
however, disagreed with this view, and advocated the strengthening
of the provisions of the Covenant.

5. PROPOSALS OF THE UNITED KINGDOM GOVERNMENT
The contents of the telegram of the 30th July, 1938, from the
Secretary of State for Dominion Affairs may be summarised as
follows:-

The United Kingdom Government is of opinion that-
(a) Although the League, by reason of its reduced membership, its
failure to give effect to Article VIII of the Covenant
(Disarmament), and its divided counsels is not at present in a
position to give effect to certain important provisions of the
Covenant, the Covenant should be maintained substantially in its
present form in the hope that eventually it may become possible to
apply it in its entirety. In the meantime, as a temporary measure,
the limits within which Member States are obliged to carry out the
coercive clauses of the Covenant should be clearly defined, and
the facilities available under the Covenant for remedying just
grievances should be improved. These aids should, if possible, be
given effect to by means of an Assembly Resolution.

(b) The Resolution of the Assembly should cover the following
points:-

(i) Article XVI (Sanctions)
It should be made clear that Members of the League are obliged to
consult when a breach of the Covenant has been committed, but that
they are not automatically obliged to apply either economic or
military sanctions. Each dispute must be considered on its merits
and each Member will be the judge of the extent to which its own
position will allow it to participate in any measures which may be
proposed.

(ii) Article XIX (Re-consideration of Treaties, etc.)
The use of Article XIX should be encouraged. It might be of some
assistance towards this end if the Assembly declared that an
expression of opinion by a sufficient majority of the Assembly on
any issue brought before it under Article XIX should be regarded
as indicative of the probable attitude of League Members in
considering any action that might subsequently be taken by the
States concerned to give effect to that opinion.

(iii) Article XI (Threat of War affecting Members or non-Members)
The unanimity rule should be modified so far as its application to
paragraph 1 of Article XI is concerned.

(iv) Separation of the Covenant from the Peace Treaty
Steps should be taken to separate the Covenant of the League from
the Treaty of Versailles.

6. A comparison between the proposals now put forward by the
United Kingdom Government, and the proposals of the Commonwealth
Government announced by the Attorney-General in the House of
Representatives on the 29th September, 1936, shows that the views
of the two Governments coincide on several important points. The
Commonwealth Government has already publicly declared that the
Covenant of the League should be separated from the Peace Treaty,
that the unanimity rule should not be applied in respect of
Article XI and that greater use should be made of the procedure
envisaged by Article XIX.

The most important suggestion made by the United Kingdom
Government is, however, the proposal concerning Article XVI
(Sanctions). In effect, the United Kingdom Government suggests
that the League of Nations should be definitely recognised as a
League of the 'intermediate' type, members of which may agree to
employ, but are not bound to employ, military or economic
sanctions.

This proposal of the United Kingdom Government involves a greater
'whittling-down' of Article XVI than the proposal announced by the
Attorney-General to the House of Representatives on the 29th
September, 1936. (Note: See, however, telegram of the 4th August
from Mr Bruce-Annexure 'B' [5]-in which the opinion is expressed
that the proposals of the United Kingdom Government are 'in entire
agreement with statement made on behalf of Australia at Assembly
of League in 1936'.) On that occasion, the proposals of the
Commonwealth Government concerning economic and financial
sanctions were said to be as follows:-

Financial and economic sanctions should follow automatically upon-
(a) a declaration by the Council that a State is an aggressor; and
(b) a decision by the Commonwealth Government that a breach of the
Covenant has been committed.

It should be noted that, during the Abyssinian dispute, there was
in practice no automatic imposition of economic sanctions against
Italy under Article XVI of the Covenant. The course of action
adopted took account of certain interpretative Resolutions
concerning the Economic Weapon, adopted by the Assembly on 4th
October, 1921. Article 4 of these Resolutions states, inter alia,
that it is the duty of each Member of the League to decide for
itself whether a breach of the Covenant has been committed. Other
Articles provide that the Council shall recommend the date on
which the enforcement of economic pressure is to commence and
enables special consideration to be given to the position of
certain States which would suffer unduly by the application of
sanctions. In other words, the automatic obligation under the
Covenant to enforce economic sanctions in certain circumstances
has been cut down in practice. Nevertheless, once a Member State
has decided that a breach of the Covenant has been committed, it
is still bound to impose sanctions on a specified date, unless it
receives special permission to abstain from such a course of
action.

The proposal now put forward by the United Kingdom Government cuts
down still further the practical effect of Article XVI, since, if
adopted, no Member State would be under any obligation whatever to
apply sanctions of any kind, even though it agreed that a breach
of the Covenant had been committed.

The arguments in favour of supporting the United Kingdom proposal
with regard to Article XVI may be summarised as follows :-

(i) So far as the British Commonwealth of Nations is concerned, it
would appear from the confidential record of proceedings of the
last Imperial Conference that, broadly speaking, the United
Kingdom, Canada and South Africa are of opinion that attention
should be concentrated on the consultative and technical functions
of the League of Nations, and not upon its coercive functions.

(ii) So far as foreign countries are concerned, Germany, Italy and
Japan are no longer members of the League; Switzerland has
recently been absolved from any obligation to impose economic
sanctions; Belgium, Luxemburg, Holland, Norway, Sweden and Denmark
have declared that they regard the system of sanctions under
present conditions as of a non-obligatory character; Chile has
given notice of withdrawal from the League because under the
existing Covenant economic sanctions still remain technically
obligatory.

(iii) It is widely believed that the imposition of full economic
and financial sanctions in effect amounts to such pressure as may
flow from a military sanction, and that nations which enforce full
economic and financial sanctions must be prepared to face war. For
instance, if during the Abyssinian crisis, an embargo had been
placed upon the export of oil to Italy and the Suez Canal had been
closed to the passage of Italian merchant shipping, it is probable
that Italy would have resorted to military reprisals.

The arguments against supporting the United Kingdom proposal may
be summarised as follows:-

(i) In recent years the smaller Powers have shown a disposition to
free themselves from their obligations under the Covenant chiefly
because, since the Ethiopian dispute, they have felt that they
cannot rely upon the Great Powers to enforce sanctions
effectively. If the Great Powers Members of the League made a
definite declaration that they would enforce sanctions against an
aggressor, this attitude of the smaller Powers may change. If the
smaller Powers come to the conclusion that the League of Nations
affords them no territorial protection whatever, they may well
decide to make the best terms possible with the totalitarian
States and withdraw from the League.

(ii) If the Assembly at its next meeting should adopt the proposal
of the United Kingdom Government, there is a possibility that
Soviet Russia, together with other States which favour a
'coercive' type of League, may withdraw from the League, or at
least give it very lukewarm support.

(iii) The deterrent effect of prospective sanctions which are in
no sense obligatory will be extremely small, and Germany, Italy or
Japan (or all three countries) may feel able to ignore the
possibility of the League acting as a restraining force upon the
realisation of their plans for expansion.

7. The following questions will need to be decided by the
Commonwealth Government:-

(a) (i) Whether the proposal of the United Kingdom Government
concerning Article XVI (Sanctions), the adoption of which will
have the effect of definitely recognising that each State may
decide for itself whether or not to impose economic sanctions,
even though it may have reached the conclusion that a breach of
the Covenant has been committed, should be supported; or
(ii) Whether the Commonwealth Government should adhere to its
proposals announced on the 29th September, 1936, namely:-

(aa) that the imposition of financial and economic sanctions
should follow automatically upon a declaration by the Council that
a State is an aggressor and a decision by the Government of each
individual State Member that a breach of the Covenant has been
committed; and
(ab) that Article 4 of the Resolutions concerning the Economic
Weapon, adopted by the League Assembly on A October, 1921, should
be incorporated in the Covenant to clarify the obligation of
States Members.

(b) Whether the proposals of the United Kingdom Government
concerning Article XI (Threat of War affecting Members or non-
Members), and Article XIX (Re-consideration of Treaties) and
concerning the separation of the Covenant from the Peace Treaty
should be supported.

The proposals set out in (b), along with the arguments used, are
fully in accord with the proposals already submitted to the League
of Nations by the Commonwealth Government.