As indicated to you in our 983 , Commonwealth Government's view has been that delay is so important at present that every reasonable step should be taken to avoid breakdown of Hull-Kurusu talks.  However, British Government's attitude was rather to brush aside Craigie's recommendation to accept Japanese overtures for British intervention in talks.  It now appears that as a result of Hull's conferences Ambassadors and yourself Japan has been successful in obtaining unofficial but practical intervention of other powers in Washington conversations.  An opportunity is thus presented to us which otherwise might be lacking, and your activities are approved and should be discreetly pursued.
In their present form the Kurusu propositions are open to the objections specified by Hull in your 1013.  Above all they do not correspond Kurusu suggestion to Hull described in your 994.
 Kurusu's suggestion was that Japan would withdraw her troops from Indo-China in return for obtaining release of small quantities of rice and oil.  As subsequent telegram M375 from Dominions Office  indicated, such Japanese withdrawal might fairly be regarded as a justification for our easing certain restrictions because it was Japanese aggression in Indo-China which occasioned the restrictions. However, the proviso of telegram M375 was that there should be no semblance whatever of abandoning China.
Taking the propositions in order , No. 1 leaves Japan free to act as she likes both in relation to China and also to Russia. If Japanese regard the Russo-Japanese non-aggression pact as still in existence, they should be prepared to repeat the undertaking contained in it. With regard to China, Clause 2 of declaration rather suggests danger of Japanese troops attacking China from northern part of Indo-China. Moreover, Clause 2 places no real obligation on Japan for complete withdrawal of her troops from Indo-China because both events specified for date of withdrawal may be indefinitely postponed by unilateral action on part of Japan. Clause 5 means abandonment of aid to China.
On the other hand, the draft heads of a possible arrangement between Japan and U.S.A. should give opportunities for considerable discussions, amendments, counter-proposals, and further valuable time may be gained thereby. At this stage it is premature to ask us to indicate the amount of economic relief that might be given by us to Japan. The quid pro quo is vague and uncertain. Moreover, it is difficult to see how you can be authorised to bind this Government in relation to an arrangement as to which we are not even suggested as parties.
It is so obviously essential to refer proposals back from time to time to governments concerned and to suggest broadening of talks, that reasonableness of this course should be so emphasised. An interim arrangement with Japan would certainly help us, but fundamental basis of such arrangement should be Kurusu's suggestion in your 994.
I realise difficulty of your position because Commonwealth is not a party to talks. But I am discussing position with Japanese Minister here  tomorrow, and he will know of our keen interest. It seems possible that from the talks of Kurusu-Hull may emerge the suggestion of a conference of Pacific countries at which governments concerned may be represented, but this will only be practicable if some basis such as Kurusu's suggestion seems to be acceptable to Japan and if the United States suggests such a course. Above all, primary consideration is to prevent breakdown of present talks.