127 Department of External Affairs to Mr R. G. Casey, Minister to the United States
Cablegram 1013  CANBERRA, 26 November 1941
MOST SECRET MOST IMMEDIATE
Your 1021  and 1022. 
Our 1009 to you  was despatched before receipt of your 1021 specifying draft counter proposal of Hull  to Kurusu.  The temporary modus vivendi suggested in your 1021 seems to us to correspond in principle with the suggestion in our 1009, namely that as Japanese aggression in Indo-China occasioned the economic restrictions, those restrictions might be lessened in return for Japanese withdrawal from Indo-China, providing that we also obtained general guarantees against Japanese aggression elsewhere and understanding as to negotiating subsequent Pacific settlement at a later time. On whole this would be Japanese diplomatic retreat, but it should be possible to give Japan chance to retreat without inflicting unnecessary humiliation. Our action is not appeasement but merely strategic expedient at crucial period in war.
In circumstances we favour Hull making a counter proposal rather than his rejecting Japanese proposal outright. We agree with Dominion telegram M380  that our demands in counter proposal should be pitched high and something approximating to paragraphs 11 and 12 of Dominion telegram M380 might well be accepted by Hull and his counter proposal redrafted. Those paragraphs suggest inter alia total withdrawal from Indo-China, not merely of troops but of all naval, military and air forces.
At present we are not a party to the Hull-Kurusu talks, but paragraphs 6 and 8 of Hull's suggested counter proposals would make it easier to widen discussions with a view to a more general Pacific settlement. The occasion seems to us a favourable one for elaborate negotiation even in relation to temporary modus vivendi, especially as we agree with United Kingdom that it is not practicable at this stage to give carte blanche to diplomatic representatives, so far as concerns easing of economic restrictions. It is so important to have the matter fully considered and to gain time that you should arrange to see immediately telegram addressed to us as M380 which contains text of telegram to British Ambassador Washington  from United Kingdom Government dated 24th November and starting: 'The Japanese proposal is characteristic and confirms the view, etc.' We are repeating to United Kingdom and Bruce our wire to you No.
1009 as well as this wire.