233 Lord Cranborne, U.K. Secretary of State for Dominion Affairs, to Mr John Curtin, Prime Minister
Cablegram 913 LONDON, 27 December 1941, 11.20 p.m.
IMMEDIATE MOST SECRET
1. We have carefully considered what policy to recommend in the light of your telegram 831 of 26th December.  We feel bound to emphasise the consequences to the general strategy of the war which will follow if an amicable solution of the Portuguese Timor question is not secured. There is a serious danger that unless a bridge is found Dr. Salazar  may proceed to the limit of breaking off relations with the United Kingdom. This would not merely mean the end of a long alliance but may precipitate Axis penetration of the Iberian Peninsula. In this event Gibraltar will become unusable as a base and vital Portuguese islands in the Atlantic will be denied to us rather than [available to]  our forces. Our air and sea communications through Lisbon to the Middle [and] Far East and to Australia itself as well as in the Atlantic would then be endangered. Recent highly secret conversations with Portugal had gone far to safeguard our position in regard to the Atlantic islands in the event of Axis action in the Iberian Peninsula; the results of these conversations are now in jeopardy.
2. While therefore we realise that Portuguese Timor is vital to our Far Eastern defences and that there can be no withdrawal until adequate arrangements are made for its protection against Japanese aggression we are bound to leave nothing undone which might prevent a rupture with Portugal and we feel sure that His Majesty's Government in the Commonwealth of Australia will do all in their power to assist us. Impatient as we may be with Portuguese susceptibilities we obviously cannot ride rough-shod over them in view of the importance to the whole of the allied cause of continued goodwill of the Portuguese Government at a time when our resources are strained to the utmost.
3. Your telegram suggests that there are some misunderstandings about the course of events. We will in a subsequent telegram endeavour to set them out as seen from this end. The essential point however is that the reaction of the Portuguese Government to the entry of allied forces into Portuguese Timor has been most serious and the question is what is the best course now to take.
4. In all the circumstances we hope that the Commonwealth Government will agree to facilitate the solution which we have suggested in my telegram 887 of 25th December.  In the light of the information contained in paragraph 11 of your telegram 831 we do not wish to suggest that the joint command shall be vested in the Governor of Portuguese Timor.  No British troops other than Australian are available to go to Portuguese Timor and it was not intended to propose that additional troops should be sent from Australia. What we should like the Commonwealth Government urgently to consider is the possibility of effecting an exchange between Dutch Forces now in Portuguese Timor and not less than an equivalent number of Australian troops from those now in Dutch Timor. As stated in my telegram 887 the Netherlands Government for their part have already agreed to this proposal. We consider it important that there should be no weakening of the allied hold over Timor as a whole; we feel that while the exchange suggested above would lead to no such weakening it would (though we cannot be certain of this) offer the best, if not the only, chance of solving our present difficulty with Portugal.