Your telegram 23 of 8th January , our Chiefs of Staff consider that by the time the Portuguese troops arrive in Timor our position at Darwin due to United States naval and air reinforcements may be improved to such an extent that we should be in a position to take more effective action in repelling a Japanese attack on Timor than hitherto.
2. Therefore in view of the serious consequences which would result due to a breach with the Portuguese, we agree with the proposed course of action in paragraph 10 of cablegram No. 23 , with the proviso that negotiation should be conducted on the basis that- (a) Road between Dilli and the Dutch border should be improved.
(b) Australian troops should be camped as close to Dilli as the Portuguese will agree.