250 Dunk to Evatt
Cablegram 233 CANBERRA, 17 September 1945
TOP SECRET MOST IMMEDIATE
Peace Treaty with Italy.
Concerning Italian-Yugoslav frontier following is additional commentary to outline given in my telegram 292  (part 3):
1. On ethnic grounds and in the light of other general considerations stated in telegram under reference the greater part of Venezia Giulia should go to Yugoslavia. Present 'Morgan Line' (see Dominions Office telegrams D.925 of 28th May  and D.1603 paragraph 2D.IV ) is in no sense a just ethnic frontier but was adopted on grounds of expediency and for strictly temporary military government purposes. It would merely complicate the ethnic problem and do further injustice to Yugoslavia if it or some slight modification of it were favoured as final frontier.
2. Apart from the ethnic problem the real issue is economic. Local trade from the Julian Region comes westward from the Julian Alps and the mountains of north-eastern Istria to the markets and ports of Gorizia and Trieste and other coastal towns. From the viewpoint of international trade Trieste is the most convenient and important outlet for a large part of the Danubian lands. During the period between the two world wars when Trieste was severed from the economic hinterland the importance of the port appreciably diminished (in 1913 the trade figure for Trieste port was 3.44 million tons. Only in 1929 with 3.11 million tons and in 1937 with 3.17 million tons did the trade approach the 1913 figure). Under proper administration and with close ties with the Balkan countries Trieste should again become a port of considerable importance and might offer valuable opportunities for Australian trade.
3. In regard to Trieste city as distinct from its Yugoslav- populated hinterland we have little to add to the United Kingdom proposals except that a joint Italian Yugoslav authority for day- to-day administration (Possibly an elective council) might be considered. Such an authority might be supervised by an International Commission drawing upon the experience, with suitable modifications, of the Tangier Convention.