130 Australian Government to Addison

Cablegram 129 CANBERRA, 16 March 1946

MOST IMMEDIATE SECRET

Your 93 and 94 [1] Reparations from Japan.

1. We are in general agreement with the points made in your 93 paragraphs one and two and we agree with your view that the division of reparations should be [on] a broad political basis and with your proposal that this should be discussed by Far Eastern Commission.

2. As regards prior consultation between British Commonwealth countries we are anxious to avoid giving grounds for other[s] to treat the British Commonwealth as one unit for purposes of allocation of reparations and think it would be best if the suggested discussions could take place as part of the normal inter-Commonwealth consultation in Washington on Far Eastern Commission problems. Experts could participate in such consultation and might continue to work in Washington in relation to whatever inter-Allied reparations machinery may be set up.

3. We think decisions on reparations should be integrated closely with economic policy as laid down by FEC as this policy should determine availability. To effect this any inter-Allied reparations body should be subordinate to FEC. We do not agree with what we understand State Department officials have in mind, viz., the establishment of an independent inter-Allied Committee to translate FEC reparations policy into detail. [2]

Any such body should be responsible to FEC. [3] 4. Your telegrams do not mention restitution. We should appreciate your views. We note that the reparations committee of FEC has set up a subcommittee on restitution. [4]

1 Both dispatched on 8 March. They supported recommendations by E.

W. Pauley to the F.E.C. for early removal of industrial plant surplus to Japan's civilian economy, and also suggested expediting the reparations procedure by basing allocation of shares on broad political agreement, rather than on statistical data as had been the case with German reparations.

2 Reported by Eggleston on 13 March. Administration of the policy would be undertaken by SCAP staff, and Allied governments be entitled to inspect equipment allocated to them.

3 Addison replied on 10 April, agreeing with the views expressed in paragraphs 2 and 3, though noting India's desire for discussions by Commonwealth experts prior to international negotiations, New Zealand's preference for postponement, and the Soviet Union's objection to F.E.C. consideration of seizure and disposition of Japanese overseas assets.

4 The text of a U.K. draft agreement on restitution was transmitted on 3 April.

[AA:A1067, ER46/13/2/7]