162 Fraser to Chifley
Cablegram 148 WELLINGTON, 25 July 1947, 9.25 p.m.
IMMEDIATE SECRET PERSONAL
Reference Commonwealth Relations telegram D.642  and your 190  and 191. 
The United Kingdom proposal for an arbitral solution appears to me to offer the best chance of success. As I see it the vital issue at the moment is that of restoring peace and this should outweigh even important questions of national prestige. If the United Kingdom proposal could be adopted at once this might head off action by the Security Council which most regrettably can only result in the introduction of extraneous international issues.
Should Security Council intervention lead to military sanctions we all risk becoming embroiled and one cannot view with anything but the utmost regret the opportunity this would give to U.S.S.R. to interest itself directly in the affairs of this area.
The United Kingdom and the United States can if they feel so disposed, exert strong influence with both parties and at the present stage they seem more likely than Australia notwithstanding its disinterestedness and its high standing to succeed in moderating the disastrous attitude of the Dutch.
I fully appreciate the vital interest of Australia and of New Zealand in the settlement of such an inflammatory dispute as this in the Pacific area and I am fully prepared to urge that Australia should be directly associated in any efforts of mediation which the United Kingdom and United States might be able to undertake but I would ask that the most serious consideration should be given to the possible consequences which might conceivably arise from your Government's refusal to accept the possibility of United States - United Kingdom arbitration and I most earnestly trust that any differences on this issue should not be allowed to hold up any such attempt.
The raising of this dispute in the Security Council may be inevitable and I do not suggest that Australia should abrogate its claim to raise the matter but I do consider that the alternative of mediation or arbitration should be attempted first.