Your memorandum No. 122.JulY 15th.
Japanese Peace Settlement.
Regret that no use every comment being sent regarding likely attitude of Soviet Government on particular proposal as only available indication of Soviet views is in official statements already made, or obvious inferences e.g., Soviet objection to simple majority decisions of any supervisory commission. In view of forthcoming Canberra conference, however, I submit with some diffidence the following general appreciation, based on my experience here. (For general background of the Soviet policy see Articles in Foreign Affairs, July 1947, page 566 to 582; Round Table, June 1947, Page 225 to 230).
1. In the past few weeks the lines of cleavage between U.S.S.R.
(with satellites) and other countries (especially the United States) have become more sharply drawn. European consideration of the Marshall plan in spite of Russia's attitude towards it has led to swift concrete action by Soviet Government to draw closer Economic ties with Satellites, and between satellite themselves.
In addition there has been daily press criticism of American policy in Europe and the Middle East, and to some extent in Asia.
No opportunity is lost to play on French and British fears of American designs in Western Germany or to play up British economic difficulties as clear proof of mildness or loss of power by any country which accepts American dollars.
This atmosphere may have contributed to strengthen the words used in the Security Council by Johnson on the subject of Greece.  2. In these circumstances there seems to me real danger that Russia on the one hand, and the United States on the other will regard the interests of other countries as unimportant or irrelevant when considered in the light of basic Soviet United States antagonism. This could have serious effects in relation to Australian interests in Asia and the Pacific.
3. As assembled in confidential American views here, United States appear to regard Asia as the logical and the most profitable ground for Communist expansion, largely because the standard of living of under privileged classes in Asia, is so low, that the present low Russian standard, accompanied by full employment seems attractive.
While the Americans admit that Russia will wish to 'consolidate' in Europe and perhaps the Middle East, they seem to assume that the main pressure will be in the Far East, though perhaps only by way of infiltration with remote control.
4. Preoccupation with problems of Security however, tends to make the Americans see Communist hares behind every Asiatic bush. As a result there is some danger that the United States may regard genuine and legitimate aspirations in Asia towards self Government as necessarily Soviet inspired or controlled, and try therefore to restrict or suppress Nationalist movements. This could have the opposite effect to that desired i.e., to make Nationalist[s] see in Russia their only hope of salvation, and to lead them to regard United States and supporting powers as antipathetic and ignorant.
5. I suggest therefore that while it may well be in Australia's interests to support the United States on broad security matters in relation to Russia, it may also be in Australia's interest to question from time to time various aspects of United States political and economical policy towards Asia and when necessary to take independent action (as in Indonesia).
6. From this post it seems likely that the next four to six months will determine the final success or failure of attempts to secure Russian co-operation in solving world problems. In the United Nations Assembly decision on such an important item as Greece could in itself be decisive. If November meeting of the Council of Foreign Ministers fails to secure basic agreement on the German settlement, it seems hardly likely that the full Council will ever discuss the matter again. In this event failure of Russia to co- operate in the Japanese Peace settlement, might be comparatively unimportant, but if the United Nations Assembly handles successfully the Greek and other questions, and if agreement is reached on the German settlement, one could still hope to bridge also the differences with Russia in the Far East.
The above considerations suggest that the timing of the final pressure of the Soviet Government may be of considerable importance and raise some doubt whether the present is the best moment to press for clear cut decision on the Japanese Peace conference.