387 Embassy in Washington to Department of External Affairs
Cablegram 572 WASHINGTON, 2 May 1947, 8.18 p.m.
MOST IMMEDIATE MOST SECRET
Reparations will be discussed at F.E.C. meeting on morning of 5th May. Following is statement which the Ambassador proposes to make.
Please advise if this has concurrence or if alterations desired.
I should like to make a statement to the Commission of Australia's [general] views on reparations.
For some weeks we have been carefully surveying all the circumstances connected with this matter, and are now conclusive in our opinion that the division of shares should be determined, with other vital questions, in the Peace Settlement. Reparations cannot be dealt with separately and apart from the overall aspects that will govern the future relations of Nations in the Pacific.
The Peace Conference is the only Body which has the power to treat the Japanese problem as a whole, and to allocate reparations in such a way that they will form a logical part of the whole settlement and contribute to the establishment of a just and durable peace in the Pacific.
Australia does not challenge the right of the Far Eastern Commission to determine the total volume of reparations from Japan or the forms which those reparations should take, such as industrial assets, gold and precious metals, current production or other forms, [as part of the duty of]  the Commission to determine what should be destroyed or removed from Japan in the interests of security of the Allied Nations. On the contrary, Australia has consistently stated that the Far Eastern Commission should regard the fixing of these levels as one of its main tasks and should undertake this work as speedily as possible.
Settlement of reparations has been long delayed and, candidly, Australia feels that there is no evidence that agreement within this Commission is very much closer than it was twelve months ago.
We are fully conscious of desire of devastated countries to receive reparations assets as soon as possible, and I might add that my own country is equally anxious to have its own claims satisfied without delay. However, we feel that any further progress that may be made within the Commission in the discussion of shares will prove to be quite illusory, and that considerable amount of time will be wasted covering ground that will have to be traversed again in some other place. The only Body where we can expect a final settlement, backed by our representatives at the highest level and taking into account all the relevant factors, is the Peace Conference. There is no reason why, with the probability of an early Peace Conference this matter of reparations should not be made the subject of consideration by that Body. Now that the attention of the world powers in regard to European settlement has been deferred, we can immediately engage our attention to finalizing the peace settlement with Japan. 
[It is likely that a Peace Conference will be called at an early date. The Australian Minister for External Affairs, Dr. Evatt, stated in the House of Representatives on 26th February, 1947, that 'the time is rapidly approaching when the F.E.C. work should be vested in a Pacific Peace Conference which can deal as a whole with the problem of the settlement with Japan'. The early calling of a Conference will overcome some of the difficulties in the F.E.C. which have made it unsatisfactory as a means of effective participation in the control of Japan. It will put an end to piece-meal settlements and the unsatisfactory position which has developed owing to failure to agree on the basic policy as a whole drafted in December 1945. With early calling of a Conference there is no reason why this matter of reparations should not be made the subject of consideration by that body.'] However, I should like to emphasize that Australia also holds that, on legal grounds, the Far Eastern Commission has no jurisdiction over the division and allocation of reparations. The terms of reference of the Far Eastern Commission empower it to formulate policies, principles, and standards in conformity with which the fulfilment by Japan of its obligations under the terms of surrender may be accomplished.
The only reference to reparations in the terms of surrender is through Japan's acceptance of the Potsdam Declaration, which stated that Japan shall be permitted to maintain such industries as will sustain her economy and permit the exaction of just reparations in kind but not those which would enable her to re-arm for war'. It is clear from this that the Far Eastern Commission can prescribe the total amount of reparations to be provided by Japan, including the kinds of reparations and the manner in which they are provided, but that the apportionment of these reparations is not a function of the Far Eastern Commission. This conclusion is strengthened if we take account of the fact that reparations is not a reserved function in para III, 3 of the Commission's terms of reference. It is reasonable to assume that it would have been reserved if the allocation of reparations had been intended as an F.E.C. function, because it is impossible to expect Sovereign Governments to agree that the division of shares could be the subject of unilateral decision by one Government.
As I have already indicated, the Australian Government does not consider that the present discussions in the Reparations Committee on the division of reparations shares are likely to be very productive. The Reparations Committee has proposed that each country should submit the percentage share of reparations, determined on broad political lines, which it desires to receive from industrial assets within Japan available for reparations. The Australian Government has been greatly impressed by the views of the United States Government, as expressed at several meetings of the Reparations Committee, to the effect that the submission of a figure for one country is of little value unless the percentages for all other claimants are calculated in the same submission. For example, it means very little for a country to say that it desires 15% of total reparations for itself unless it discloses what proportion that percentage bears to allocations to every other country. To meet this difficulty, the American Government has suggested in the Reparations Committee that each country should table a list of eleven percentages. However, there are two objections to this:-
A political objection that a country may shrink from the odium that might attend the giving of particular percentage to particular countries and the practical difficulty that member Governments have only scanty statistical data as to the losses and contribution of some of the other Member Governments. For the first reason, the American Government has expressed a reluctance to table its own list of eleven percentages unless a substantial number of other Governments are prepared to do likewise, for the second reason, some other Governments feel they cannot prepare lists for all countries. The Australian Government fully appreciates and shares that reluctance.
We consider that the method proposed in the Reparations Committee is too much in the nature of guess-work and a blind venture. The original percentage tabled by each country for itself would be a stab in the dark made in ignorance of many important considerations. The next step after submission of such figures is shrouded in mystery. If we assume, as it must be assumed, that tables of eleven percentages will not be forthcoming, the Commission will find itself in a blind alley and will once again consume time discussing procedures, as we have done so often in the past.
The Australian Government therefore proposes that there should be a careful working out of a scheme of distribution based on justice, and calculated on broad political lines, taking into account the relative contribution of each nation to victory, and its physical losses and damage and the personal injuries and loss of life of its servicemen, internees, and other Nationals. [Such personal losses should in our view be a prominent feature of a reparations scheme. Japanese war crimes put this aspect in a special category. There are arrangements for the punishment of war crimes and there should also be special compensation to Governments acting on behalf of victims and their relatives.] The Australian Government proposes that a Tribunal of three independent and preferably judicial persons be established to make the necessary investigations, and that this tribunal report direct to the Peace Conference, which should be summoned as soon as possible. In this way we shall achieve what our American colleague has so often and so rightly called for-a table of eleven percentages, responsibly prepared and accompanied by complete factual supporting material. Of course, the views of the tribunal may not prove acceptable in their entirety-no bench can satisfy all claimants. But the final adjustments and adoption of the allocations should be made at the Peace Conference, which alone has power to take account of all relevant factors and at which will be assembled foreign ministers of all our countries armed with plenipotentiary powers.
My Government believes that this offer[s] the only way to a speedy and just settlement of reparations. The alternative course, which is now before the Reparations Committee, is obscure, unlikely to secure agreement, and certain to be prolonged. On the other hand, the course, which I have just suggested is likely to produce a definite result within a few months of such time, I hope, the Peace Conference will be assembled and ready to ratify the reparations agreement.
I do not expect Mr Chairman, that [all] my colleagues will be able to express their Government's views on their statement today, and I have no doubt that you will adjourn debate until a later meeting.