As a result of the German coup in Austria and the general tension
which it has created, imperative in my view, Prime Minister of the
United Kingdom [2] should at the earliest possible date make a
declaration of the British attitude. As this will be of vital
interest [3] to Australia essential that you should be thinking
round the issues involved. I had long talk with the Secretary of
State for Foreign Affairs [4] last night and while he agreed the
Prime Minister must make a declaration, it was apparent as yet the
British Government has no clear idea what form such declaration
should take.

While it is impossible to forecast what the decision of the United
Kingdom Government will be, I set out below matters that will have
to be dealt with, with some thoughts on lines it may be found
desirable to take so that you can be giving consideration to the
position.

AUSTRIA
The close link between the people of Austria and Germany has long
been recognised and the world generally has contemplated at some
time and by peaceful means that the link would be cemented into a
closer union, though probably not to the point of complete
absorption of Austria into the German Reich. Such an absorption
has now however, taken place. It is not the fact of what has
occurred that has created the present apprehension of alarm and
tension [5], but the way in which it was brought about-the
application of force and coercion to an independent people. The
atmosphere which has been created may lead to anything not
excluding war, the limits to which it would be impossible to
define. In these circumstances necessary to state where the United
Kingdom stands. Then a reference to grievances many of which were
legitimate and the injustices which have existed since the war and
the failure of international statesmanship to remedy them. Then a
statement that Britain's policy since the Prime Minister assumed
office has been to face and endeavour to remedy those grievances,
e.g. Halifax's visit to Berlin in November. That this is still
Britain's policy with a proviso that it is conditioned by no
further attempts to bring about a solution by force. That the
United Kingdom is prepared to go further to rectify the grievances
[6] and prepared to consider the co-operation of any means for the
maintenance of the world's peace and for bringing about political
and economic appeasement. On the economic side this may be
amplified by references to the financial strength [7] and greater
resources of raw materials of some nations with an expression of
such nations' willingness to assist less fortunate peoples. After
reiterating Britain's hope that the situation will be dealt with
down these lines, a statement that the world has suffered a rude
shock from the recent example of force, and a warning that a
repetition cannot be tolerated, then a specific reference to
individual dangers. [8]

MIDDLE AND EASTERN EUROPE PARTICULARLY CZECHOSLOVAKIA
In this area many of the small nations would individually be
unable to effectively resist aggression. Others not in this area
e.g. United Kingdom, France, vitally concerned in the situation
which would be created by further examples of force.

Imperative that these nations great and small should act together,
should any further act of force be attempted. The United Kingdom
could not view with indifference such a situation and would feel
compelled to take action should such circumstances arise. Must be
no misunderstanding but that the United Kingdom determined not to
allow the situation further to deteriorate. The United Kingdom
sincerely hope that wise counsels will prevail and that at long
last Europe will face the situation and arrive by peaceful means
at political and economic appeasement.

In view of the gravity of the situation cannot avoid taking every
practical step to meet the position should efforts towards
appeasement unhappily fail. To this end the United Kingdom
Government propose to take such steps as may become necessary to
organise the defence of the country. It will therefore introduce
legislation to enable compulsion to be utilised where necessary so
that the nation's wealth and man power can be directed to this
end. This would not include conscription for military service.

Note-It may be necessary to take as definite a line with regard to
Spanish situation as is taken with regard to Central Europe.

Owing to uncertainties of the position it is impossible to
forecast developments. United Kingdom Government is very
determined at the moment to maintain for the present policy of
non-intervention and will only be moved from this attitude if it
is established that Germans and Italians have been recently and
are continuing to pour further troops into Spain in contravention
of their undertakings in the Non-Intervention Committee and their
recent acceptance of British formula for withdrawal of volunteers.

BRUCE