His Majesty's Ambassador at Tokyo [1] has suggested that some
readjustment of our Far Eastern policy which takes account of
impact on Japan of recent developments in Europe is now urgently
necessary.

2. His Majesty's Ambassador has expressed his doubts whether the
aim of preventing Japan from being drawn into the war on the side
of her former Axis partners can be achieved without the adoption
of some more [positive] [2] methods than those followed hitherto.

He feels that the United States policy, designed so to wear down
Japanese resistance that the Army in Japan would be deposed from
its paramount position, is now in view of the French collapse
certain to be ineffective.

3. Sir Robert Craigie considers that the issue by the United
States Government of a declaration to the effect that they will
not tolerate any change in Territorial status quo in the Pacific
area would be valuable if it means more than a repetition of non-
aggression but that if an eventual head-on collision between the
United States and Japan is to be avoided, there should also be a
more positive side to the Anglo-American policy in the Far East.

Hence it is important to know, without delay:-

(1) Whether in the growing emergency in the Far East the United
States are prepared to co-ordinate policy and to act with us more
closely than in the past;

(2) If so, whether it is possible to expedite some common policy
capable of dealing with the German drive to secure Japan's
involvement in European, war.

As to (2), he considers our object should on no account be to
involve the United States in war in the Far East on our behalf
Such involvement would be miscarried [3] to our most vital
interests since it would divert the United States attention from
Europe and seriously diminish the extent of the United States
material assistance at a crucial point. On the contrary, he feels
that we should seek a plan which would lessen the chance of the
United States involvement in the Far East by offering some
alternative to that policy of stark aggression for which
extremists and younger officers in Japan are now pressing so
strongly.

4. He believes that if Great Britain and the United States were to
agree upon it promptly, an understanding might yet be reached with
Japan along the following lines-
(a) Joint assistance to Japan in bringing about peace with the
Chinese Government on the basis of restoration of Chinese
independence and integrity.

(b) Japan formally to undertake to remain neutral in the European
war and to respect the full territorial integrity not only of the
Netherlands East Indies, but also of British and French and
American possessions in the Pacific so long as the status quo of
these territories is preserved.

(c) United States and members of the British Commonwealth to give
Japan all financial and economic assistance and facilities in
their power both now and during the post war reconstruction
period.

(d) The Allied Governments to receive full guarantees against re-
export to enemy countries.

(e) The question of the future status of settlements and
concessions in China to be left in abeyance until the restoration
of peace in Europe and China.

5. On method of procedure he thinks that such proposals should
emanate from the Japanese themselves, and he has reason to believe
that this might be quickest if the Japanese intermediaries were to
be definitely assured in advance that a settlement on these lines
would be acceptable in principle both to the United Kingdom and
the United States Governments.

6. If, however, the United States answer to both questions in
paragraph 3 were to be negative, and if the United States
Government were unable to give us a promise of [active] support
even as regards the International Settlement at Shanghai, he feels
that best we could seek would be to gain time by concessions on
points not considered of capital importance.

7. A telegram has been sent to His Majesty's Ambassador at
Washington [4] suggesting that there seem to be two courses of
action open to the United States:-

(a) To increase their pressure either to the extent of a full
embargo or of the despatch of ships to Singapore in full
realization that this may result in war with Japan.

(b) To seek to wean Japan from aggression by a concrete offer on
the lines indicated by Sir Robert Craigie.

8. The United [Kingdom] Government appreciate that if the United
States of America were involved in war with Japan, she would be
unable to give the material assistance which we require in Europe
at the crucial moment (though it is not [5] known to what extent
this would apply to Fleet action only). If the United States
Government shares this view then we are anxious to know whether
they are prepared to give early and serious consideration to the
second alternative mentioned in paragraph 7.

9. While there is no doubt an element of bluff in the Japanese
attitude and while wiser elements in Japan cannot but be conscious
of what are adverse effects upon their economy of an extension of
the policy of aggression, we cannot ignore the possibility that
interventionists may before long gain complete control. If
anything can be done to prevent this, it must be done soon.

10. In the meantime, we are faced with the necessity of returning
a reply to the Japanese demands [6] which we understand have just
been presented through the Ambassador:-

(1) To withdraw our garrison from Shanghai;

(2) To close the Hong Kong frontier;

(3) To close the Burmese frontier to supplies to Chiang Kai Shek.

[7]

11. As to (1), we feel that as the United States are not in a
position to promise armed support, and as our own territories in
the Far East are now in some danger of attack, we may well desire
to withdraw troops to reinforce the garrisons of our colonies. We
should however prefer not to appear to be giving way to a Japanese
demand, and to take this step in return for definite undertakings
by Japanese possibly as a part of a general settlement on the
lines of paragraph 7 (b). It is questionable however whether we
could delay our reply for very long.

12. As to the second demand, we may be able to satisfy the
Japanese without in fact making any concession in principle. But
the third demand presents serious difficulties and is one which we
feel we should endeavour to resist. At the same time, we have to
recognize that the Japanese if they persist in their intention
have means to enforce it. The contemplated [8] situation is
further complicated by the fact that by far greater part of the
traffic to which objection is taken is United States. Put bluntly,
our problem is whether we are to incur both United States and
Chinese odium by stopping traffic or face the consequences of
refusal without the United States support.

13. His Majesty's Ambassador has been asked to put these
considerations before the United States Government at the earliest
possible moment, and to invite their observations. [9]

His Majesty's Ambassador has been authorized to add that if there
is war in the Far East we Shall resist to the best of our ability.

The slenderness of our resources must however already be apparent
to the United States Government and the effect upon our operations
in Europe of the severance of our communications, the loss of
supplies and possibly also of shipping would be obvious. If on the
other hand the United States Government feel able later [10] to
come to our assistance or to undertake a policy directed towards
the termination of hostilities between China and Japan, then we
should be prepared to offer our full contribution. If conciliation
is the alternative to be adopted, then it is obvious that the
weakness of our position in fighting Japan renders it undesirable
that we should take the initiative in the matter. [11]