Repeated to Washington 12; London 12.

My telegram No. 60. [1] Your telegram No. 46. [2] According to
latest reports (which since they are reported to Naval Board
Melbourne no doubt you have seen them) although Japanese cruisers
at present in Gulf of Siam and naval force south of Hainan,
southward move which seemed probable at end of January does not
seem to have developed. Also there is no confirmation yet of
Japanese request for bases and I have seen report from Bangkok
denying any demand on Thai. Therefore I have not seen Vice
Minister for Foreign Affairs but am keeping in closest touch with
British Ambassador and will act in accordance with your
instruction should change in circumstances make action
appropriate.

Press and Government are playing up the idea that acceptance of
mediation means that France and Thai[land] have accepted and
submitted to Japan's leadership in East Asia and include Indo-
China and Thai[land] in the mutual co-prosperity sphere which
Japan is about to establish. [3]

Very desirable that all possible steps be taken to counteract this
endeavour to establish a fait accompli.

I have told the Minister for Foreign Affairs [4] that Australia is
not part of Asia and that Australia will not accept any new order
prescribed by another Power. Dutch Minister [5] made similar
statement on 1st February to Minister for Foreign Affairs.

Important to try to establish this attitude in Thai[land] and
Indo-China and to stimulate self-respect rather than self-
abasement.

In particular every effort should be made to prevent Japan's
securing either in terms or recitals of any agreement reached or
in any statement any reference to Japan's leadership in East Asia
or to future co-operation with Japan.

But what seems to me most important is a more general decision as
to what is to be the British policy with respect to South East
Asia. There is no doubt that acceptance of Japanese mediation has
greatly enhanced Japan's prestige. I fear that Japan's hold on
French Indo-China is very strong. Whilst this is a serious threat
to our position at Singapore, Japan's domination of Thai[land]
would be far more serious and would make the situation of
Singapore very precarious. Available resources in Army, Air and
above all material are very slender to deal with land based
attack. If worst happened we would have to hope for aid from the
United States. But I think we should decide where we must draw our
lines. If, as I believe, it is Thailand, I think we should adopt
following policy; we should do what we can to strengthen our
forces near Thai border, warn Thai Government against giving
footholds to Japan and offer them all aid in our power to resist
any attempt by Japan to take them by force. We should try to
disabuse Thai of any idea that they will escape by yielding to
Japan.

Having decided on our policy we should explain to the United
States Government fully and in advance what we are doing and
reasons for it and that we hope they will stand by us if we are
attacked.

It may be urged that such action will bring about Japanese attack
on us but in my opinion it is more likely to make Japan pause for
despite the outcry in their press I do not believe they want war
especially as it means American intervention, but seek rather to
advance peaceably by slow stages establishing each position before
they make the next move. Compare with Hitler in Europe.

Finally, I think we are more likely to secure United States
support if we make up our minds and tell them what we believe we
must do.

In making the above recommendations I realize the many other
preoccupations of the Government in London and Canberra, but I
fear we may have already missed the chance of persuading Indo-
China to stand firm and that we may see Thai[land] go the same way
unless we are resolute and prompt. As I assume Mr. Menzies [6]
will leave shortly for both Singapore and London present seems to
be the moment for considering and deciding our policy. [7]

LATHAM