Reference your No.1003 [1] relative to Pacific bases.

1. I have submitted to Cabinet a report of your discussions in
Washington. [2] We are glad to note the good progress you have
made. It has emphasised the value of the direct approach to the
United States, particularly in view of the report, when we were in
London, that Mr. Byrnes had not reacted favourably to the approach
made to him at the time, in Paris. [3]

2. The following observations have been furnished by the Defence
Committee:-

'The Defence Committee recalled that the background against which
United States' request for bases in the Pacific had to be viewed
was indicated in the Prime Minister's memorandum relating to the
London Conference, and that facilities should be conceded to the
United States only in return for the acceptance of Defence
obligations under an agreed scheme.

On the other hand, it was clear, from recent cablegrams, that the
United States Government is disinclined to consider, at present,
the assumption of specific defence obligations concerning the
Southwest Pacific, and that an alternative plan, which could
properly be regarded as a regional arrangement and which might
lead to an informal agreement, was now proposed by the Minister
for External Affairs. The Committee observed that the proposed
informal agreement related to approval by the United States
Government to the principle of reciprocity in connection with the
use of bases to be specified in the Pacific, and to subsequent
discussion on the service level in relation to the necessary
details involved.

The Committee noted further, that the Minister for External
Affairs was keeping the United Kingdom Embassy and the New Zealand
Minister generally informed of the talks with the United States
Authorities, and that he had stated that the United Kingdom and
New Zealand would have to participate in the plan.

The Committee concluded that an informal agreement of the scope
envisaged in the cablegrams under review can be related to the
needs of the Empire strategy in the Pacific, and that in these
circumstances, it is to our advantage to secure such an
agreement.'

3. Cabinet approves in principle of the approach along the lines
that are being followed, and that a plan as suggested be developed
through staff conversations on the Service level, subject to later
agreement between the Governments concerned, including the
implications of military and financial commitments that may be
involved in regard to the bases under the control of the
Australian Government. [4]

4. To assist you in looking ahead to the ultimate machinery aspect
of the development of such a plan, I would recall the following
views expressed to the Prime Ministers' Conference in London:-

'(a) It is fundamental to future arrangements for co-operation in
Defence that appropriate machinery should be created to provide
for an effective voice by the Governments concerned in Policy and
in the higher control of planning on the official level.

(b) There should be assigned to the Australian Government
machinery, responsibility for the development of the defence
aspect of matters relating to Regional Security in the Pacific, in
which the United Kingdom, Australia and New Zealand are concerned,
and provision should be made for the representation of the United
Kingdom and New Zealand at the appropriate levels on such
machinery.

(c) Corresponding provision would also be necessary for Dominion
representation on any parallel machinery in the United Kingdom. On
the official level, the Australian Government contemplates the
strengthening of its Joint Service Staff in London, as a
counterpart to the Defence Committee in Australia, and to provide
an agency for advice to the Resident Minister in London on Defence
matters.

(d) Consideration is also being given to the Australian Joint
Service Staff requirements in Washington and at the seat of the
United Nations. Development in this direction would depend on any
arrangement reached with the United States and machinery which may
be created for the purposes of implementing any agreement.'

It was also pointed out to the Conference that:-

'Australia has had considerable experience of working with the
United States Forces in the set-up in the Southwest Pacific Area,
and though operational control was vested in the Commander-in-
Chief, Southwest Pacific Area, under his directive, a close link
was established between General MacArthur and the Australian
Government. The Americans worked through and were integrated into
the Australian Government Machinery in respect of their extensive
logistic requirements for which Australia was the source.'

5. The expansion of the Australian machinery to provide for United
Kingdom and Dominion representation on the various levels can also
readily provide for American representation for purposes of
consultation and co-operation. It is realised that it will be
necessary to hasten slowly and let the development of any joint
machinery evolve by circumstances rather than to endeavour to
force its growth. Nevertheless, for the staff conversations it
will be necessary to have some ad hoc arrangement, and it will
probably be found necessary later to have some established
machinery through which to work.

CHIFLEY