Pacific Bases

Since subject of future control of Pacific bases was first under
consideration situation has altered in following respects:

(a) With United States firmly established in former Japanese
Mandates and with every prospect of international agreement to
deprive Japan of other island possessions, importance of regional
defence arrangement covering South Pacific can be said to have
diminished.

(b) You will recall that we were afraid earlier that United States
and United Kingdom might be contemplating bargain involving United
States support on question of Anglo-Egyptian Treaty and on use of
facilities in Iceland and Azores, in return for United Kingdom
grant of sovereignty over certain Pacific Islands. Possibility of
any arrangement so prejudicial to our interests has now
disappeared.

(c) Formerly sweeping United States demands for sovereignty have
now moderated.

2. It would seem to me, therefore, that we can now agree in
general with United Kingdom counter proposals to the United
States, in which the New Zealand Government concurs. It is to our
advantage to retain United States interest even on a commercial
basis in Canton and Christmas Islands, particularly if we can
secure right to use facilities in Samoa and provided our civil
aviation rights are fully safeguarded.

3. In this connection we should be taking up with United Kingdom
question of our increasingly important interests in South East
Asia, and in particular in the area immediately north of the line
Cocos-Christmas-Timor. We have not yet raised with the United
Kingdom Government the question of our security interests in
British territories in this area. You may feel that the present is
not an opportune time and that we should await better relations
with the Dutch in order to come to some form of understanding with
them regarding Dutch Timor and Dutch New Guinea, but we might
mention to the United Kingdom Government, in informing them of our
concurrence in their proposed reply to the United States, that in
the near future we wish to take up with them similar questions
involving the South East Asia area.