MOST IMMEDIATE

Reparations from Japan. Your F.E.C. 41 and related telegrams.

1. We are unable to agree to the United States paper on advance
transfers of Japanese reparations, for the following reasons:-

(a) Relief of devastated areas is not a satisfactory basis for
reparations policy.

(b) We are opposed to decisions on reparations being rushed. The
matter is of great importance and requires full consideration
after complete examination of the facts and of the grounds upon
which claims should be based.

(c) It is essential that grounds of claims should include
compensation in respect of prisoners of war and internees.

(d) If priority deliveries are to be made they should be made in
respect of all Allied territories which were actually invaded by
Japan, including New Guinea, Papua and Nauru. Percentages to be
allotted to the Governments of such territories should be worked
out carefully in the F.E.C. Reparations Committee.

(e) The discretion accorded to the Supreme Commander in 1 (c) of
the U.S. paper is inappropriate. [1]

2. You should press our views on the above points particularly (a)
and (c). [2]