FEC 109.

Reparations will be discussed at F.E.C. meeting on morning of 5th
May. Following is statement which the Ambassador proposes to make.

Please advise if this has concurrence or if alterations desired.

[1]

I should like to make a statement to the Commission of Australia's
[general] views on reparations.

For some weeks we have been carefully surveying all the
circumstances connected with this matter, and are now conclusive
in our opinion that the division of shares should be determined,
with other vital questions, in the Peace Settlement. Reparations
cannot be dealt with separately and apart from the overall aspects
that will govern the future relations of Nations in the Pacific.

The Peace Conference is the only Body which has the power to treat
the Japanese problem as a whole, and to allocate reparations in
such a way that they will form a logical part of the whole
settlement and contribute to the establishment of a just and
durable peace in the Pacific.

Australia does not challenge the right of the Far Eastern
Commission to determine the total volume of reparations from Japan
or the forms which those reparations should take, such as
industrial assets, gold and precious metals, current production or
other forms, [as part of the duty of] [2] the Commission to
determine what should be destroyed or removed from Japan in the
interests of security of the Allied Nations. On the contrary,
Australia has consistently stated that the Far Eastern Commission
should regard the fixing of these levels as one of its main tasks
and should undertake this work as speedily as possible.

Settlement of reparations has been long delayed and, candidly,
Australia feels that there is no evidence that agreement within
this Commission is very much closer than it was twelve months ago.

We are fully conscious of desire of devastated countries to
receive reparations assets as soon as possible, and I might add
that my own country is equally anxious to have its own claims
satisfied without delay. However, we feel that any further
progress that may be made within the Commission in the discussion
of shares will prove to be quite illusory, and that considerable
amount of time will be wasted covering ground that will have to be
traversed again in some other place. The only Body where we can
expect a final settlement, backed by our representatives at the
highest level and taking into account all the relevant factors, is
the Peace Conference. There is no reason why, with the probability
of an early Peace Conference this matter of reparations should not
be made the subject of consideration by that Body. Now that the
attention of the world powers in regard to European settlement has
been deferred, we can immediately engage our attention to
finalizing the peace settlement with Japan. [3]

[It is likely that a Peace Conference will be called at an early
date. The Australian Minister for External Affairs, Dr. Evatt,
stated in the House of Representatives on 26th February, 1947,
that 'the time is rapidly approaching when the F.E.C. work should
be vested in a Pacific Peace Conference which can deal as a whole
with the problem of the settlement with Japan'. The early calling
of a Conference will overcome some of the difficulties in the
F.E.C. which have made it unsatisfactory as a means of effective
participation in the control of Japan. It will put an end to
piece-meal settlements and the unsatisfactory position which has
developed owing to failure to agree on the basic policy as a whole
drafted in December 1945. With early calling of a Conference there
is no reason why this matter of reparations should not be made the
subject of consideration by that body.'] However, I should like to
emphasize that Australia also holds that, on legal grounds, the
Far Eastern Commission has no jurisdiction over the division and
allocation of reparations. The terms of reference of the Far
Eastern Commission empower it to formulate policies, principles,
and standards in conformity with which the fulfilment by Japan of
its obligations under the terms of surrender may be accomplished.

The only reference to reparations in the terms of surrender is
through Japan's acceptance of the Potsdam Declaration, which
stated that Japan shall be permitted to maintain such industries
as will sustain her economy and permit the exaction of just
reparations in kind but not those which would enable her to re-arm
for war'. It is clear from this that the Far Eastern Commission
can prescribe the total amount of reparations to be provided by
Japan, including the kinds of reparations and the manner in which
they are provided, but that the apportionment of these reparations
is not a function of the Far Eastern Commission. This conclusion
is strengthened if we take account of the fact that reparations is
not a reserved function in para III, 3 of the Commission's terms
of reference. It is reasonable to assume that it would have been
reserved if the allocation of reparations had been intended as an
F.E.C. function, because it is impossible to expect Sovereign
Governments to agree that the division of shares could be the
subject of unilateral decision by one Government.

As I have already indicated, the Australian Government does not
consider that the present discussions in the Reparations Committee
on the division of reparations shares are likely to be very
productive. The Reparations Committee has proposed that each
country should submit the percentage share of reparations,
determined on broad political lines, which it desires to receive
from industrial assets within Japan available for reparations. The
Australian Government has been greatly impressed by the views of
the United States Government, as expressed at several meetings of
the Reparations Committee, to the effect that the submission of a
figure for one country is of little value unless the percentages
for all other claimants are calculated in the same submission. For
example, it means very little for a country to say that it desires
15% of total reparations for itself unless it discloses what
proportion that percentage bears to allocations to every other
country. To meet this difficulty, the American Government has
suggested in the Reparations Committee that each country should
table a list of eleven percentages. However, there are two
objections to this:-

A political objection that a country may shrink from the odium
that might attend the giving of particular percentage to
particular countries and the practical difficulty that member
Governments have only scanty statistical data as to the losses and
contribution of some of the other Member Governments. For the
first reason, the American Government has expressed a reluctance
to table its own list of eleven percentages unless a substantial
number of other Governments are prepared to do likewise, for the
second reason, some other Governments feel they cannot prepare
lists for all countries. The Australian Government fully
appreciates and shares that reluctance.

We consider that the method proposed in the Reparations Committee
is too much in the nature of guess-work and a blind venture. The
original percentage tabled by each country for itself would be a
stab in the dark made in ignorance of many important
considerations. The next step after submission of such figures is
shrouded in mystery. If we assume, as it must be assumed, that
tables of eleven percentages will not be forthcoming, the
Commission will find itself in a blind alley and will once again
consume time discussing procedures, as we have done so often in
the past.

The Australian Government therefore proposes that there should be
a careful working out of a scheme of distribution based on
justice, and calculated on broad political lines, taking into
account the relative contribution of each nation to victory, and
its physical losses and damage and the personal injuries and loss
of life of its servicemen, internees, and other Nationals. [Such
personal losses should in our view be a prominent feature of a
reparations scheme. Japanese war crimes put this aspect in a
special category. There are arrangements for the punishment of war
crimes and there should also be special compensation to
Governments acting on behalf of victims and their relatives.] The
Australian Government proposes that a Tribunal of three
independent and preferably judicial persons be established to make
the necessary investigations, and that this tribunal report direct
to the Peace Conference, which should be summoned as soon as
possible. In this way we shall achieve what our American colleague
has so often and so rightly called for-a table of eleven
percentages, responsibly prepared and accompanied by complete
factual supporting material. Of course, the views of the tribunal
may not prove acceptable in their entirety-no bench can satisfy
all claimants. But the final adjustments and adoption of the
allocations should be made at the Peace Conference, which alone
has power to take account of all relevant factors and at which
will be assembled foreign ministers of all our countries armed
with plenipotentiary powers.

My Government believes that this offer[s] the only way to a speedy
and just settlement of reparations. The alternative course, which
is now before the Reparations Committee, is obscure, unlikely to
secure agreement, and certain to be prolonged. On the other hand,
the course, which I have just suggested is likely to produce a
definite result within a few months of such time, I hope, the
Peace Conference will be assembled and ready to ratify the
reparations agreement.

I do not expect Mr Chairman, that [all] my colleagues will be able
to express their Government's views on their statement today, and
I have no doubt that you will adjourn debate until a later
meeting. [4]