I am directed by the High Commissioner to refer to your letter of
the 28th July (G.41/1/7) on the subject of the future
constitutional position of Ceylon.

2. The views of the Commonwealth Government upon the draft
agreement upon external relations and defence which it is proposed
to conclude with the new Ceylon Government were communicated to
the United Kingdom Government who desire to make the following
observations in reply:-

(a) As regards the Australian Government's doubts about setting
out obligations of this nature in regard to External Affairs in a
contract form, the United Kingdom Government, too, in general feel
that matters of the kind are best expressed more informally. The
case of Ceylon is, however, a very special one. As the Australian
Government know, the United Kingdom Government are anxious to get
substantial agreement on this and other matters before the new
Ceylon Government takes office in October and to have reasonable
assurance that the necessary safeguards will then be immediately
agreed to by the new Ceylon Government as a preliminary to any
legislation in the United Kingdom to amend the Ceylon
Constitution. Failing the immediate conclusion of such an
agreement between the United Kingdom and the new Ceylon
Government, it is doubtful how far progress can be made in the
United Kingdom Parliament with any legislative steps to confer on
Ceylon full responsibility status within the British Commonwealth.

(b) The procedure suggested by the Australian Government for a
London meeting after the new Ceylon Government has been formed
would lead to delay and would deprive the United Kingdom
Government of the assurance which they hope to obtain in advance
from Mr. Senanayake [1] that, if he is returned to power, he will
recommend the draft agreements on Defence and External Affairs to
his Cabinet for acceptance.

(c) The special procedure suggested by Australian Government for
dealing with External Affairs might prejudice the possibility of
obtaining advance acquiescence in the terms of the Defence
Agreement also to be entered into-Mr. Senanayake might take the
line that he would like the latter subject deferred to a
conference also.

(d) The draft agreement as between the United Kingdom and Ceylon
was purposely so worded as to involve no commitment, expressed or
implied, on the part of members of the British Commonwealth other
than the United Kingdom as to their relations with Ceylon in the
field of external affairs. The United Kingdom Government is at
present, and will remain until constitutional change is made,
responsible for Ceylon's external affairs, and for this reason the
United Kingdom Government feel that a bilateral agreement between
the United Kingdom and Ceylon before that responsibility is
surrendered is the appropriate method of procedure.

There is no reason to believe, however, that Ceylon would not be
ready, if that were the desire, to enter into similar
understandings with the other members of the British Commonwealth,
and the conclusion of a bilateral agreement would not in the view
of the United Kingdom Government preclude a later meeting on the
lines and for the purpose suggested by the Australian Government
if this should be agreeable to the other Commonwealth Governments
concerned.

3. In these circumstances the United Kingdom Government hopes that
in the light of the above comments the Australian Government will
see no objection to them proceeding with the draft Agreement on
external relations.

4. As regards the observations of the Australian Government on the
draft Defence Agreement the arguments for the insertion of some
time limit or provision for giving notice of termination were that
the permanent obligation on the Ceylon Government to permit the
United Kingdom Government to base naval, air and land forces in
Ceylon might be regarded as some derogation from full independence
and that there was a risk that the prospects of agreement might be
prejudiced if too much were asked of the Ceylon Government. As
against this the inclusion of such provisions might suggest that
Ceylon's obligations under the agreement were expected to be
brought to an end at some not necessarily too distant date and
there were in fact precedents for agreements of the nature
proposed e.g. the lease of bases to the United States Government
in Bermuda and the West Indies, which were not held to imply any
derogation from sovereignty. It was felt by United Kingdom
Ministers that these latter considerations had the greater weight
and it has therefore been agreed not to insert any time limit or
provision for termination in the draft agreement.

5. The High Commissioner has also been asked to inform the
Commonwealth Government that the draft agreements have been
considered by United Kingdom Ministers and have been agreed
subject to the following amendments:-

[matter omitted]

6. As indicated in paragraph 4 of the letter from this office of
the 22nd July it is desirable that the Governor [2], who has just
left for Ceylon, should be authorised to discuss the drafts in
confidence with Mr. Senanayake as soon as possible. The Government
of the Union of South Africa has indicated that they have no
observations to offer and no comments have been received from the
Governments of Canada or New Zealand. The United Kingdom
Government is anxious to be able to give the Governor within the
next fortnight the necessary authorisation to discuss the terms of
the draft agreement with Mr. Senanayake and if the Commonwealth
Government has any further comments the United Kingdom Government
would be glad to receive them as early as possible within that
period.