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306 Noel-Baker to Australian Government

Cablegram 197 LONDON, 20 July 1948, 4.50 P.m.

SECRET

My telegram No.150, repeated New Zealand No.122. Japanese
Reparations.

The matter has now been considered by Ministers whose views were
as follows:2. As regards Australian plan, Ministers fully share
Commonwealth Government's anxiety for an early settlement of the
reparations problem having regard to the fact that every day of
continued stalemate in Far Eastern Commission:

(a) reduces chance of claimants receiving anything at all, and,
(b) increases risk that war potential will not be removed from
Japan. But in light of all the factors involved, Ministers felt
obliged to endorse expert advisers' doubts set out in my telegram
of 11th May, Number 138 [1], whether the bringing forward at this
stage of a comprehensive proposal on the lines suggested would, in
fact, lead to an early settlement. Not only would the attitude of
U.S.S.R. almost certainly be unfavourable, but chances of other
countries accepting any new approach on the lines contemplated,
whatever its intrinsic merits seem slight; in particular, the
United States Government would be unlikely, we feel, to support
any new plan greatly different from their own. The best course in
the circumstances seems rather to be to continue to seek a
settlement, as regards internal industrial assets only, by means
of some plan on the lines of that submitted by the United States
Government last November. 3. This, as you know, represented an
attempt to strike an average of various schedules of percentages
put forward by different countries in the course of discussion in
the Far Eastern Commission, and was supported by Australia,
Canada, New Zealand and China. Since then, we have heard at the
official level that the United States Government might be prepared
further to modify schedule of percentages if some slight amendment
would increase chances of the plan being accepted. The United
States Government had already stated in the Far Eastern Commission
that, if schedule proposed in November, 1947 were adopted United
States Government on its part would hold 18% out of its own 28%
share for distribution among 'dissatisfied' countries in
proportions to be agreed upon by them. Suggestion for further
modification now made is that the United States might reduce basic
Claim from 28% to 23%, thus making available an additional 5% to
increase basic figures for four 'dissatisfied' countries, viz
United Kingdom, India, Netherlands and France. This would make the
United States plan somewhat more attractive from the point of view
of the United Kingdom and those territories for whose interests we
speak, and there is some reason to suppose that France and the
Netherlands would be prepared to support it also.

4. Ministers have accordingly considered carefully, whether,
without great disadvantage to our own economy, and without
disappointing legitimate hopes of Burma and Colonies, we could
accept less than the 20% of industrial assets which we have
hitherto regarded as a minimum. In the result we have decided to
instruct the United Kingdom representatives in Washington to
inform the United States Government that the United Kingdom
Government would be prepared to accept United States plan subject
to modifications on lines indicated in paragraph 3 above, whereby
the United States would forgo 18 % Plus 5% out of her own share,
provided it is made clear to all concerned that the United Kingdom
Government's acceptance is entirely without prejudice to the
percentage of other Japanese assets to be allocated to the United
Kingdom in subsequent distributions of Japanese reparations. The
United Kingdom representative has been asked to inform his
Commonwealth colleagues of these instructions. [2]

1 Document 304.

2 External Affairs instructed the Embassy in Washington to
continue to sound out other FEC members about the Australian
proposal and to discuss it informally with US representatives. The
Embassy should also hold itself ready to introduce the proposal to
the Commission whenever the time seemed appropriate (see
memorandum to Washington dated 11 August 1948) It appears,
however, that the proposal was not submitted to the Commission.


[AA:A1838/2, 479/10, V]
Last Updated: 11 September 2013
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