Japanese Peace Settlement and Pacific Pact
The problems of a Japanese peace settlement and a Pacific pact are becoming increasingly intertwined.

2. Between the end of 1947 and mid-1950 the Americans showed little inclination to be involved in a Japanese peace settlement or a Pacific pact. Lately, however, and more particularly since Australian/U.S. co-operation in the Korean war, the Americans have made positive steps towards a Japanese peace settlement and they have shown themselves, at least on an official level, not unsympathetic towards a Pacific pact.

3. The British Commonwealth in May in London recognised the nature of the double-headed penny - security, namely, security of Japan against Communist aggression and the security of the democratic countries against a resurgence of a militaristic Japan. The Americans have also recognised the nature of the security problem and have not been altogether scornful of Australia's fears of a Japanese revival.

4. There seems to be little chance of a Pacific pact in isolation but in conjunction with a Japanese peace settlement there may be a distinct chance.

5. Consideration might therefore be given to developing the idea behind the proposed U.S./Japan bilateral defence pact [and suggesting][2] U.S./Australian, United Kingdom, New Zealand, Philippines pact. The Americans have said that Australia should not worry because U.S. would automatically and naturally come to their aid if attacked. Why should they not then be willing to say so in black and white?
6. There would thus be the following three major international agreements negotiated separately and signed at the same time:-

(a) Japanese peace treaty - multilateral treaty between Japan and all possible FEC[3] nations based on U.S. seven points[4] and British Commonwealth Working Party report.

(b) U.S./Japan bilateral defence agreement in which U.S. would guarantee Japan against Communist aggression.

(c) U.N. regional pact for Pacific between U.S., Australia, U.K., New Zealand and Philippines initially and perhaps others in which U.S. would guarantee these nations against Japanese aggression.