Your M. 40 of 26th June, Japan and Far Eastern position. [3]
Commonwealth Government has given prolonged consideration to the
questions in issue, and is in full agreement with the conclusion
of the British Ambassador, Tokyo [4], that a readjustment of Far
Eastern policy is urgently necessary.

From reports and information from various quarters, it seems to us
that Japan will take advantage of the present European situation
to further her extreme interests, even to the extent of war with
the Empire, if immediate steps are not taken to meet the new
position.

To our mind it is imperative at the outset to have a clear
indication of United States policy, how far she is prepared to act
beyond her recent negative policy, and especially her intentions
regarding future disposition of Fleet.

From point of view of holding our position in Pacific and Far
East, the continued maintenance of Fleet on Hawaii is essential,
and so long as the British Fleet, the main defence of America on
the Atlantic, remains undefeated, there would seem no reason
outside American sentiment for it to be transferred to Atlantic.

We consider the present three Japanese demands do not in
themselves vitally affect future or present security of Empire.

The French acceptance of similar demands has further strengthened
the Japanese position, and we can only arrive at the conclusion
that if the United States is not prepared to give the most
complete support, these demands should be conceded. The
alternative is a grave risk of war, against Japan, which cannot be
contemplated in our present position.

As to the suggestions of Craigie for a general settlement the
bases of negotiation so far as they visualise the complete
independence and integrity of China appear to us as quite
impossible of acceptance by Japan. They would put her in a worse
position than at commencement of hostilities in 1937.

Further, we cannot believe that Japan would herself make an
approach to the United States of America and United Kingdom on
such a basis.

In this respect, it is strongly urged that if there is to be
mediation, the original proposal should go to the limit of
concessions at the outset, rather than to raise the stakes when it
is too late.

At the same time, we see virtue in this proposal of mediation for
the termination of the Sino-Japanese war only if the specific
object and result is a tripartite declaration regarding the status
quo in the Western Pacific, and guarantees as to respective
territorial integrity in designated spheres, to which the U.S.A.

must be definitely committed.

This latter may in fact prove difficult to obtain but failing it,
the United Kingdom herself should not offer to mediate.

Generally, we agree with view that it would be contrary to
successful prosecution of war for the U.S.A. to become involved in
war in the Pacific, and policy therefore must be based on
realities of situation and common sense that we should not at
moment take such action or by omission of reasonable action as
will cause Japan to become involved in this war. [5]

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