The news from Indo-China has grown steadily worse since the
Minister forwarded his despatch No. 81 of the 23rd December, 1946
[1], and the attitude of both the Viet-Namese and the French has
naturally hardened in proportion as the fighting has grown in
scale. What is most significant, and what is of particular
importance to ourselves, the Indo-Chinese affair is beginning to
have considerable repercussions internationally, particularly in
other Asiatic countries.

[matter omitted]

13. An official spokesman in Paris has expressed the opinion to
the British press here that if the trouble in Indo-China continues
it will have a disastrous effect on the British position in the
Far East as well as the French. In showing this anxiety to
generalise the conflict, the French have demonstrated their real
perplexity. No-one, except the unregenerate Right wing and the
young fire-eaters of the expeditionary force believes that a
second military conquest is a satisfactory solution. It is not
only charitable, but commonsense, to credit the present French
Government with the desire to reach a lasting settlement as soon
as possible. But they cannot now turn back from the course set by
events, and a purely French restoration of order must precede a
new political settlement. The sort of settlement that will then be
possible, however, is uncertain, and one feels that the French
Government is much less eager than in 1945 to shoulder the
responsibility for it by itself.

14. It would be interesting to know what part, if any, is being
played in this affair by the Kuomintang government in China. There
is reported to be a Viet-Nam group in Nanking which might serve as
a 'provisional government', although it is not likely that this
group could amount to very much unless the French suffered
military defeat. The Chinese government has all along sponsored
dissident Annamite groups in its territory, with a view to having
a strong card up its sleeve, rather than to playing it. The
original Viet-Minh front for instance was formed as a result of
Chinese pressure on exiled Annamite factions; but the front early
proved a disappointment to its sponsors by intriguing with the
Japanese and by throwing off Chinese leading-strings once it had
achieved power. The Nanking group is worrying the French, but with
its present internal troubles the Chinese government is not very
likely to enter the Indo-Chinese lists at this stage.

15. Other international repercussions, however, are already
evident.

16. The reaction of the Indian leaders to the question shows how
undesirable is the continuation of the present situation. Both
Pandit Nehru and Mr. Bose [2] have attacked French policy and made
very clear their opinion that the present conflict is part of the
Asiatic struggle for freedom from Western domination, and one
demanding racial solidarity on the part of all Asiatics.

17. This shows how easy it will be for the Indo-Chinese affair,
like the Indonesian, to have a permanent ill-effect on relations
generally between Asia and the Western world. It must be expected
that the approach to the question shown by Pandit Nehru will be
shared by all Asiatic leaders, and their attitude towards other
Western countries may easily become as bitter and impassioned as
that now displayed towards the European colonial powers.

18. This is the significant aspect of the problem to Australia.

The ultimate danger needs no emphasis, and it is of cardinal
importance, from our point of view, that the conflict in Viet-Nam
should be followed by a settlement which will avoid a heritage of
bitterness that might in time affect the only Western power which
cannot withdraw from the Eastern hemisphere, i.e. Australia
itself.