Cablegram 32 19 May 1939,
Your 179. [1] Russian negotiations. In our view it is scarcely possible to exaggerate the importance to Australia and New Zealand of Japan remaining outside a military alliance with Germany and Italy. As distinct from the risk of her engaging immediately in major operations, we cannot escape the possibility or even the probability that if Japan joined with Germany and Italy in the event of war, she might participate on a limited scale but sufficient to be completely destructive of Australian and New Zealand trade, while at the same time running relatively little risk of intervention by the United States. She might do this by the very free use of raiders and Navy generally, while at the same time keeping clear of any territorial aggression.
As against that, Japan is heavily involved in Asia, and must be conscious that if she launched a major campaign of territorial aggression in the Pacific, America would probably intervene. It is therefore difficult to escape the view that it would pay her far better to remain neutral and rehabilitate her financial and general economic position out of any conflict. She could expect little gain either by purely naval and raiding activities or by major Navy and Army territorial campaign.
We recognise the relative weakness of the non-aggression bloc so far constituted without Russian co-operation. We find it difficult to see how Great Britain and France alone can be decisively effective in implementing their obligations to Eastern European countries without direct Russian assistance.
We feel that a complete breakdown of present Russian negotiations would jeopardise the structure so far built up, and divulge weaknesses which might precipitate aggression.
Our view, therefore, is an endorsement of the United Kingdom attempt to secure the maximum amount of co-operation with Russia in the European sphere, without for a moment overlooking the Japanese factor.
We agree that the strongest possible assurances should be given to Japan that any arrangement with Russia will not extend beyond Europe.
MENZIES
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1 Document 89.
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[AA: A981, GREAT BRITAIN 8B, iv]