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22.

(c) If (a) and (b) fail we should have to rely upon the

Fleet to prevent an actual occupation.

We do not consider that Turkey should be encouraged to take over the Mandate, since this would probably have serious repercussions in the Arab world - particularly in Iraq and Saudi Arabia and would be opposed by the Syrians themselves.

Indo-China and Oceania

23.

The principal French possessions in the Far East are Indo-China (population 23 millions), New Caledonia, the Loyalty Islands (to the north-east of Australia), the Society, Marquesas and numerous other islands in the Pacific. In addition,

the Anglo-French condominium of the New Hebrides lies to the north of New Caledonia.

24. The strategic importance of these possessions, apart from their use as raider bases, depends on the attitude of Japan. With a defeated France, they would be a tempting bait for the Japanese. From this point of view, the most importan is Indo-China,` A Japanese occupation of Indo- China would enable her to control Siam; would bring a Japanese base at Saigon within 640 sea miles of Singapore, and would provide air bases for operations against Malaya (less than 300 miles from Indo-China to Malaya at the nearest point). Indo-China is of economic importance as a source of tropical products and as a re-export base for non-ferrous metals from South China. The problem of controlling the trade from Indo-China will present considerable difficulty. Some control could be exercised through Chiang Kai Shek, who is dependent to some extent on imports through Burma; and also by denial of imports to Indo-China herself.

25.

New Caledonia and the Loyalty Islands in Japanese occupation would be a serious threat to Australian and New Zealand trade. The other islands in the Pacific are of negligible strategic value except possibly to provide bases for Japanese light craft.

26.

It is obviously most desirable to maintain the status quo in the Pacific. Any attempt by us to alter it by the occupation of one of the French possessions would lead to immediate difficulties with Japan.

27.

The best course would be to induce the United States to announce that she would treat any change in the status quo in the Far East and the Pacific as a casus belli. At the same time, we should attempt to persuade the local French administrations to continue their trade with us and to deny any facilities to enemy raiders if the latter should try to make use of them.

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