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Wednesday, 25 August 1937

Senator Sir GEORGE PEARCE (Western Australia) (Minister for External Affairs) . - by leave - I last made a statement on the international situation to honorable senators on the 23rd June, and I think it would be opportune for me to review some of the more important developments which have occurred during the last two months. Ipropose to confine my remarks to the subject of nonintervention in Spain, the Sino-Japanese conflict and the position which has arisen as a result of the recommendations of the Palestine Royal Commission.

Honorable senators will recollect that it was alleged in a German official communique of the 19th June that a Spanish Government submarine had fired torpedoes at the cruiser Leipzig on the 15th and 18th June. The German Government asked that the four powers responsible for the naval patrol, Great Britain, Prance, Germany and Italy, should join in a. strong though " peaceful " demonstration before Valencia, that the Valencia Government should be required to surrender its submarines, which would be placed under neutral control, and should be threatened with reprisals in the event of further attack. The British and French Governments refused the German request for a demonstration,taking the, view that there should be a further investigation of the Leipzig incident. Germany and Italy forthwith assumed full freedom of action and withdrew their ships from the naval patrol scheme, though they did not withdraw from the Non-intervention Committee.

The British and. French Governments informed the Chairman's Sub-Committee of the Non-intervention Committee on the 29th June of their willingness to assume responsibility for the gap in the naval patrol scheme caused by the withdrawal of the German and Italian units, and of their willingness to consider the placing of neutral observers on their own patrol ships. These proposals were favorably considered by all members of the sub-committee except the German and Italian representatives who, although undertaking to submit the proposals to their governments, expressed the view that these would be found unacceptable because they offered no guarantees of impartiality. The German and Italian representatives also informed the subcommittee that all Germans and Italians employed on international duties as observers would be withdrawn, and the Portuguese Government intimated that it could no longer agree to the control of the Portuguese-Spanish frontier by British observers, until it had become clear whether a new scheme of naval patrol could be put into operation. .

The German and Italian representatives put forward counter-proposals at a meeting of the Chairman's SubCommittee on the 2nd July, which were briefly to the effect that all interested powers should agree to recognize the possession by both parties in the Spanish conflict of belligerent rights, that the international system of naval patrol should be abandoned, and that the rest of the present system of supervision by land and sea should be maintained. The Belgian, Czechoslovak, Swedish and Russian representatives expressed themselves in agreement with the AngloFrench proposals, and the sub-committee finally decided that the two sets of proposals should be communicated to all governments represented on the NonIntervention Committee, with a view to the situation being considered at a full meeting.

The Non-Intervention Committee met on the 9th July, and the fact became clear that neither of the two sets of proposals would be generally acceptable. The representatives of the small powers expressed the hope, however, that it would be possible to find some compromise which would enable the policy of non-intervention tobe continued, and it was proposed by the Netherlands representative that the British Government should be invited to make an attempt to reconcile the divergent views. This proposal was unanimously adopted by the committee, and the Chairman, Lord Plymouth, announced the willingness of the British Government to undertake the task of finding a solution of the -present difficulties in view of the gravity of the situation.

The British plan was published on the loth July and submitted to the NonIntervention Committee on the following day. Its principal features were the abolition of the naval patrol, the reinforcement of the land patrol, the supervision of the entry of aircraft into Spain,' the withdrawal of foreign volunteers, and, conditional on progress being made with this latter point, the recognition in a modified form of the belligerent rights of both parties.

The Chairman's Sub-Committee of the Non-Intervention Committee met on the 20th July to consider the new British plan. Disagreement, however, arose as to the question of priority between the withdrawal of volunteers and the recognition of belligerency. Lord Plymouth, ' supported by the French, Russian and other representatives, proposed that the sub-committee should address itself first to the three problems set out in paragraph !) of the British plan in the following order : First, the establishment of officers in Spanish ports; second, the withdrawal of foreign volunteers and the establishment of commissions in Spain to supervise such withdrawal; and, third, the conditions on which belligerent rights were to be granted.

This procedure was not acceptable to the Italian, German and Portuguese rep- resentatives who maintained that the discussion should follow the order of the British proposals as a whole, which would mean taking the question of belligerent rights before that of the withdrawal of volunteers. The Russian representative said that the whole British plan was dependent on the questions relating to the withdrawal of foreign volunteers from Spain, and that this should accordingly be the first matter considered by the subcommittee. It was found impossible, at this meeting, to agree upon the procedure to he adopted, and it was decided that the sub-committee should adjourn to enable representatives to consult their respective governments.

The British Government attempted to resolve the deadlock reached at the meeting of the sub-committee on the 20th July, by drawing up a list of questions based on the full British plan which it proposed to submit to the various governments in order to obtain a clear statement of their views for and against the various details. This . list was circulated in advance to members of the Nonintervention Committee, but when the chairman's sub-committee met again on the 26th July, it had before it a rival Italian list of questions. The sub-committee eventually decided to send the text of the British plan to the governments represented on the Non-intervention Committee with a covering note asking them to indicate in writing their views on each of the proposals in the plan, the replies to be framed on the assumption that acceptance of any of the proposals was conditional on agreement being reached on all other points. The replies of most of the governments were generally favorable to the principles of the British plan, but in the case of France, the Union of Socialist Soviet Republics, Germany and- Italy, -the comments attached to the proposals for the recognition of belligerency and the withdrawal of volunteers still revealed different points of view. The French Government insisted on the complete fulfilment of the conditions laid down in the original plan for the recognition- of belligerency. The Soviet Government stated that it could not consent to the linking of the question of the recognition of belligerency with that of the withdrawal of volunteers, and expressed the view that as soon as belligerent rights had been granted to them, the Spanish insurgents would cease to carry out their part of the undertaking. The Soviet Government would not be prepared to examine the question of belligerent rights until the complete evacuation of all foreign nationals from Spain had been effected. The German and Italian replies were to the effect that the recognition of belligerent rights should synchronise with the beginning of the process of the withdrawal of volunteers.

The chairman's sub-committee met on the 30th July, to consider these replies. Lord Plymouth, in his opening statement, indicated the serious disagreement which still existed between the Soviet Government's view on the one hand, and that of the German and Italian Governments on the other, as to the connexion between the withdrawal of volunteers and the recognition of belligerent rights. A fairly general agreement had been reached in respect of the other features of the scheme. The German representative strongly criticized the attitude of the Soviet Government, and said that the Soviet's refusal to consider the granting of belligerent rights had created an entirely new situation; the German Government must now reserve its decision. The Italian representative agreed with the German view, hut the Soviet representative refused to modify his opposition to the recognition of belligerency. The sub-committee finally agreed to adjourn, no date being fixed for its next meeting.

I hope that ultimately it will be possible for the Non-Intervention Committee to agree upon a common basis of action. No nation wishes the Spanish civil war to become a European war, but, unless there is sincere co-operation between the nations of Europe to make the policy of non-intervention in Spain a reality, the danger of a European war must inevitably increase. The British proposals in regard to non-intervention are designed to circumscribe the area of the Spanish conflict and to leave Spain to work out its own destiny.- The Commonwealth Government is entirely in agreement with these aims.

Before concluding my remarks on Spain, I would refer to one other aspect of the situation. During the last few weeks, there has been an increasing number of submarine attacks on shipping in the Mediterranean, and on the 18th August, the following official statement was issued by the British Government : -

His Majesty's Government has been seriously perturbed at the increasing number of attacks upon shipping which have occurred of late in Mediterranean waters, and at the extension of the area -in which these incidents are now taking place.

His Majesty's Government has issued instructions through the Admiralty that if any British merchant ship is attacked by a submarine without warning, His Majesty's ships are authorized to counter-attack the submarine.

The present situation in. North China is exceedingly dangerous. On the 7th July, fighting broke out at Loukouchiao, 20 miles from Peiping, between -troops belonging to the 29th Route Army and Japanese troops who were carrying out night -manoeuvres in the neighbourhood. The responsibility for the. origin of the outbreak remains obscure. The Chinese Central Government at Nanking has, from the outset, sought to effect a settlement direct with Tokyo, whereas Japan has been equally insistent, on negotiating only with the local authorities in *North China, that is to say, with the HopeiChahar Political Council. In a public declaration, on the 20th July, Marshal Chiang Kai-shek, the head of the Nanking Government, said that any settlement must respect the territorial integrity and the sovereign rights of China, that the status of the Hopei-Chahar Political Council must be defined by the Central Government, that outside interference must not be tolerated, and that he would not agree to the removal of officials in North China appointed by the Central Government. By the 11th August, the centre of the Sino- Japanese crisis had shifted to the Shanghai area. Owing to the deaths of two Japanese marines in a clash with Chinese troops outside the city boundary of Shanghai, the Japanese strengthened their forces in the neighbourhood by the despatch of considerable naval and military reinforcements.

Before the situation in North China became dangerous, it had been arranged that the Australian Trade Commissioner in China, Mr. V. G. Bowden, whose headquarters are in Shanghai, should visit Australiaon departmental business. It has now, however, been decided that he should, for the time being, remain in Shanghai in order to advise the Government immediately of any important developments, and to co-operate with the representatives of other powers in measures for the protection of Australian lives and property.

For the past twelve days, therehas been heavy fighting in the Shanghai area, where British subjects have large interests, and considerable damage has been caused to British property. The International Settlement was bombed by Chinese aeroplanes on the 14th August, resulting in the death of . 1.73 people and the wounding of 149. No British subjects were killed, but several are reported to have been injured. The British Government is determined to protect British lives, rights and property, and has intimated to the Japanese and Chinese Governments that it will hold them responsible for any damage to either life or property that may be suffered by British subjects as a result of action taken by Japanese or Chinese forces in the course of the present hostilities in China. The International Police Force has been mobilized, the British troops in Shanghai have been heavily reinforced, and there are now three battalions there. Five hundred additional American marines have arrived. By the 28th August, there will also be three battalions of French troops in Shanghai together with five armoured cars and tanks. It is considered that the defence position at the International Settlement is now satisfactory. Reports that have appeared in a section of the Australian press to the effect that the International Police Force has withdrawn from Shanghai and that the International Settlement is undefended, are, therefore, completely misleading.

By the 21st August, about 3,300 British subjects, nearly all of them women and children, had been evacuated from Shanghai. Another 450 British subjects left yesterday, but no arrangements are being made for further evacuation unless the situation deteriorates. It appears that the members of the British community are unwilling to contemplate any general evacuation or abandonment, of their interests. Chinese banks resumed restricted business on the 20th August and foreign banks normal business on the- 23rd August. There is no shortage of" food and fresh supplies are entering; Shanghai daily. Many large fires havestarted in the belligerent area, but there is none in the immediate neighbourhood of the International Settlement. Thelives of the inhabitants of the International Settlement are still endangered by stray shells and aircraft bombs, but both Japanese and Chinese aeroplanes appear to be avoiding any attack on theInternational Settlement.

Every government interested in the maintenance of peace in the Far East believes that it would bea disaster if Japan and China were to drift into a major war without making a seriouseffort to settle their differences by direct diplomatic negotiations. The British Government has, from the outset of the dispute, made it clear both in Tokyo and Nanking that it would do anything in its power to contribute to a peaceful solution. From the information in possession of the Commonwealth Government, it appears, however, that hostilities on a large scale are now inevitable, although there are elements on both sides which still favour a peaceful solution.

The Japanese already control a large portion of North China. The two main cities of Peipirig and Tientsin are in their possession, and Japanese military control has extended to the establishment of a censorship of all postal and telegraphic communications, which, meanwhile, remain suspended. Their various demands, which have brought relations almost to a breaking point on several occasions, have not been modified, and Chinese spokesmen have now announced that nothing loss than the withdrawal of all Japanese troops from NorthChina will restore amicable relations. On the other hand, the heavy reinforcements being poured into the Shanghai and Peiping areas by Japan indicate a determination to crush Chinese resistance by extreme measures. It is estimated that China has suffered some 4,000 casualties, and Japan about 500, in the fighting which has taken place up to the present.

The report of the royal commission which was appointed in August, 1936, to inquire into the underlying causes of the disturbances in Palestine and the manner in which the mandate was being implemented was published on the 8th July,- 1936. After considering several possible solutions, the commission recommended the partition of Palestine and the termination of the mandate. The British Government expressed its general agreement with the recommendations of the commission, and stated that it proposed to take the necessary steps to give effect to a scheme of partition.

A debate on the royal commission's report took place in the House of Commons on the 22nd July and a motion was moved on behalf of the Government asking the House to approve the Government's policy relating to partition. An amendment moved by Mr. Winston Churchill was carried, however, providing that the proposals of the royal commission should be brought before the League of Nations with the object of enabling the British Government, after an adequate inquiry, to present to Parliament a definite scheme, and take into full account all the recommendations of the commission. The British Government informed the Secretary-General of the League of Nations that it had communicated the report of the royal commission, and also its conclusions on that report, to the Permanent Mandates Commission. The British Government asked that matters relating to Palestine should be placed on the agenda for the September session of the League Council, and that the Mandates Commission should consider the documents relating to Palestine at an extraordinary session to begin on the 30th July. At the opening meeting of the Mandates Commission on that date, Mr. Ormsby-Gore, the Secretary of State for the Colonies, explained fully the recommendations of the royal commission. The Mandates Commission then proceeded to examine the annual reports submitted by the British Government on the administration of Palestine during 1935 and 1936. It also examined in detail the report of the royal commission.

The Permanent Mandates Commission has now prepared its report, which will be considered at the next session of the League Council, in September. The full text of the report has not yet been received in Australia, but cabled information indicates that- the commission considers the present mandate to be unworkable, and recommends that there should be a transitional period of political apprenticeship for Arabs and Jews. In the opinion of the commission, one solution would be to divide Palestine into cantons, or provinces, which would be self -governing in such matters as public works, health, education and general administration. The mandatory government would remain as a central, or federal, government, controlling such matters as foreign relations, defence and customs. An alternative solution suggested by the commission would be to set up two separate states - one Arab and the other Jewish - each of which should be administered under a separate mandate until it had proved its capacity for self-, government. The report also recommends a separate regime for the Holy Places, and concludes by paying a tribute to the disinterested efforts of Great Britain on behalf of both Arabs and Jews.

Honorable senators will agree that the problem of Palestine cannot be regarded as a purely local one. Palestine is of great strategical importance in the defence of the Suez Canal ; it is the outlet of the oil pipe line from Mosul; it is also one of the halting places on the international, air route to India, the Far East and Australia. A satisfactory solution of the problem of Palestine is, accordingly, a matter of great practical importance to Australia on account of its bearing on the safeguarding of this country's communications' with other 1)arts of the Empire.

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