Reference: Your telegram No. WA-133 of January 24, 1955.?

Repeat London No. 152; Permdel No. 30.

I should like to expand some of the views expressed in my statement in the House of Commons yesterday about the situation in the Formosa Strait.⁷⁶ The passage in President Eisenhower's message to Congress about the series of recent Chinese Communist attacks in the Formosa Strait is quite striking.⁷⁷ The President quotes the Chinese Communist statements that their objective is the conquest of Formosa and his speech suggests that the United States authorities may agree that this is their objective. Our understanding is that the Chinese Communists lack the strength, particularly naval and air strength, successfully to invade Formosa. Further, we have little if any indication that the Chinese Communists are thinking in terms of direct hostilities with the United States which, of course, an attack on Formosa would entail. The immediate objective of the Chinese Communist operations in the Formosa Strait seems to be limited to the taking over of the coastal islands.

2. In my statement Tuesday, I made a distinction between the status of the coastal islands and that of Formosa and the Pescadores. From the terms of the defence treaty we gathered that defence arrangements could be made for Formosa and the Pescadores without the retention of outposts in the coastal islands.⁷⁸ Indeed, we have hoped that with the more formal guarantees of United States support in the treaty, the Nationalists would in time have come to regard these outposts as of minor importance in their defensive arrangements. Moreover, as some of these islands are so close to the Chinese coast, it obviously would be difficult to defend them locally and possibly the only effective method would be by retaliation against the Chinese mainland.

3. In this connection there is an obvious danger that in assisting the Nationalist forces to evacuate the Tachens, there may be some brush between United States and Chinese Communist forces. We sincerely hope that the United States Administration will do everything possible to play down such incidents if they occur.

4. To obtain a cease fire agreement it is, of course, necessary that the Chinese Communists should participate. The United States Government has made one important concession in the abandonment of any sponsorship of Nationalist claims to re-establish themselves on the mainland. They may well feel that it is now up to the Communist Chinese to make a concession. As President Eisenhower pointed out recently, although the allies of the United States have no doubt as to her defensive intentions, the Chinese Communists may well entertain other notions and the continued occupation of islands so close to her coast may cause the Chinese to doubt United States intentions. In order to attempt to overcome these suspicions, I consider it very desirable that the question of the coastal islands should be kept open. It is unlikely that the Chinese Communists will agree to cease fire discussions unless it is indicated to them in some fashion that the possession of the coastal islands is open to negotiation. It might be possible, for example, to suggest that some of these islands be de-militarized while remaining provisionally under Nationalist Administration.

5. I have emphasized the importance of securing participation by the Chinese Communists in cease fire discussions because I assume that the type of United Nations action that is envisaged is good offices or mediation action. I do not consider that the situation in Formosa at present lends itself to collective security action and we assume that this is not what the United States Administration has in mind.

6. I should be obliged if you would express these views to the State Department; preferably to the Under-Secretary of State or Mr. Murphy.

[L.B.] PEARSON