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 C. That in case of overt aggression, Chinese Nationalist forces would be employed as desirable and feasible in military operations in Southeast Asia, Korea, or China proper.

D. The proposed policy with reference to the Malay States and Indonesia is that appropriate military action should be taken to defend them, thereby in effect placing them within the offshore island defense chain. It is contemplated that in case the three mainland States fall, the British ground forces in Malaya, combined with British and United States naval and air power, could defend these areas.

E. With respect to the threat of Communist subversion of the Southeast Asian States, the paper contemplates minor changes, such as:


 * . Strengthen psychological activities


 * . Encourage trade and cooperation with Western countries


 * . Strengthen covert operations


 * . Promote the co-ordinated defense of the area.

No increase is contemplated in our economic and technical assistance programs, or military aid programs. Minor recognition is given to the danger that France may not be willing much longer to carry the burden in Indochina, but the paper provides only for consultation with the French and British and opposition to French withdrawal in this event, A major strengthening of our policy in Indonesia is contemplated by a provision that in case of seizure or attempted seizure of power by internal Communist action, we would take appropriate military action consistent with our world-wide commitments to prevent Communist control of the area. Rh