761.93/5–1347
The Consul General at Dairen (Benninghoff) to the Ambassador in China (Stuart)76
Sir: I have the honor to submit some comments and observations concerning Sino-Soviet relations regarding the Port Arthur Naval Base Area, as viewed from Dairen.*
Summary. As has been reported, this Consulate General has no detailed information obtained locally concerning current Sino-Soviet negotiations for the takeover of Dairen. The Yalta Agreement and the Sino-Soviet Treaty have given Russia a strong position in the railroad, port, civil administration and exercise of police power even in Dairen as long as “war with Japan” exists. This position is tantamount to extraterritoriality in the Naval Base Area. Economically, the Soviet Union is well entrenched. It is accordingly doubtful whether China is in a position to assume its Treaty status of equal partnership in the port and railroad, taking into account China’s political and economic difficulties, official corruption, and lack of trained personnel. In the present negotiations the Russians have therefore probably set conditions for the takeover on a “take it or leave it” basis, relying on the Treaty provisions for justification if China rejects the offer, and on the nature of such conditions, if they are accepted, to safeguard their future domination of the Area and of all Manchuria as well. The attitude of the Chinese Government is unknown in Dairen. If the conditions are accepted, Chinese sovereignty will be impaired, but the Chinese might be willing to accept them, perhaps slightly modified, for a foothold in Dairen. In any event, as long as Russia keeps a large garrison in the Area, controls the local administration and prevents the entry of Chinese troops or the effective exercise by China of police power, Chinese sovereinty within the Area will be purely nominal. End Summary.
[Here follows detailed report.]
Respectfully yours,