The statement made by the British, "India would be far more reliable as a base for operations. Moreover the prospect of a settlement will be greatly enhanced by the disappearance of Gandhi, who had for years torpedoed every attempt at a settlement," is referencing the context of the Quit India Movement.

The Quit India Movement, also known as the August Movement, was a major civil disobedience movement launched in August 1942 by Mahatma Gandhi. It aimed to demand an end to British colonial rule in India. The British viewed Gandhi as a major obstacle to reaching a settlement because he had been actively involved in various movements for Indian independence, such as the Non-Cooperation Movement and the Civil Disobedience Movement.

In their statement, the British express their belief that India would be a more reliable base for their operations if Gandhi were no longer leading the movements. They also believe that the likelihood of reaching a settlement with the Indian people would be greatly increased with Gandhi`s disappearance because they viewed him as obstructing any attempts at a resolution.

Therefore, the correct answer is option 3, Quit India Movement.