World leaders are to meet at a peace conference in Phasia, the most peaceful and happy country in the world ruled by the always smiling General Zarnoff. Gadget is sent to take care of security and finds nothing amiss but Fidgit and Didgit discover unhappiness is a crime and there are severe penalities for citizens who don't smile all the time. Add to that the fact that General is secretly stockpiling weapons and it's obvious to everyone except Gadget that something is rotten in Phasia.