INDONESIA In view of long series of cables from Australia including Macmahon Ball's reports and conversation with Makin, I have reached following conclusions.
The situation appears to be worsening following failure of conference  with probability of very serious disorders involving heavy British commitment to use of force including Japanese Forces to suppress nationalists and consequent legacy of hatred throughout Southeast Asia with undesirable reaction upon Australia and difficulties for future development of our policies of security and welfare in that region.
Australia is the main outside power with direct interest in the region and is bound in its owed interest to take some initiative.
Fact that initiative may not be successful does not warrant us in not taking it. Australia is now the only power likely to act. You will have noted Macmahon Ball recommends third-party intervention.
United States wants to keep out. Public statement along lines of immediately following telegram  including statement our interest and concrete proposals is designed to avert further bloodshed and incalculable evils of prolonged guerrilla warfare.
If statement is agreed on between us Dutch could be told we see proposed action as means of saving lives of prisoners of war and internees and also of preserving Dutch sovereignty short of a war of suppression which would hopelessly prejudice Dutch in eyes of democracies. United Kingdom clearly wishes early solution without further commitment of forces and to assist them we might offer to continue in Borneo for further limited period. One important question is whether we could provide Australian force for limited task mentioned in proposals in following telegram. This is an important feature of proposals and if adopted there must be no doubt as to it being carried out. Undertaking by United Kingdom to supply adequate shipping for removal of Japanese and prisoners and internees would be essential.
I understand public feeling in Australia would approve proposals of this kind.
These are now all matters of great urgency. Please telegraph your views. I regard matter as of extreme delicacy and to be completely agreed between us before any mention elsewhere.