Indonesia, my telegram N.21. 
1. Information from Java and the Hague seem to contradict earlier hopes that a really satisfactory solution of the Indonesian problem was in sight.  you may already have received reports from Batavia regarding the situation there, but in case you have not, the following two paragraphs summarise the latest information received here from Java.
2. According to this, since Lord Inverchapel and Van Mook left Batavia the reactionary element among the Dutch has come into the open. While he was there Van Mook succeeded in keeping his reactionary colleagues out of sight, but the field of Dutch officials is now led by Dr. Blom and Count van Bylandt.  The British Representative in Batavia fears that Spoor must be included in this group because it is difficult to believe that had he wished he could not have prevented recent excesses of troops.
At the same time the D. E. Inheid group under Major Jiskoot is actively unfolding its Nazi principles.
3. According to the same source it is apparent that Sjahrir's mission to the interior has failed to placate the extremists, and in fact he may have lost ground. To Indonesian leaders the present Dutch line seems to justify all their earlier suspicions. They are becoming increasingly restive over the apparent inconclusiveness of the talks in the Hague, and they are not reassured by the way in which the Dutch radio is endeavouring to minimise their importance.
4. it appears from reports from the Hague that the Netherlands Government has no immediate intention of carrying out the proposal of issuing a declaration regarding the agreement with the Indonesians (see Dominions Office telegram D.359, paragraph 2 ) . An official statement released at the time of the departure of the Indonesian delegates from Holland  instead of placing the matter before Parliament 'in all its ramifications' and then evolving instructions for Van Mook. The statement adds that the Government's offer of 10th February of Dominion status with a later choice between [continuance of that status or independence still formed the basis of discussions. It stated that the conference at The Hague had made an important contribution to the problem that 'it was natural that all differences could not be bridged'.
5. According to remarks made privately this week by the Netherlands Minister for Foreign Affairs undue expectations had perhaps been aroused in regard to the conference, which was in fact essentially exploratory since Indonesian delegates had not full powers to speak for Sjahrir. The Minister gave the impression that the constitutional issue was now the main preoccupation of the Netherlands Government. If the opposition in Holland could accuse them of flouting the constitution they would rally the support of elements who other-wise would be prepared to accept the Government's decision as probably the only solution to a disagreeable situation.
6. The general impression given by these reports is that the Netherlands Government has receded from the determination which Schermerhorn  expressed in London of coming to an agreement with the Indonesians on the basis then under discussion, and is once again playing for time. It may be suspected that the court, instigated possibly by the Army, has intervened to prevent the Government from committing itself to an agreement which must seem to those in court circles as an abandonment of Dutch rights and privileges in Indonesia. It might also be that the Government has become alarmed at the effect on Dutch opinion of the propaganda being put out by the opposition that the present proposals would mean the loss to Holland of]  her Indonesian trade and her consequent reduction to an insignificant and impoverished country with catastrophic unemployment.