106 Ballard to Department of External Affairs
Cablegram 209 BATAVIA, 2 July 1947, 12.24 p.m.
My telegram 208. 
On the instructions of Netherlands Government I have the honour to convey to your Excellency the following observations concerning your answer of 27th June  to the aide-memoire of the Netherlands Government of 23rd of this month. 
Although on certain points full agreement [with the]  views of the Netherlands Government can be ascertained, on other points the measure of agreement is doubtful or considerably differs from the remainder.
On the aide-memoire, however, the Netherlands Government declared, as was stressed in verbal comment addressed to the Prime Minister of the Republic, that they consider ready acceptance of essential parts of their proposals necessary to terminate the present intolerable situation. In order to make this possible the main points have been summarised below without going into the question of whether and how far the agreement thereon was expressed in your letter of 27th June.
Therefore, those summaries will include subjects on which agreement of views were reached between the Netherlands Government and the Government of the Republic. They have, however, been formulated as a whole in order to enable you and your Government to determine by a clear statement for parties concerned and for the world at large how far agreement exists which is necessary for a good and reasonable implementation of the Linggadjati agreement.
1. First it should be beyond dispute that the maintenance of the Netherlands sovereignty and responsibility during the transition period is accepted unquestionably as a result thereof the de-jure authority representative of the Crown in the Federal Council (interim Government) as defined in [the Netherlands] proposals is agreed to. The same should apply to the composition of Federal Council representatives of several states.
2. Secondly it should be affirmed that foreign relations during the transition period shall be organised in conformity to proposals of the Commission-General of 27th May  and the Netherlands sovereignty mentioned before and that organisations or functions conflicting with those proposals shall be abolished.
3. Thirdly, there should remain no doubt that, save further discussions with representatives of East Indonesia and Borneo, the Federal organisations mentioned in the Netherlands proposals are adopted with the task and authority as described in those proposals. These organisations shall include the joint Council for Foreign Affairs, the Joint Commission for training and appointments for Foreign Service and the joint Directorate for Internal Security.
4. Fourthly, it should be made certain that restitution of estates and property to non-Indonesian owners in the Republican territory shall be effected as indicated in the proposals of the Commission- General.
5. Finally, with regard to internal security it should be clearly established that the proposed Federal Council as an interim Government must, without prejudice of primary responsibility of several states for law and order, bear ultimate responsibility [for] law and order and political freedom. For that purpose the said Council must have at its disposal a mixed constabulary in order that aid in restoring law and order wherever the authority or means of separate states should appear insufficient.
It must be obvious that points formulated under three, four and five are of greatest importance for the re-establishment of political stability which is indispensable as a basis for rehabilitation and credit of Indonesia and for the restoration of its contacts with the world.
The Netherlands Government will appreciate an answer on these points which leave no doubt concerning the measure of agreement reached.
They must furthermore urgently request that the Republican Government terminate, by unmistakable and public measures, certain conditions and actions which are at present the cause of tension and lack of trust. in this respect they have particularly in mind, as was said in verbal comment on the aide-memoire to Mr. Sjahrir:
1. A general cessation of hostilities including, construction of military works, the food blockade and destructive actions around the perimeters and action against parts of Indonesia outside the Republic.
2. The cessation of negotiations concerning separate foreign market and abolishment of organisations and functions which are contrary to what has been stated under two above.
3. The dissolution of organisations and discharge of functionaries who maintain protection authority of the Republic over parts of Indonesia outside her territory.
With regard to pressing circumstances the Netherlands Government have to request that points mentioned above be answered or implemented within a week and that execution of the Linggadjati agreement in case of acceptance, be instantly and actually initiated.
They undertake from their side to contribute their full share in the spirit of co-operation and trust which only can make such an execution possible.