114 Ballard to Department of External Affairs

1. In spite of the narrowness of the gap between Dutch and Republican positions at the present time, there is still considerable uneasiness.

2. The Dutch are maintaining a very intransigent attitude and emphasising the necessity for acts showing the good faith of the other side before they will consider taking steps to get the interim government going.

3. Beel's statement [1] was followed by a broadcast by Van Mook on the same lines, and Soekarno replied in a broadcast on 11 July emphasising that 'all objections put forward by the Dutch can be eliminated and other things desired by them which may relieve the tension can be realised', but maintaining that 'the instrument for preservation of peace and order in Republican territories remains in hands of Republic' though under 'joint command together with other states of Indonesia and the Dutch'.

4. Republic has abolished Republican governors of areas outside Republic and Gani says he is going to lift food blockade at Medan, but apparently Van Mook insists on a unilateral withdrawal to garrisons of Indonesian forces, and 'stopping the shooting', which he says proceeds wholly from Indonesians, before establishment of interim government. Republican authorities are considering how far they can carry their people with them and how far they are justified taking the risk if they concede this. Sjarifoeddin is expected in Batavia today.

5. It is noteworthy that recent steps in negotiations have not been between the delegations, but between the N.E.I. government and the government of the Republic. It is not clear what inferences are to be drawn from this. Possibly it is mixed up with political considerations in Holland.