120 Carne to Tonkin

Minute MELBOURNE, 18 July 1947

TRADE WITH N.E.I.

With reference to your Minute of 17th June, 1947 [1], 1 have to advise that I have seen Dr. Oesman on two occasions and have discussed with him in general terms the availability of goods which his Government requires.

It is, however, not possible to make much progress at this stage, as Dr. Oesman is very vague as to actual requirements (including types and quantities) and also as to the ultimate method of payment which will be adopted.

I explained to him that, with the exception of 'disposals' goods, none of the commodities concerned are the property of the Commonwealth Government and will, therefore, need to be bought on a commercial basis from manufacturers or merchants.

He appears to visualise some form of barter arrangement, whereby the Commonwealth Government would make available stocks of the required goods in return for supplies of sisal, kapok, etc. which could be brought back in the Dutch ships now loading Dutch-owned goods in Australia.

Some definite agreement along these lines would appear to be necessary, or else the grant of a loan to the Indonesian Government to enable credits to be set up against which they could purchase goods here. I do not know how far negotiations in this direction may have progressed at Canberra, but foresee some difficulties until the Interim Government is set up in Indonesia, or alternatively, until some arrangement is arrived at with the Dutch which would enable the Republican Government to trade direct with Australia. I gathered from Dr. Oesman that he was not interested in importing goods for the benefit of anybody but the Indonesians.

It would appear that some clarification of the political position will be required before any practical steps can be taken to assist Dr. Oesman to obtain his requirements. It would be obviously useless at this stage to introduce him to suppliers, or to attempt to earmark supplies in the hands of manufacturers for eventual shipment to Indonesia until it is known on what basis and to whom the goods are to be sold.

1 Document 87.

[AA:A609/1, 552/175/2]