121 Ballard to Department of External Affairs

1. This morning Gani and Tamzil (Vice-Minister for Foreign Affairs) called to see me and offered an account of the present situation.

2. The Republican position is that since Commission-General's note of May 27th [1] Republic has been under the threat of an ultimatum and this had limited the possibilities of what they could do. They knew the Dutch did not trust them, and for their part they needed guarantees from the Dutch before unilaterally withdrawing their troops from demarcation lines and stopping defensive measures.

This was the whole problem. If however the political air were cleared by a statement that little distance now separated the parties, and that both parties intended to settle remaining differences peacefully, and further negotiations would not be held under compulsive force of an ultimatum, the Republic could and would stop border incidents and defensive measures and withdraw troops to garrisons even before the Dutch did so. The Cabinet and Working Committee of the K.N.I.P. were of one mind on this. In fact they had agreed to 4 of the 5 demands made by the Dutch in their note of 29 June (my telegram 209 [2]), and by their proposal on the police force [3] (which follows in my telegram 232) had gone 90% of the way towards meeting the fifth Dutch demand. They therefore proposed the issue, jointly or separately, of statement given in my immediately following telegram. [4]

3. Draft statement and police proposal were handed to Dutch yesterday and Van Mook and advisers and Commission-General met 4 Republican ministers last night. This meeting was apparently unsatisfactory and rambling, and the Dutch revived all the old issues, and, Gani says, 'did not behave like gentlemen'. It was gathered, rather than said, that the proposals were unacceptable, and Van Mook said he had 'neither the will nor the authority' to continue negotiations. The statement and police proposal were telephoned to The Hague while Dutch Cabinet was in session, and the impression was given that a decision could be expected today.

4. Only development this morning has been that Secretary of Commission-General has been in touch with Republican ministers with a view to finding a way to continue negotiations. He can scarcely be considered an emissary of Van Mook, but some good may come of it.

5. I was asked whether the Republic could count on the good offices of Australian Government. Relying on your telegrams 151 and 188 [5], I said yes, pointing out that the offer was meant to be availed of by both sides.

6. They said that 'if the worst happened' it was their desire to seek international action. They were thinking of the International Court, the Security Council or an outside power but did not know how to set about it and asked my advice. They also sought advice on how the negotiations could be kept open. There was also some discussion about Article 17 (2) of Linggardjati arbitration). [6]

7. I told them I should have to communicate with you, and they asked to see me later on.

8. Glad of instructions.