137 Ballard to Department of External Affairs

Cablegram 243 BATAVIA, 22 July 1947, 6.30 p.m.

IMMEDIATE SECRET

Your telegram 198. [1]

I have conveyed your points to Schuurman and discussed the matter with him and Van Hoogstraten.

2. The latter reiterated his intention to get textiles to Indonesian areas and said that he thought that was the main consideration in everybody's mind. His accommodation at Batavia and Sourabaya was full and, therefore, he intended all the more to send goods direct to Probolinggo and Bangoewangi. The latest news was that these ports had been taken by the Dutch. He also still needed rice from these areas and for all these reasons could give assurance sought by your paragraph 4.

3. Feeling that this was an evasion of the real issue raised by your reference to implementation of agreement by both parties (your paragraph 3), I asked whether they considered the agreement of May 24th [2] as still in force or not. They would give no direct answer to this, though pressed. Their argument was that the question was irrelevant as the goods were going to those areas and that was the object of the agreement. It was pointed out that the Australian Government's undertaking was given on this basis and in contemplation of the agreement and that therefore the status of the agreement was vital.

4. Asked who would distribute the goods, they said the local authorities. On clarification, this meant that the local officials in reoccupied areas would not be disturbed unless they were unacceptable and such as remained would be subordinate to and under the authority of the newly appointed Commissioners for Civil Affairs (Recombas) who are described as highest bearers of civil authorities directly subordinate to the Governor-General and will co-operate with the military force.

5. Van Hoogstraten agreed to the proposed operation to be properly described as an administrative removal of rice from areas from time to time brought under Dutch control with a corresponding inward movement of textiles of a like administrative character.

6. A written reply to my memorandum [3] has been promised for tonight or tomorrow [4] and this is being sent in anticipatory comment and background.

1 Document 132.

2 The text of the Gani - Van Hoogstraten Agreement is given in Appendix II.

3 See Document 132, note 2.

4 Forwarded to Ballard later On 22 July, the promised written reply reaffirmed the intention of the NEI Government to honour its undertaking of 24 May to ship approximately two-thirds of goods held in Australia to Republican ports to be exchanged for rice and other goods. With regard to the undertaking of the Australian Government to exercise its good offices to secure the lifting of the shipping ban, the NEI Government took the view (expressed in paragraph 4 of the reply) that that undertaking could only be considered honoured when all goods held in Australia had been shipped to the NEI. The text of the reply was dispatched to Canberra by Ballard in cablegram 244 late on 22 July.

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