Your 164. 
1. Our guess had been, from the attitude of Dutch here, Dutch at Batavia, and reports from New York, that, for the time being, the decision had been taken there could be no further military moves.
2. Eaton has reported fully and conditions in Djokjakarta. are encouraging and the whole question of alleged breaches of 'cease fire' has been observed by other representatives who are now inclined to believe that the so-called mopping up operations of the Dutch is the chief cause.
3. We are at present giving thought to the line the Australian representative on the Committee of Three should take. We are fairly confident that we can sell any solution we think is just to the Indonesians, and recent Dutch attitude to us makes us believe that they too wish to find a solution through the Committee of Three.
4. The Cheribon Agreement approached independence of Indonesia in a roundabout way, first of all giving independence to a United States of Indonesia, and then forming a Netherlands-Indonesian union. In our view, this procedure toward independence is now outmoded. There must be independence for the Republic, that is, Java, Sumatra, and Madura, as a first initial step, association with other parts of Indonesia being left to subsequent arrangements.
5. Our second observation at this stage is that the Cheribon Agreement leaves unsolved all the major questions, for example, the economic arrangements, and that the Committee of Three must attempt to solve these questions if a solution is to be found.
6. For these reasons, it would seem futile to return to the Cheribon Agreement, and we ha[ve] in mind a combination of the Cheribon Agreement and the Philippines -United States Agreement.
 Under [the] latter, if you can obtain a text, you will see that complete independence is granted, subject to agreements between the Philippines and the United States contemplated in a protocol to the main agreement. In our view, if the Dutch can be persuaded to offer independence along the lines offered by the United States to the Philippines, and by the United Kingdom to India, Burma, and Ceylon, and if Indonesians, on the other hand, can be persuaded to offer subsequent agreements satisfactorily governing economic and administrative arrangements, there is every prospect of final agreement.
7. The location of the meetings of the Committee of Three is not yet decided.
New York has been suggested, but we think this unrealistic and would prefer Singapore. We are convinced also that our representative must go with concrete proposals generally acceptable to both parties.
8. I will be speaking informally and on a personal basis to Teppema along these lines and therefore there is no objection to you taking similar action at The Hague. Our impression is that the Dutch are now willing to believe that we are sincerely desirous of a satisfactory settlement and that, in arriving at this settlement, do not wish to prejudice their fundamental interests.
Proposals along the lines outlined above would satisfy the objective interests of both parties. It would be interesting to us if you could think aloud along these lines to whatever Dutch authorities are available to you and to report their reactions.
9. As regards procedure of the Committee, we had contemplated that, while the Committee was considering an overall draft agreement based on Cheribon and perhaps also on Philippines, members of their staff would discuss with Dutch and Indonesian representatives further agreements dealing with detailed economic and other relationships. We envisage also that the Committee of Three, after its first meeting, should meet subsequently from time to time until all agreements had not only been completed but carried into effect, thus maintaining the supervision of the Security Council over all negotiations and ensuring that both parties carry out the terms of the agreement.
10. The granting of immediate independence to the Republic will come to the Dutch as a new suggestion, as Cheribon contemplated, as indicated above, a more roundabout procedure. There can be little doubt, however, that the British technique, which has met with such success, can, with our influence, meet with equal success in respect of Indonesia, and that, in place of the Cheribon Agreement, there should be the immediate offer of independence, subject to certain subsequent agreements. We can sell this to the Indonesians and, from the Dutch point of view, there would be tremendous beneficial effects throughout the whole world.
11. You will realise this is the important stage of all negotiations we have initiated in this matter and therefore wish you to do everything possible to have accepted this general approach, maintaining always that events have proved the course we adopted to be the correct one and that, with Dutch co-operation, we can see the whole matter through to a successful and satisfactory conclusion.