We have been informed from Batavia that the local Administration has agreed to granting visas to two Commercial Attaches to the Consulate-General. Carne and Hetherington will reach Batavia Tuesday or Wednesday. When visas are actually issued, we will send messages to Batavia and to The Hague acknowledging this arrangement, pointing out that the Supply and Commerce Officers will be able to carry forward discussions with a view to interim arrangements for the commencement of trade and that, according to how discussions develop, we may wish to send forward a financial adviser and a representative from this Department. It is still desired however, that you and Ballard persuade both authorities to permit immediately a financial adviser to visit Batavia, as it is he who may supply the solution to the present problem pending agreement between Dutch and Indonesians. For example, he may be able to suggest means of financing by credit or by payment into a frozen trust account until such time as Dutch and Indonesians determine title of goods. You may use this suggestion as an example advancing the reasons why we particularly desire a third visa for a financial adviser.
2. One condition is imposed that the officials approach the Indonesians through the Dutch and do not visit the interior without Dutch approval. It is not proposed to acknowledge this condition, as visas are given for members of the staff of the Consul-General and he will determine whether invitations to visit the interior should or should not be accepted. We have always maintained a direct link with Indonesian Cabinet Ministers and will continue to do so, as in fact do the British whose Consul- General was recently invited to visit the interior.
3. While these officials are instructed to make no commitments and merely to explore possibilities of trade, you will appreciate the importance of their visit leading to some firm arrangement. Van Mook may be unsympathetic and may not co-operate in seeking an interim arrangement unless he is instructed from The Hague. In our view, it should be possible to arrange the physical shipment of supplies in existence in Indonesia with the concurrence both of Dutch and Indonesians and thereby removing the ban on Dutch shipping from Australia without in any way interfering with Dutch- Indonesian negotiations. The goods are there, we desire them, we have goods to send which both Dutch and Indonesians desire, and local disputes over title need not necessarily prevent the exchange of these goods.
4. It is not proposed that the question of diplomatic representation should be discussed immediately, either with Dutch or Indonesians. We would propose in a sense using Dutch desire not to raise the question and Indonesian desire to raise the question as bargaining position by which to achieve some practical arrangement immediately on trade. That is, if Van Mook is completely uncooperative in respect to trading arrangements, we should be forced to deal direct with Indonesians which would involve arrangements on representation. Equally, if Indonesians do not co-operate in arriving at an interim arrangement which would help us to get rid, once and for all, of shipping difficulties, we would be reluctant to make any move suggesting their recognition.
5. If representation is discussed with Indonesians formally or privately, we propose making it clear that, even as an interim arrangement we are opposed to idea of any Australian acting as their agent. We would be prepared, if the Dutch were willing, to receive an Indonesian representative, either attached to the Dutch mission in Australia or separately, and we are equally prepared to send to the Indonesian capital an officer of the Consulate-General whom we would regard as our representative to the Indonesians.
6. The overriding necessity is to arrive at an immediate trading arrangement which would completely remove the political difficulties associated with our relations with N.E.I. These have during the past year, strained Australian-Dutch relations, in spite of the fact that, in every other matter and in particular in the policies the two Governments follow in international affairs and at international conferences, the two Governments have always worked closely together and regard each other as having common purposes and most friendly relations.