46 Ballard to Department of External Affairs

Cablegram 113 BATAVIA, 4 May 1947, 2.40 p.m.

IMMEDIATE SECRET

Your telegram 89. [1] Negotiations.

Contact has now been made and preliminary discussions held with both Dutch and Indonesian Departments. Reception has been cordial in both quarters. A call was made on Van Mook who was quite amiable though no controversial issues were raised.

2. Conversation with the Dutch produced general information on the availability of goods here and an explanation of 28th January regulations [2] with particular reference to availability of native produced goods, such as kapok, subject to Dutch inspection on export. The Dutch statistical service has not yet been fully restored and only incomplete information on goods available is to be had. However, it is certain that satisfactory supplies of kapok and rubber are available, some timber and some sisal. Very poor transport between the interior and ports is another factor.

3. On the Indonesian side, it was put to Gani that the present situation was penalizing Australia but no other countries. It was emphasised that any request for lifting of the boycott should be made to the Australian Government in the first place and we think that this registered.

4. Gani said that Indonesians had three main aims: removal of Dutch interception of imports and exports; allocation to them of a percentage of the exchange resulting from sale of [3] goods; and transport of goods in ships owned or chartered by the Republic.

Subsequent conversation clarified that this last point did not include British or Australian ships calling freely at Republic ports.

Gani added that Indonesian labour organisations were pressing his government not to interfere with the boycott.

5. At this stage the problem was fully presented, with all elements of a deadlock, but we have hopes of a solution.

6. Suggestion first put forward by us is, briefly, to use Dutch ships to carry Dutch goods from Australia to Dutch ports and British ships to handle cargo to and from Republic ports. This appears acceptable to Gani and the Dutch reaction will be sought tomorrow. Our suggestion for modification of the blockade, so far as Australian trade is concerned, is for exchange of manifests covering both inward and outward cargoes and for mutual consent to carriage without interception of vessels.

7. We have made no promises of specific quantities from Australia but have given general assurances that goods will flow freely on a commercial basis when shipping is restored and that the Government will endeavour to facilitate purchase and export.

8. Further reports will follow after the next discussions with the Dutch.

1 Dispatched on 29 April, it made suggestions regarding the conduct of negotiations with the Dutch and Indonesians, but left precise procedure for Ballard to decide in consultation with Carne and Hetherington who had arrived at Batavia on 26 April.

(Richardson and Forsyth would not arrive until 5 and 8 May respectively.) Cablegram 89 also stated that it was essential as an outcome of the negotiations that Sjahrir send a message of appreciation to the Australian Government, including a draft statement which could be released to overcome any further shipping difficulties.

2 See Document 20, note 4.

3 A sign here indicates 'mutilated'.

[AA:A1838/278, 401/1/3/2, ii]