Your 350. 
We fully appreciate disadvantages of Kirby's absence from Java at a crucial time and are doing our best to enable him to return as soon as possible. Present arrangement is that he will fly back, leaving here 29th December. His return here was in large part to consult with us owing to continued delaying tactics of Dutch and lack of progress of Committee.
2. In the meantime please seek an early occasion to inform Noel- Baker of our concern at the steady deterioration of the Indonesian Republican Government's position. While we still hope that Committee of Good Offices will succeed in persuading both parties to agree to a settlement, we feel that Dutch tactics of attrition and delay have given rise to serious danger of complete breakdown in negotiations, or at best an unjust settlement which will leave Republican Government temporarily in a greatly weakened position but with strong feeling of resentment which will in due course lead to even worse conflicts. We have in mind especially the following examples of Dutch behaviour:
(1) Their delay in making known their attitude to the truce plan submitted by Committee of Good Offices to both parties, and their ultimate acceptance of it in principle but subject to such modifications as to change its nature completely.
(2) Their continued insistence on acceptance of the so-called 'Van Mook Line' as the line of demarcation, which was clearly shown by the Consular Commission to lie beyond the furthest points reached by the Netherlands advance at the 4th August.
(3) Their efforts to isolate the Republican Government by continuing to set up so-called 'Provisional Governments' in areas where they have regained control but where Republican authority was originally recognised under the Linggadjati Agreement.
3. If the Dutch are to continue to strengthen their hold in this manner until the Republican Government is no longer politically or economically capable of carrying on, we are concerned at the possible long-term consequences throughout South East Asia. An equitable settlement would no longer be possible and Committee of Good Offices would inevitably be placed in the position of having to report failure. The re-assumption by the Dutch of temporary military control over the whole of Java, Sumatra and Madura, could scarcely fail to give rise to a feeling of bitter disillusionment and resentment, finding expression in anti-foreign demonstrations through the entire area. Such a turn of events would be viewed in Australia in misgivings which we think would be shared by the United Kingdom authorities in Malaya.
4. In short, we feel that Indonesian nationalist aspirations have come so close to satisfaction that their complete frustration at this stage would end for the time being all hopes of stability and orderly progress in Southeast Asia. We are convinced that unless the Dutch are prepared now to show restraint, foresight and real statesmanship they will not only forfeit all Indonesian goodwill towards themselves and other western democratic peoples but will also be committing themselves to a military occupation of bitter intensity and indefinite duration. We have from time to time tried to point out to the Netherlands authorities that their as well as our best interests will in the long term be served by a policy which recognizes these considerations, and we earnestly hope that the United Kingdom Government will not lose any opportunity of putting the same views to the Netherlands Government.