52 Ballard to Department of External Affairs

Cablegram 125 BATAVIA, 10 May 1947, 3.55 p.m.

MOST IMMEDIATE SECRET

We talked to Gani yesterday evening. He had, meanwhile, learned Sjahrir's views reported in my telegram 124. [1] He had also been in touch with Van Hoogstraten and said that the latter was agreeable to a joint discussion with us. This has been arranged for this evening, Saturday.

2. Gani is confident of an arrangement by which two-thirds of the Dutch-owned goods in Australia will be transported to Cheribon in non-Dutch shipping under charter to the Republic, one-third to Batavia in Dutch shipping. If this is agreed a joint Dutch- Indonesian telegram would be sent to the Australian Government requesting all efforts to get ships loaded.

3. Talks with the Dutch, however, make us much less optimistic than Gani of the acceptance of this in entirety especially as regards entry of non-Dutch ships to ports closed to the Dutch.

4. With reference to my telegram 124, paragraph 2, the joint official message would possibly suffice to get the shipping ban lifted as it would be published and also probably otherwise known to the Waterside Workers. If it seems necessary we will pursue the possibility of an unofficial appeal to them by Republican authorities to follow the official cable. Glad of confirmation of this procedure.

5. In the event of the successful outcome of talk[s] along the lines of paragraph (1) and (2) above, would you want simultaneous publication arranged? 6. We are aware that the proposals above do not cover the whole assignment but our assessment of the position here is that the question of resumption of trade generally is better left until shipping ban, at present on Dutch goods in Australia, is lifted.

Once ships begin moving we are hopeful of better atmosphere and think movement of goods would tend to develop beyond present limited objective in paragraph 2 above.

7. We will explore the possibility of agreement to exports going out to Australia on return voyages of the particular ships involved in the proposals above. This may be most difficult with the possible exception of native produce (kapok and perhaps some rubber) but we will try to persuade the Dutch to release some estate produce (including sisal if possible) on blocked account pending solution to Dutch-Indonesian impasse concerning proceeds or on the lines of my telegram 118. [2]

8. We do not propose, however, to press aimlessly to the point of seriously prejudicing the proposed arrangement in paragraph 2. If ships could lift cargoes from say Singapore or Manila they would not have to make return voyage to Australia empty.

9. You are aware that the question of resumption of Australian trade generally with the whole of this area is only a small part of the major issue of trade between this area and the world as a whole (see also my telegram 123 [3], paragraph 2). This involves settlement of Dutch-Indonesian dispute on proceeds and administration. The Dutch want one pool for proceeds and single administration both controlled jointly. The Indonesians want separate arrangements in both cases, only high policy to be determined jointly.

1 Document 50.

2 Dispatched on 6 May as a follow up to Document 46, it summarised possible financial arrangements for Indonesian trade.

3 Document 49.

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