We have been considering in the light of the recent debate and resolutions in the Security Council and having regard to your latest telegrams and despatches what should now be our main objectives in Indonesia.
2. It is clear that the Dutch are doing everything they can to weaken the position of the Republic and to exclude it from their plans until these are so far advanced that the Republic can carry little weight in any future United States of Indonesia. To this end Dutch policy is apparently to delay a settlement with the Republic and meanwhile to regard the 'Renville' principles as having no binding effect until a settlement is reached.
3. We get the impression that the Dutch still have the initiative and that the Committee is placed in a position where it can do little but complain and protest about Dutch actions which, however much at variance with the spirit of the Renville principles are not easy to challenge as outright breaches of any agreement. It seems to us that the Committee should now be making every effort to seize the initiative. Even though the Australian amendment to strengthen the Committee's power  was not incorporated in the Security Council resolution, the Council has given the Committee a sufficiently clear lead to adopt a more active role, in particular by making proposals to both parties and by making them public if there is any tendency to stall. Above all the Committee has an open invitation to report back to the Security Council if there is no progress towards a settlement.
4. In our view the Committee should concentrate on the following:
(a) Political Agreement. The importance of an early agreement incorporating all the 'Renville' principles over-rides everything else. It must be the task of the Committee to bring both the parties together and to use every available means to persuade them, particularly the Dutch, to reach a settlement. Now that the Security Council debate is over the Dutch can have no excuse for delaying negotiations any longer. The main objective should be to tie the Dutch to a firm agreement which will limit their opportunities for weakening the Republic and from which any departure by the Dutch will stand as a manifest breach of faith.
(b) Trade. Important as it is that negotiations for a political settlement should be got under way at once and agreement reached as soon as possible, it is even more urgent that a firm arrangement be made in respect of trade. The value of Indonesian products in relieving world shortages and in particular their bearing on the current dollar shortage problem, make it of the utmost importance that trade should again begin to flow to and from Indonesia. At the same time any arrangements made for the resumption of normal trade with Indonesia must take full account of the position of the Republic. Whether or not the Dutch can be compelled to allow the Republicans to trade direct with countries abroad with their own goods and their own ports, there must at least be an early restoration of conditions under which the products of Republican territory can be disposed of and the Republic fully paid for them in money or in needed goods. We are ourselves considering approaching the Netherlands Government and proposing a resumption of trade between Indonesia and Australia on the basis of an agreement between the Republic, the Dutch and ourselves. 
We hope to let you have further information on this proposal and meanwhile it is confidential to yourself. Meanwhile the Committee should lose no opportunity of pressing for a resumption of internal trade and intercourse as contemplated under Article 6 of the truce agreement. 
(c) New States. While the action of the Dutch in sponsoring the creation of separate States in Republic territories under their control is clearly at variance with the 'Renville' principles merely to vilify the Dutch for breach of principle can serve only a limited purpose. The object should be to bind the Dutch to agreement to refrain from sponsoring new States until free plebiscites can be held under the supervision of the Committee.
This again brings out the importance of an early political agreement which should incidentally ensure that the Republicans are not hampered in any reasonable activity designed to persuade population in areas at present under Dutch control that their future is bound up in a single State covering Java, Sumatra and Madura.
(d) Provisional Government. We see no advantage to the Republicans in their hastening to join the new provisional Government. Whether the new Government is to be called 'provisional' or 'interim' seems to us to be of relatively minor importance; the fact remains that it will continue to be subject to Dutch veto until it is replaced by a sovereign federal Government. It may ultimately be to the advantage of the Republicans to join it, but not until they have ensured in their political agreement with the Dutch, that it will exercise greater powers than are at present contemplated for it. 5. We are far from pessimistic that the Republic is beyond help. Signs of independent action in East Indonesia, and the election of Wiranatakoesoema in West Java  (whether planned by the Dutch or not) suggest that Republican influences are still strong throughout Indonesia and will increase provided the immediate danger period can be overcome by satisfactory political and economic settlement. It is clear that the immediate need is for vigorous and energetic action by the Committee to bring these settlements about.