108 Eaton to Evatt

Ministerial Dispatch 6/1948 BATAVIA, 19 March 1948

SECRET

I have the honour to refer to my previous Despatch. [1] I saw Dr.

Hatta privately on 13th March, and he informed me confidentially that his talks with the Lieutenant Governor-General were confined to matters concerning a joint new currency, the future of the Republican armed forces, Republican overseas representation and sovereignty. Memoranda on these subjects will be submitted through the Dutch Delegation at the forthcoming talks with the Republicans. Participation of the Republic in the new Provisional Federal Government was not discussed. Dr. Hatta appears determined that the Committee of Good Offices will not be bypassed in any settlement move by the Dutch. This information was more or less covered by a cabled report by Critchley. [2]

2. The American representative on the Committee of Good Offices, Mr. Coert Dubois, told me privately that he had done all he could to persuade Dr. Hatta to have the Republican Government join up with the Provisional Federal Government. Mr. Dubois, I think, is inclined to lean towards the Dutch point of view.

3. The Representative Council of East Sumatra was inaugurated at Medan on 15th March, 1948, in the presence of the Lieutenant Governor-General and military and civil officials from various parts of the archipelago. From well-informed sources I have the information that all 'is not too good' in East Sumatra and that the 'Republican feeling' is still very strong. I hope in the near future to obtain sufficient details for a full report.

4. It seems quite probable that East Sumatra in the future will coincide with developments in East Indonesia and West Java and that Republican sympathy will bubble to the surface. With regard to East Java and South Sumatra, Republican sympathy appears at the present time too strong for firm endeavours to be made by the Dutch to establish new States in these areas.

5. In spite of the previous paragraph the Dutch, backed by their +100,000 army, are in a strong position compared to the Republic, who on their side have only a weakly empowered Committee of Good Offices. There is no doubt of the hatred of the Dutch towards the Republic for having forced the present political issue or the antagonistic feelings of the Dutch towards Republican sympathisers. From this can be seen how difficult the future talks will be.

6. The Dutch seem determined to remain, if they can, in control, and to get what they can out of Indonesia for an X number of years, and at the same time to give some measure of self- Government and independence to Indonesia, and will go to great lengths to obtain American and British backing for this policy.

7. In connection with the previous paragraph it is of interest to note the following press release:

'BATAVIA, March 15. According to the N.E.I. Foreign Exchange Institute, it is possible to transfer, after deducting the necessary taxes, profits made by estates or concerns working in this country to the country of origin of the invested capital.

It should be remarked that profits which can be considered as not being made under normal conditions, do not fall under this category. Furthermore, transfers are permitted only to those estates or concerns which had made such transfers before 1st January 1940.

Applications for the transfer of profits made in the book years opened on or after 1st August 1946 can be submitted to the Institute, together with a copy of the Balance Sheet and Profit and Loss Account and all supporting documents.'

8. With regard to the future political negotiations in Indonesia, a fact which should not be lost sight of is the alteration of the Dutch Constitution to enable ratification of any agreement reached on the 'Renville' principles. Schuurman, the Head of the Far Eastern Office, told me recently before he left for The Hague that the alteration of the Dutch Constitution would prove most difficult and required a two-thirds majority of Parliament. He seemed to think that the only solution would be the formation of a National Coalition Government after the elections in Holland in June. A bitter fight is expected over the Indonesian question.

9. The position regarding Raden Abdulkadir, the Deputy Lieutenant Governor-General, is interesting and it may be a fact that he has now outlived his usefulness to the Dutch. His appointment as Head of the Dutch Delegation has been obviously nominal only.

Abdulkadir informed me a few days ago that he needed a rest but that of course it would not be possible for him to take a long holiday as it was most important for him, an Indonesian, to be part of the Dutch Delegation for language and general understanding of the Indonesian problem.

10. Without any prompting, Abdulkadir also told me that he had come to an understanding with Dr. Hatta, but during my conversation with Dr. Hatta. he did not confirm this, except to state that any understanding may have been with regard to a minor matter.

11. There are strong rumours that the Deputy Lieutenant Governor- General may be packed off to Bangkok as Dutch Ambassador.

12. The Doyen of the Consular Corps in Batavia, Mr. Tsiang the Chinese Consul-General, at the request of the Consular Corps interviewed the Head of the Far Eastern Office to ask the reason for the Consular Corps not being invited to the inauguration function of the Provisional Federal Government. Schuurman informed our Doyen that when the matter first came to his notice he, with Dr. van Vredenburch, went to see the Lieutenant Governor-General and after an hour's argument in favour of the Consular Corps being invited, Dr. van Mook's opinion that the occasion was not significant enough still remained, and he proved too obstinate to change his mind.

13. Last night I dined with the British Consul-General and Mr.

Scrivener, who is to be the Political Advisor to the Governor- General in Malaya. Scrivener, who is on a short visit to Batavia, seems to be an open minded type of man, is looking forward to his task in Singapore and hopes to visit Australia at an early date.

He seems very keen for trade to be opened between Malaya and the Netherlands East Indies but said he was not yet in possession of the details of the progress of trade negotiations.

1 Ministerial Dispatch 5/1948 dated 11 March was mainly concerned with the formation of a Provisional Federal Government.

2 Document 103.

[AA:A1838, 403/3/1/1, xvi]