Rumours are widespread that the Americans have proposals for the political settlement based on our original proposals but with provision for an interim federal government before a Constituent Assembly is set up. Rumours emphatically denied by the Americans who stress the importance of giving the Netherlands full opportunity of submitting their own proposals. If the latter are unsatisfactory or not forthcoming within a reasonable period the Americans will doubtless make suggestions.  Unofficial reports from The Hague of the intended Netherlands proposals indicate they will be entirely unacceptable to the Republic. Hatta has informed the Americans that with the deterioration in internal conditions the margin for concessions by the Republic is now very small. I believe an appointed interim government as part of an overall scheme would be acceptable to the present Republican government providing it could appoint at least 50% of the members and that the new government were given wide powers, including control of the armed forces, in Indonesia.
2. The Masjumi Council after a special meeting on the 4th and 5th September issued a resolution which amongst other things a) opposes communism and imperialism;
b) supports a strong policy by the government against peace disturbers;
c) recognizes the private rights of foreigners but also the right to nationalize industries important to the State;
d) advocates extension of Republican foreign relations.
3. Van Mook who is apparently going to Holland at his own request is considered by Hatta more liberal than The Hague but is nevertheless opposed to elections in Indonesia.