I saw Palar this afternoon at his request. He explained that he had asked to see me because the G.O.C. fourth interim report  had been received and there were several matters arising from it which he would like to mention to us.
The first of these was that he had reports of dissension in the Dutch Government arising from a strong difference of opinion between Sassen and Stikker. There appeared to be pressure on Drees to acquiesce in a solution by force. A note prepared by his office summarising and interpreting these reports is attached.
Secondly, he would like our opinion on the means of making the best use of the material provided in the report, which generally showed the Indonesians in a much better light than the Dutch. He said that the local New York Times correspondent had been well briefed regarding Indonesia and had stated that he would be prepared to write a story providing he had some informed comment on the gravity of the situation on which to base it. Palar suggested that Australia might consider commenting without any published attribution of sources. He thought also that India and China might possibly be prepared to comment on the same basis.
(Timperley is due back to-day and will be staying at the Baltimore.)
Contrary to the optimism publicly displayed by the Dutch government, the actual atmosphere in the Dutch cabinet at this time is one of dissension and pessimism. It is apparent that Stikker has failed in his efforts to win the support of the whole cabinet when he reported to them his conviction that there exist real possibilities for reaching an agreement through discussions with Hatta. Sassen, the Minister for Overseas Territories, stated to the cabinet that he did not believe in any such possibilities and furthermore he assured the cabinet that he was positive that he would be able to swing the governments of the puppet states to the side of the Netherlands, so that they would legalize a military action against the Republic. Sassen stated that this support of the puppet states could be had by brushing aside the expected opposition of the parliaments of certain of these states.
Sassen's view was shared by the majority of the cabinet, including almost all Catholic members.
This difference in viewpoint between Stikker and Sassen, together with personal antagonisms between the two men, gave rise to a serious open clash between them. It also caused great confusion in the cabinet upon which the Prime Minister, Drees, stated that in such a situation of open conflict between two ministers he would feel compelled to resign. This crisis was overcome by the intervention of the influential Catholic Party Vice-Premier, Van Schaik, who then stated that if any minister should resign, it should certainly be Sassen. Sassen, however, did not resign but stayed in the cabinet where his presence can enable Romme, the leader of the Catholic parliamentary bloc, to carry his opinions into the cabinet. The Catholic members of the cabinet then decided to back down a little from their original stand. Realizing that they could not get away from strong international pressure they consented to send Stikker back to Indonesia, but they stipulated that this time he was to be accompanied by Sassen and by Neher, the representative of the crown.
The fact still remains, however, that the majority of the Dutch cabinet does not have any faith in this mission nor in the possibilities or even the necessity for a peaceful solution. This lack of faith is also manifested in the mission itself in the personality of Sassen and even of Neher who, in private talks in the Netherlands, is reported to have stated that there would be no other way out than crushing the Republic.
Up to the present, the Prime Minister and the other Labor Party ministers have dissociated themselves from a policy based on the assumption that a peaceful solution is neither necessary nor probable. However, confidential statements by the Prime Minister have indicated some possibility that he would acquiesce [in] military action, although he has also been reported to have expressed his conviction that, while such a military action would entail the downfall of the Republic, it might also entail the downfall of Holland.
Another possibility, however, is that the Labor Party may decide to oppose military action. Such opposition-the chances of realization of which are still uncertain-would force the Labor ministers to resign. If such opposition from the Labor Party became definite, it would be likely that the Catholic Party would refrain from such a step because they realize that a government without the support of the Labor Party would not be able to secure social stability in Holland.
The political atmosphere in Batavia is also seriously influenced by the presence of a Parliamentary commission of observers consisting of the parliamentary leaders representing the larger factions in the Dutch parliament. This commission was sent out to secure the necessary parliamentary backing for any decision reached by the Dutch ministerial delegation in Indonesia. This parliamentary commission includes Professor Romme, whose political influence reaches beyond the limits of his Catholic Party, and who actually is the formulator of Catholic policy both in parliament and in the cabinet. In addition to these two protagonists of Catholic policy, Sassen and Romme, there is also in Indonesia at this time Beel who, in his position of High Representative of the Crown, is able and in fact has already seriously influenced the political scene in Batavia. There is reason to believe that in his actual policy Beel does not deviate from the general line of action of the Catholic Party. Beel is personally responsible for the denial of Stikker's statement, made on the latter's arrival in Holland after his first mission, about a clear decline in the number of Republican truce violations.  Beel's ban on permitting newspaper correspondents to enter Republican territory- which has since been rescinded-only arouses deeper suspicions about his intentions.
It is feared, in those Dutch political circles which still believe in the possibility and the necessity for a peaceful solution and which oppose a military action, that the cooperation of these three people (Beel, Romme and Sassen) in Batavia will have a bad effect on the situation since all signs indicate that these three men are fundamentally unwilling to settle the Indonesian problem by peaceful means. This is making it difficult if not impossible for Stikker to pursue his policy of sincere negotiations. In fact, the predominance of this Catholic bloc in Indonesia could easily enable Beel and the Dutch colonial clique, through the existing colonial machinery, to create and provoke such circumstances that a military action by the Dutch would be justified in the eyes of the world. There are already indications of this tendency. It is therefore of the utmost importance that to these three people should be made clear the international implications and repercussions which such a policy would bring about. Such pressure could also be brought to bear by the members of the COG, and would give Stikker a freer hand to carry on the negotiations with the Republic along the lines he originally set out.