355 Embassy in Washington to Department of External Affairs
Cablegram 1253 WASHINGTON, 7 December 1948, 7.29 p.m.
Indonesia. Following is assessment of United States position based on conversations with Lacy and United Kingdom Embassy.
1. State Department are most concerned at suspension of Hatta- Stikker talks and return of Stikker and Sassen to The Hague.  They do not, however, (and have so informed Indonesians) anticipate police action by the Dutch. They believe, after careful investigation, that Dutch are not prepared to take initiative in breaking off negotiations. In spite of Hatta's statements they believe Indonesians wish conversations renewed. Dutch may, however, proceed with inauguration of interim Government on 15th December.
2. State Department has therefore within the last twelve hours reiterated in strongest terms to the Dutch that (A) United States is categorically opposed to any renewal of military action. This would not only be contrary to Security Council resolutions, but would not achieve assumed Dutch objective of stability and increased production in Indonesia. It could only be followed by prolonged guerilla warfare necessitating maintenance of large Dutch forces. Moreover it would be a continuing drain on Dutch financial resources which would not be to Dutch advantage. (We believe this is intended as a veiled warning to Dutch that loans and E.C.A. aid will not be forthcoming if Dutch renew 'police action').
(B) United States considers that talks should continue either in the Committee of Good Offices, or directly between the parties. To establish interim Government without Republic would make it most difficult subsequently to bring the Republic in.
State Department have not informed Indonesians of above approach to Dutch, which they wish regarded as secret.
3. Indonesian representative today told us he had been informed from a very reliable source that Marshall was considering asking Security Council to call for a report from the Committee of Good Offices. We have been unable to obtain confirmation.
4. State Department believe that the United Kingdom, with their experience in Malaya, can be of great assistance in bringing home to the Dutch consequences of attempt to liquidate Republic. United Kingdom Embassy have been kept informed of United States approach.
5. State Department are puzzled at Australian resolution in E.C.A.F.E. providing that if no Netherlands-Republican settlement is reached before the next meeting Republic should then be admitted to associate membership.  They are not so concerned at threatened Netherlands walk out as at possibility of replacement of Hatta. Government at some stage e.g. by a Sjariffoeddin regime.
They could not commit themselves so far in advance to support admission of Government whose composition cannot be certainly known.