Netherlands report of direct talks  was received today, December 11th. The Netherlands delegation emphasised that:
(a) It has become clear that the Republican Government cannot exercise control over its Armed Forces and therefore that effective co-operation on part of the Republic to combat infringements of Truce cannot be expected;
(b) Republican point of view regarding powers of High Representative of the Crown and particularly regarding his control over Armed Forces is fundamentally irreconcilable with the Netherlands sovereignty as formulated in the first Additional Renville Principle ;
(c) That refusal to recognise Netherlands Sovereignty during the interim period nullified acceptance by the Republic of the draft agreement submitted by the United States delegation  on September 10th, 1948 as a basis for negotiations;
(d) Netherlands Government must now proceed to promulgate decree setting up Federal Interim Government leaving open, however, the possibility of future admission of the Republican held areas.
2. Statement concludes 'The Netherlands Government regrets that negotiations under the auspices of the Committee at this stage are futile' in that the Republican Government does not 'in fact recognise either truce or Renville Principles and basis for agreement is fundamentally lacking'.
I shall endeavour to ensure that Committee's report to Security Council which will probably be cabled tomorrow is as strong as possible and makes it clear that further progress towards a peaceful settlement depends on the Council's decisions. I believe the United States may support direction from Council that formation of Interim Federal Government without Republic be postponed and that parties resume negotiations on basis of United States plan. At any rate this course will be recommended by Cochran.
3. Netherlands case depends basically on evoking a part of Article I of 6 Additional Principles while ignoring the remainder of the Article calling for guaranteed date for transfer of sovereignty.