400 Teppema to Chifley
Memorandum CANBERRA, 20 December 1948
From the communiques which have reached you, and from Notes of this Legation through the intermediary of the Department of External Affairs you know that the Netherlands Government decided yesterday to authorise the High Representative of the Crown at Batavia to take certain action. 
The action has been undertaken to create conditions to promote the establishment of a sovereign democratic United States of Indonesia in the shortest time possible, as the Netherlands Government is firmly convinced that, should it give way further to pressure which extremist groups in the Republic have been exercising, this would only lead to the obliteration of the constructive elements in the Republic. The consequence would be chaos and complete disintegration of the whole of the Indonesian society.
The Netherlands Government has taken this decision only after exhaustive deliberations, deeply conscious of its responsibility and fully aware of the serious consequences which may devolve on the Netherlands and on its people.
After consideration from every angle the Netherlands arrived at the conclusion that no alternative existed to redeem the pledges which it had given to the Netherlands and Indonesia. Its action is exclusively directed against the extremist groups referred to above which are only concerned with the retention of their own position of power, politically and militarily, in the Republic, and not in any sense against those Republicans and Groups which desire to cooperate in a Federal Interim Government in the transition period prior to the establishment of the independent and sovereign United States of Indonesia.
I am to stress that the Netherlands Government will pursue the course which it has been compelled by circumstances to adopt, with all the forces, material and moral, which the Netherlands people possess.
I enclose herewith for your personal information a Memorandum in which recent events in Indonesia are surveyed and I trust that this will prove additionally helpful for your understanding of the situation.
MEMORANDUM of Netherlands Government, The Hague 18th December 1948:-On December 11th the Netherlands Government informed the Good Offices Committee that, to its great regret, it had reached the conclusion that, as a result of recent discussions of the Netherlands Delegation including two Ministers of the Crown, with Dr. Hatta, Vice President and Prime Minister of the Republic, it would be impossible to reach an agreement either by continuing informal direct discussions or through negotiations under the auspices of the Committee.  The following events have led to this decision which was only reached after careful consideration of all circumstances:
1. The Netherlands Government in August 1947 at the request of the Security Council issued a Cease Fire order and agreed to the appointment of the Good Offices Committee. This decision was taken in order to leave nothing undone which might assist in reaching a peaceful solution, notwithstanding the conviction of the Netherlands Government that the Security Council was not competent to deal with the dispute in Indonesia because this is an internal problem of the Kingdom of the Netherlands. This view has been emphatically stressed by the Netherlands Government on various occasions.
2. Largely as a result of the activities of the Good Offices Committee a Truce Agreement was concluded on January 17th 1948 on board the U.S.S. Renville and the Netherlands and Republican Governments agreed upon a number of principles which could serve as a basis for a political settlement.
3. Negotiations covering the whole field of outstanding problems were resumed immediately but after many months of discussions it became evident that no tangible result on basic issues was being achieved. Meanwhile the relations between parties became strained and the number of infringements of the truce increased. With infiltrations for the purpose of guerilla fighting, terrorisation of the population and of officials outside Republican territory, the number of victims both Indonesian and Dutch increasing from week to week, the situation gradually became untenable.
4. Informal plans were put forward by individual members of the Good Offices Committee in June and September  which were both, in form and contents, unacceptable, or acceptable by both parties only with considerable reservations.
5. The Netherlands Government, realising the wide divergences existing between the parties and perturbed by the increase of tension, decided to make a last effort to bridge the differences on the main issues by direct discussions with Republican Leaders on a high level. The Netherlands Minister of Foreign Affairs, with the full concurrence of the Good Offices Committee, visited Java to investigate the possibilities of reaching an agreement on the basic issues in order to facilitate the resumption and the rapid conclusion of negotiations under the auspices of the Good Offices Committee.
6. Meanwhile consultations had taken place between the Netherlands Government and Representatives of Non-Republican areas on the future organisation of Indonesia. A plan for the organisation of the Government of Indonesia in the Transition Period was worked out and the Netherlands Government obtained Parliamentary approval to put this plan into operation before January 1st 1949.
7. Confidential and frank discussions between Dr. Stikker and Dr.
Hatta and their advisors took place, which led to the conclusion that possibilities to reach a political agreement still existed.
This conclusion was substantiated by a confidential memorandum  in which Dr. Hatta summarised his views.
8. On the basis of the prospects resulting from Dr. Stikker's first talks, a Cabinet Delegation consisting of the Ministers of Overseas Territories and Foreign Affairs and the Royal Commissioner, Mr. Neher, accompanied by a number of advisors, was despatched to Indonesia with wide powers to reach a settlement of the main issues. On arrival at Batavia of the Delegation the members of the Committee of Good Offices were again fully informed.
9. It soon appeared that unanimity of opinion did not exist in Republican Governmental circles, and moreover that the Republican Government was unable to combat the infringements of the Truce. It also became clear that the Republican Government, notwithstanding the desire of some responsible leaders to pursue a more moderate policy, could only agree to a Federal Interim Government in the Transition Period if the Netherlands Government would be willing to exercise its sovereignty in name only, and permitted the existence of large independent private armies. In a final and frank discussion with Dr. Hatta it appeared beyond doubt that while he personally still adhered to the ideas in his memorandum he was unable to guarantee anything but their nominal application.
10. As it is absolutely impossible to prepare the establishment of the sovereign United States of Indonesia if no central Government organisation is brought into being which controls the whole area and puts an end to the economic, financial, social and political disorder, Netherlands support is essential to carry out this work of reconstruction.
11. The Netherlands Government has committed itself to continue the preparation of the United States of Indonesia and it can no longer allow the Republic to delay the enactment of the plan for an Indonesian Interim Government on which agreement with the representatives of the Non-Republican area, representing a large majority of the population, has already been reached. The adherence of the Republic to this future organisation is still desired both by the Netherlands Government and by the Non- Republican Indonesians, therefore a special clause will be incorporated in the decree on the Interim Government enabling the Republic participation therein at a later date.
12. It is with the greatest regret that the Netherlands Government reached the conclusion that further discussions would be futile unless the Republican Government radically changed its attitude, and besides would only delay the political independence of Indonesia and the necessary economic reconstruction. Irresponsible political groups and military elements have consistently sabotaged the execution of the Linggadjad and Renville Agreements and through their acts of terrorism have created disastrous conditions both in the Republic and in the Non-Republican territories. These groups are planning increased widespread disorder by January 1st 1949, or, maybe, even earlier.
13. An extremist minority prevents freedom of expression and terrorises the people and Government officials. The Netherlands Government can only transfer its responsibilities if conditions are created for an orderly Government in Indonesia. It trusts that all Indonesians whether outside or inside the Republic will assist in the rapid implementation of the formal and unconditional pledges which have been made for the creation of a sovereign United States of Indonesia on a Federal basis freely linked with the Netherlands in a Netherlands-Indonesian Union.