MY 349. 
Indonesia. I saw Pearson today when I recapitulated views previously conveyed to Canadian Government and expressed concern at latter's attitude, emphasising that in our view, which was based on first hand knowledge, excuses put forward by Dutch were not valid.
Main points from lengthy discussion are:
1. Canadian Ambassador at The Hague has been instructed to emphasise to Netherlands' Prime Minister and Foreign Minister the embarrassing position in which their action has placed their friends and urge them to 'find a way out'.
2. Pearson adhered to view that Dutch action, although regrettable, had been taken under provocation and repeated that Canadian Government could not support punitive measures at this stage though it might have to reconsider attitude if Dutch 'remained obstinate'. For the moment they would await outcome of discussions at The Hague.
3. I stressed regrettable consequences if no positive action taken to check aggression by Western power. Pearson agreed that effect on prestige of Atlantic Union and on reputation of the West in Asia would be regrettable and that Communist hand likely to be strengthened, but reiterated that Canada could not support sanctions against friendly Western State in view of failure to check aggression by (for example) Arab States and Greece's Balkan neighbours. He added practical value of attempt to impose sanctions reduced by likelihood of French veto in Security Council.
I gained impression Pearson was not entirely happy about Canada's temporising policy but that there was little hope of appreciable change in Canadian attitude key to which is to be found in Pearson's statement 'Without the Netherlands there could be no Atlantic Union'.