I do not know what you will think of Kirby's telegram UN106.  The following points strike me about it- (a) I had gathered that Kirby had seen all the heads in the State Department-Marshall, Lovett, Armour, etc. In point of fact he seems to have seen leading officials at the 'operating level'. Not that this is a bad thing-it will have given Kirby a better insight into what the State Department thinks than if he had seen the heads.
(b) Both sides seem to have missed the fundamental issues-or at least what I think we regard as the fundamental issues. The State Department's general line is I think unexceptionable, so far as it goes. I can well imagine that it is quite in accord with the State Department's usual policy on these matters that it should be determined that the Dutch should observe and adhere to the principles laid down in the so called Renville Agreement. Doubts raised by Kirby and Forsyth (para 3) do not to my mind affect the real substance of the matter.
(c) Kirby seems to have been convinced that the State Department is on the right course.
2. But the questions which we have been regarding as vital-those which concern the status and condition of the Republic throughout the interim period until it can take its place in the sovereign United States of Indonesia-appear to have been tacitly evaded.
These include the Republic's capacity to control its own trade, issue its own currency, and maintain its own de facto representatives abroad. These matters are presumably the difficulties which Kirby had intended to suggest to describe to the Council as standing in the way of 'an early and just settlement'. These we may suppose are more or less fundamental, particularly the first. If the Republicans hold out for control of their own trade before the United States of Indonesia comes into being, I think there may well be a further breakdown. Yet on this point I do not think we can assume any support for the Republic from America or indeed from any other member of the Security Council. I should think that Lacy's view (para 3 of Washington telegram 156 ) reflects the attitude from which the State Department is unlikely to budge without strong persuasion.
3. I had understood that Kirby was emphatic on the point of doing something to help the Republicans on the question of trade. Now, however, he seems to think that it would be alright to fall in with the United States plans for a peaceful and nonc-ontroversial discussion in the Security Council in return for certain hypothetical United States assurances which could admittedly be useful in the forthcoming talks at Batavia, but which on their face do not amount to very much and which bear no direct relation to the fundamental issues in dispute.
4. Kirby may be on the right track. Following the unconditional acceptance of the Committee's principles by both sides, the points in dispute have been so reduced in number that no useful purpose would be served in 'going to town' in the Security Council-and stirring up further strife if it can be avoided-however much we may resent the behaviour of the Dutch, it seems pretty clear that the Committee will have to stay on in Batavia and see the settlement through, and this should serve to keep the Dutch up to the mark.
5. But I do not like the idea of this so-called 'trade', especially if it is to result in the Security Council's being given a too rosy prospect of an easy settlement. If there are going to be difficulties, the Council ought to know about them at this stage. Or at the very least there should be a cast iron assurance of American support for the Republic on the economic and other questions before any decision to gloss over them in the Council discussions.
6. The foregoing views are of course based simply on the two telegrams 106 and 109.  You may have gathered from your telephone conversation with Kirby  that there are other considerations as well.