Your UN 106 and 109. 
Whilst we fully appreciate the importance of gaining the maximum possible support from the United States, we are not happy at your suggested bargain with the Americans.
2. The State Department's attitude as set forth in your 106, paragraph 2, is broadly what we would have expected and up to a point it can be regarded as satisfactory. Evidence of their willingness to bring pressure to bear on the Dutch to agree to a settlement along the lines of the Renville principles is welcomed.
At the same time some of the fundamental questions at issue were not apparently discussed in your talks with the State Department.
3. We have been assuming that whilst the unconditional acceptance of the Committee's principles by both sides provides an agreed basis for an ultimate settlement in Indonesia, the position of the Republic in the interim period would remain precarious unless it could be properly safeguarded; and that it is on the question of these safeguards that the negotiations for settlement may break down. The Republicans are still insisting, for example, on controlling their own trade and maintaining their own representatives abroad. The first of these conditions seems to us to be the fundamental issue in dispute. The Dutch are unlikely to agree to it, and the State Department is at present unsympathetic according to reports from Washington.
4. It does not seem to us that the Committee's visit [to] New York will have accomplished its real purpose i[f] controversial issues such as trade are not fully discussed. We agree that an open wrangle in the Security Council should be avoided if possible. At the same time we do not think it would be fair to leave the Security Council in ignorance of the real obstacles that still remain in the way of a settlement. The assurances which you believe can be obtained from the Americans in return for the suppression of controversial issues in the Council, while they could be useful in the forthcoming talks at Batavia, do not appear to us to bear any direct relationship to the fundamental points under dispute. You will be better able to judge their real value, but they seem scarcely worth the cost of avoiding difficult questions at this stage. We think these latter might be discussed frankly with the Americans.
5. A further important consideration is that we think on reflection that an agreement of the sort suggested resembles too closely in some respects the kind of procedure we have been objecting to in negotiations elsewhere and is, in a sense, a by- passing of United Nations organs. If the Americans are anxious as they appear to assist in reaching a satisfactory settlement they should be prepared to act on the lines of their suggested assurances without any thought of a quid pro quo. If there is to be any arrangement it should be between the Dutch and the Committee of Good Offices, and not between the Australian and United States Governments. It should be made clear to the United States Government that we cannot accept a procedure involving private understandings between our two Governments involving other Governments. We would nevertheless hope that the Americans could immediately exercise their influence in the direction of agreement between the Dutch and the Committee Good Offices on points listed in your paragraph 4(c)  before the Committee reports to the Security Council. Failing such agreement, the Australian representative who will be attending the Security Council, in addition to yourself as a member of the Committee, must be free to raise fundamental questions in the Security Council.