Cochran's attitude on his return was disappointing. Last year his super-optimism, patience and supreme confidence in his own ability to bring the parties together were finally dissipated by the Netherlands Military action of December 19. Absence from Indonesia and his return via The Hague have restored these qualities at least to the degree that he will insist on a wait-and-see attitude until the end of the month.
2. Briefly his approach may be summarised as follows:-
(1) Van Royen's statement  in the Council on 28th January was as satisfactory an acceptance of the Resolution  as might be expected in the circumstances and should not be regarded as a rejection.
(2) The Netherlands might not be able to make a forthright statement accepting the Resolution, but the final test should be Netherlands actions, not their words.
(3) The Netherlands might satisfactorily clarify their policy with regard to the Security Council Resolution.
(4) In particular there were hopes that the Netherlands Government would implement the major requirements of the Resolution, namely the release of Republican leaders and early negotiations under the auspices of the Commission.
(5) The resignation of Sassen was of special significance.
(Cochran, most confidentially, gave himself credit for this.) (6) The Netherlands Government had considered the Commission too insistent in addressing too many communications too frequently to the Netherlands Delegation so quickly after the passing of the Resolution. They had complained to the State Department of needling by the Commission.
(7) The Netherlands cabinet might fall if, on February 15, the Commission should strongly condemn the Dutch for their non- compliance.
(8) There was considerable doubt whether the United States would support sanctions against the Dutch and there was every possibility that a move for sanctions in the Council would fail.
(9) Consequently every effort should be made to induce the Netherlands to accept the Resolution and in view of the political difficulties at The Hague they should be given further time.
3. I need hardly say that I disagreed strongly with Cochran on practically all his arguments. It seems to me:-
(i) Van Royen's statement and subsequent official statements at The Hague and at Batavia have indicated that the Netherlands do not intend to implement the Resolution.
(ii) The Resolution calls for immediate action which the Commission has every right to expect.
(iii) Release of Republican leaders is not enough. Their administration must be restored at Djokjakarta with full freedom of communication. The Republican Government must maintain its full prestige if it is to exercise a decisive influence so urgently required in Indonesia for the restoration of order. Sukarno has stated that restoration of the Government at Djokjakarta must be a first step before any decisions can be made by the Republican leaders.
(iv) Cochran seems to over-estimate the significance of the Sassen-Beel clique and the effect on Government policy of the resignation of Sassen.
(v) Cochran's views of the political dangers of a strong report by the Commission are not persuasive.
(vi) Postponement by the Commission of its report will encourage the Netherlands in their policy of delay, a policy which they have come to rely upon.
(vii) Delay must be used by the Netherlands to exert further pressures on Indonesians and enable the Dutch to continue their unilateral policy by forming a new state in Middle Java.
(viii) Delay will lift the pressure on the Netherlands and give the Dutch heart in their policy of bucking the Security Council.
It will also encourage them to try to get by on a vague scheme for an early transfer of sovereignty.
(ix) The Commission, if it remains passive in Indonesia will lose the initiative given it by the Security Council at a vital time, when only strong action by the Commission or the Security Council can bring a solution to the Indonesian problem.
(x) In the past such limited concessions as the Dutch have made have all been the result of pressure. Only the continuation of strong pressures on the Netherlands is likely to bring successes.
If this pressure fails at least the Commission and the Security Council can be sure that no other course would have succeeded, and they will have placed responsibility where it belongs.
4. Fortunately, since his return Cochran has been influenced towards our point of view. The vagueness of the Dutch statements, the reservation of the Netherlands Government regarding the release of the Republicans, the proposed return of Beel and the realities of the situation in Indonesia could not be overlooked.
He as good as admits that at The Hague he under-estimated the importance of re-establishing the Republican Government at Djokjakarta, but he has now made a point of correcting any wrong impression he may have given.
5. However, Cochran cannot be won over easily. He retreats trench by trench. Furthermore, in his case pressure must be applied tactfully. I believe that the course of events will force him to accept our views and that there is every reason to expect a strong report at the end of the month. He stresses that he has not been misled by the Dutch and that they will have to more than step lively if they are to circumvent a critical report from the Commission. Already he is speculating as to what action the Security Council can take.
6. At all costs we must avoid a situation in which Australia will remain a minority on the Commission. Divided by the European and Asiatic influences, the State Department has probably not yet formed a firm policy on Indonesia, but will depend largely on Cochran's advice. As suggested above, I believe he can be won over.
7. Cochran's appointment  to Pakistan, announced last Friday, was decided while he was in Washington, when it was agreed that he should stay on in Indonesia until at least a preliminary settlement was reached. I have not failed, of course, to point out the importance Pakistan attaches to a satisfactory settlement here.
8. It is still abundantly clear that developments since the police action have not gone as the Dutch planned. Militarily there are difficulties in wide areas of Indonesia. Economically co-operation is being refused by the Republicans. Politically the Republic is remaining steadfast and the Federalists are becoming decidedly restive and, in some cases, even aggressive. The Netherlands if they are to pursue their own interests, must take drastic action now. Financially their difficulties are acute. There is no immediate prospect of a balanced budget, let alone a start on rehabilitation. Certainly 1949 will be a year of strict economies and tightening belts in Indonesia.
9. Roughly, the overall political situation appears to be as follows:-
(1) military action has brought disorders to large sections of Indonesia, (2) the Netherlands are incapable of restoring order, at least without international assistance, (3) there can be no settlement in Indonesia without the Republic, (4) restoration of the Republic, with headquarters at Djokjakarta is essential, (5) in their own interests, the Netherlands should come to a quick settlement; they should therefore be prepared to implement the resolution or make a grand gesture offering clear cut independence in the near future, (6) the Netherlands Government has not yet faced up to the basic issue. It is therefore likely there will be further international pressure on the Dutch, with which the United States will probably be forced to associate, (7) Meanwhile the situation in Indonesia, already serious, will continue to deteriorate.
Federalists 10. In previous letters I have mentioned my intentions to write to you about the 'Federalists'. The following outline of their position is obviously incomplete, but may be of assistance in understanding the present rather confused position.
11. The B.F.O. (Assembly for Special Federal Consultations) which the Dutch have recently pushed into the limelight developed from the famous Bandung Conference. You will recall the Committee reported  to the Security Council on the Bandung Conference on the 27th May, 1948. Strictly the B.F.O. is a direct continuation of the so-called 'Small Bandung Conference' which the Dutch arranged to follow the Bandung Conference when the former recessed for Ramadan and when the Netherlands found that the Bandung Conference was unwieldy and not producing results. Subsequently the Small Bandung Conference was used by the Netherlands to justify the B.I.O. Decree. 
12. According to the Netherlands the Small Bandung Conference was convened in July on the initiative of the Wali Negaras and Heads of State of West Java (Pasundan) and East Indonesia (Indonesia Timor) with a view to making an independent contribution to the solution of the various problems concerning the formation of the United States of Indonesia. (See Second Report on Political Developments in Western Java (S/960) of 2nd August.) 13. As first explained, the Small Bandung Conference, consisting of the Heads of States and Prime Ministers of the Negaras and autonomous districts, was to deliberate alongside the main Bandung Conference on specific issues. Gradually, however, this Conference with the Heads of States was given increased importance until today the B.F.O. is the sole policy directing body of the 'Federalists' in Indonesia.
14. The B.F.O. which may be subject to changes through the co- option of new members and as newly organized political entities come into being, numbers 16 Delegations, of which 14 have the right to vote. These are:-
The Negara of Pasundan (West Java) The Negara of Djava Timur (East Java) The Negara of Madura The Negara of Indonesia Timur (East Indonesia) The Negara of Sumatera Timur (East Sumatra) The Negara of Sumatera Selatan (South Sumatra) The Daerah Istimewa of Riouw The Daerah Istimewa of Bangka The Daerah Istimewa of Billiton The Daerah Istimewa of Kalimantan Barat (West Borneo) The Daerah Istimewa of Kalimantan Timur (East Borneo) The Daerah Istimewa of Bandjar The Daerah Istimewa of Borneo Tenggara (South-East Borneo) The Daerah Istimewa of Dajak Besaw (Greater Dajak).
The two areas of Padang and of the Recomba of Middle Java have as yet not been constituted into self-governing political entities, although such a status is projected and they are therefore represented without right of vote.
15. It will be clear from the composition of the conference that the Dutch policy of forming states in Java and Sumatra in contravention of the Renville Agreement  is the basis of the federal organization. Furthermore, the formation of small autonomous areas such as Riouw, Bangka and Billiton, with separate votes, means that many 'representatives' are given an importance far beyond what could be justified by the population of the areas they represent.
16. Strictly, therefore, the B.F.O. is an organization created by the Netherlands in opposition to the Republic. Netherlands influence, for example, is clearly discernible in the telegram  inviting consultation which was conveyed to Republican leaders on February 3. The Representatives of East Sumatra and South Sumatra are firmly in the Dutch pocket. The chairman of the Conference, the Sultan of Pontianak (West Borneo), seems just as dependent, although prominent Indonesians inform me he is tending to adopt a wait-and-see policy.
17. On the other hand, there are equally clear indications that weight of public opinion and the force of nationalism are lending strong support to the Republic even in the Dutch-constructed administrations. Wherever elections have been relatively free, Republicans have, of course, scored heavily. Representatives of East Indonesia and West Java in particular have made it clear that they are not prepared to follow blindly a pro-Dutch policy against the Republic. A short note on the political and military position in West Java is attachment 1 , and I particularly draw your attention to the decision of the Pasundan Parliament announced today, recommending, inter alia, acceptance of the Security Council Resolution as a basis for the B.F.O. talks. In East Indonesia the Prime Minister, Anak Agung Gde Agung has stated that he cannot go along with the formation of an interim government without the Republic and may also come out clearly in support of the Resolution.
18. Many of the smaller states are also uncertain as to their policy and present Dutch indecision is strengthening opportunities for support[ing the Republic]. Even Bangka since the Republican leaders were interned there has tended to join the Pasundan - East Indonesian camp.
19. Last week I was informed by one of the Netherlands officials 'running' the B.F.O. that unfortunately 'many of the representatives were afraid to say what they thought, that the Dutch knew that representatives of West Java and East Indonesia were "Republicans" but that Mansoor of East Sumatra and Malik from South Sumatra were stout fellows of ability'.
20. So, as you yourself have suggested, the Dutch after painstakingly building a massive facade are discovering that they have used too much sand with the concrete. Unless they do something very quickly to command the support of the Federalists, States such as East Indonesia and West Java may openly revolt against the Dutch and demand implementation of the Security Council resolution under the Commission. If they do so they hope to take with them all of Borneo, save West Borneo, East Java and Madura. They also think they will gain support from Daerahs such as Bangka.
21. It is interesting to speculate whether the formation of a state of Central Java will be of assistance to the Dutch.
Republican sympathisers have been so active in Semarang of late that this new state could easily be pro-Republican in its views.
22. To the Republic the B.F.O. presents serious problems. On the one hand Republican leaders cannot afford to assist the Netherlands to strengthen a front which has been constructed against them. On the other hand, encouragement must be given to those federal representatives who realize the importance of the Republic and the fact that there can be no lasting settlement of the Indonesian problem without the participation of the Republican leaders, and in particular Sukarno and Hatta. Although Sjahrir has been critical of the willingness of Republican leaders while interned on Bangka to meet representatives of the B.F.O., I believe that Hatta has so far adopted an effective and tactful formula.
Freedom of the Press 23. With my letter  of 8th February I attached a memorandum by the Commission's Press Officer, dealing with restrictions on Indonesian newspapers. Today I enclose a revised and enlarged report on the Republican Press as Attachment 2.