345 Dexter to McIntyre
Minute CANBERRA, 8 April 1949
THE FUTURE IN INDONESIA
1. PRESENT POSITION Both Dutch and Republicans have accepted the United Nations Commission's invitation to discussions in Batavia subject to certain conditions.  The Republicans [will] only discuss initial[ly] practical details concerning the restoration of the Government to Djocjacarta. The Dutch who are to be led by Dr. van Royen will attend the discussions on the understanding that they will not prejudice the responsibility of the Dutch for 'freedom and order' in Indonesia.
It should now be plain to both parties that they have much to gain by reaching a political settlement and very little extra to lose.
2. DUTCH ATTITUDE The Dutch fail to see why the rest of the world cannot understand that they alone have responsibility for law and order in Indonesia during the interim period. They blame the United Nations for their troubles in Indonesia and do not see why they should be one of the few to obey its dictates. Their stubbornness will now be strengthened by their inclusion in the Atlantic Pact. They cannot get away from the idea that they have ruled Indonesia beneficially for three and a half cent[uri]es and probably have a genuine belief in the inefficiency and corruption of the Republic.
3. REPUBLICAN ATTITUDE The Republicans have no faith in Dutch promises and proposals and have insisted on implementation of the 28th January Resolution.
 They would need more than Dutch assurances to reach a political agreement although they have accepted the Federal idea and the proposal for a Netherlands-Indonesian Union.
4. RESULTS OF BATAVIA DISCUSSIONS Some agreement to get together on the future of Indonesia must undoubtedly be reached at the Batavia discussions. Critchley however, is not very optimistic and in his latest telegram (K294 ) states 'I have little confidence ... in the Dutch intentions towards the Conference'.
The Security Council directive  of 23rd March was both a face saver for the Dutch in that it accepted a counter proposal for a Round Table Conference at The Hague, and a warning to the Republic in that it was a watering down of the 28th January Resolution.
The Dutch must now realise that their aggression has not liquidated the Republic but has strengthened it. The moral support of the world, the activities of the Republican guerillas and the sympathy of the B.F.O. for the Republicans must make the Dutch see reason.
The Republican leaders must realise that if some agreement is not soon reached they will fail to control their emergency Government and the guerilla bands among whom splits have already developed.
5. FACTORS FORCING AGREEMENT (a) Opinion of the World Moral Condemnation of Dutch aggression has already been expressed through the Security Council and the New Delhi Conference Resolutions.  It is likely to be expressed on a larger scale in the General Assembly. The Dutch are apprehensive that discussion in the Assembly will add to the difficulties of agreement. Perhaps this will make them get a move on towards settlement.
(b) Guerilla Warfare Reports from Military observers and neutral observers as well as Dutch and Indonesian sources show clearly that guerilla activity, reprisals and terror have caused chaos in large parts of Java and Sumatra. Colonel MacDonald who visited Canberra on 6th April stated that Military observers believe that the Dutch have no hope of cleaning out the guerillas. He claimed that before the second Police Action it was safe to move anywhere in Republican Territory but not in Dutch Territory; now it was unsafe to move anywhere.
Both sides probably realise now that guerilla warfare can become chronic. Only a political settlement can prevent this.
(c) Fear of Indonesia becoming Second Burma Chaos is on the 'rompok' in Indonesia. Unless there is soon some central control through political agreement the country will be divided between rival bands of T.N.I. Siliwangi Division, Darul Islam Federalist troops, Tan Malakka bands, P.K.I. bands and plain brigands.
(d) Attitude of B.F.O.
After accepting the Dutch invitation to attend the Hague Round Table Conference at its face value, the B.F.O. changed its mind as a result of discussions with the Republican Leaders at Bangka. On 3rd March it passed a resolution  calling for the restoration of Republican leaders and Government to Djocjacarta. This was a severe and unexpected blow to the Dutch who have made every attempt to keep the resolution secret.
(e) Attitude of Republican Emergency Government Critchley pointed out  on 15th March that there was already some criticism of the Republican leaders at Bangka taking decisions for which the Emergency Government was given power on 19th December. Since then Dr. Sjafrudin, Head of the Emergency Government, has stated his belief that the Dutch intend to re- impose Colonial status in the guise of a Federal Government and United States of Indonesia. Unless Political Agreement is soon reached there is bound to be a split in the Republican ranks.
(f) Economic Dislocation In the areas occupied by the Dutch after the 1st and 2nd Police actions guerilla activity is dislocating economic rehabilitation which can only function on law and order the establishment of which was ostensibly the reason for the Police actions. This is nullifying whatever effect the nominal lifting of the Dutch blockade may have had. Indonesia, potentially a prosperous country, will be reduced to poverty unless a political settlement is reached.
(g) Further Action by the New Delhi Powers The Dutch are aware that if no solution is forthcoming the New Delhi Powers may initiate a move for sanctions.
(h) United States Pressure on Dutch This is perhaps the only way to make the Dutch see reason. In Friday's press (Canberra Times) is the following 'The Senate agreed to cut further United States aid to any nation singled out for punishment by the United Nations for violation of its Charter.
The proposal, sponsored by Senator Brewster, arises from the Indonesian dispute. He told the Senate that, unless the dispute was settled, it would be a major hurdle to Senate approval of the recently signed North Atlantic Pact, in which Holland was a signatory. Senator Brewster said a number of Senators would demand that the Netherlands settle the Indies trouble before the Senate agreed to ratify the Atlantic Pact.' 6. POSSIBLE SOLUTIONS (a) If the Dutch refuse to restore the Republicans to Djocjacarta then the Republican Government will presumably maintain the fight either from somewhere in Indonesia or in exile. Chaos will ensue and Indonesia will be in the grip of terror and disruptive creeds.
The United Nations should in this event impose sanctions.
(b) If the Dutch agree to the restoration of the Republicans to Djocjacarta the Indonesian problem will not be insoluble.
Australia might then suggest that:
(I) the Republicans (including the Emergency Government) and B.F.O. should get together to arrive at a Political Agreement among themselves. It would be hoped that they would then burn the B.I.O. Decree ;
(II) after such agreement the Dutch and Indonesians (Republicans and B.F.O.) should agree to joint control of the Federal Army during the interim period. This question of control has always been a stumbling block, but if the Dutch really mean that they can form the United States of Indonesia before 1st July, 1950, then the interim period will not be very long. Indonesian and Dutch troops could maintain de facto control in areas now occupied by them until the Dutch troops are withdrawn and Indonesian troops take over.