482 Critchley to Department of External Affairs

Cablegram C9 THE HAGUE, 7 September 1949, 10.45 p.m.

RESTRICTED

The following is a summary of developments in the various committees.

1. Steering Committee.

A sub-committee consisting of one Representative from each of the three delegations has been set up to screen applications from 'Representatives of significant interests' who wish to express their views. The commission has reserved the right to participate in the work of the sub-committee.

So far only the Netherlands group has taken advantage of the right of minorities to be heard on matters that concern them. In reply to a request from the Steering Committee this group has submitted a list of 30 items which it considers affects its interests. The sub-committee on 'significant interests' has been given the additional task of considering this list and of advising the Steering Committee which reserves the right to decide on which items the group may be heard.

2. Political Committee.

The three sub-committees of the political committee have been continuing their informal talks. Only the second sub-committee dealing with the Netherlands-Indonesian Union has got down to essentials. All participants agree in general that the purpose of the Union is to 'organise co-operation between two sovereign nations of equal status on a voluntary basis'. But there is a sharp division of opinion as to how this will be effected. The Netherlands want to establish a permanent machinery such as a Council of the Union, a Minister and a Union Court. The Republicans reject the idea of a Union Council as a permanent organisation and insist that the highest organ should be a conference between the Ministers or their deputies responsible to their respective Governments and meeting whenever the need arises.

They agree, however, that a joint organisation such as a Joint Secretariat or Bureau may be necessary to execute the joint decisions of the Union. The Federalists have not yet stated their views on the execution of the Union but have insisted strongly on 'the formation of a voluntary association which must not be felt as coercion'. Presumably they will support the Republicans.

A conflict may also develop with regard to the 'King' as the 'Head of the Union'. While all parties may agree that the King will be only a symbolic head The Netherlands are unlikely to agree to this being expressly stated in the agreement.

3. Economic Committee.

As expected informal discussions on economic and financial problems have brought out the sharpest differences between the parties. The Netherlands have presented an oral note setting out 15 principles to serve as a basis for the financial and economic agreement. These are summarised in my immediately following telegram.

Many of these principles and sections of most of them are unacceptable to the Republican and B.F.O. Delegations. The main objection is to the proposed far reaching interference in the internal economic policy of the R.I.S.

Four sub-committees have been set up to continue the discussions.

Sub-committee I-the study of the liabilities of Indonesia towards the Netherlands and the presentation of proposals for the solution of this question.

Sub-committee II-the investigation of real rights such as long leases, concessions, licenses etc., granted by Netherlands Indies Government (c.q. the Government of Indonesia) after 1942 and a report thereon.

Sub-committee III-the study of agreements regarding commercial policy and monetary treaties in order to make proposals with regard to the line of conduct to be followed in the future between the Netherlands and the R.I.S. in this respect.

Sub committee IV-the study of the monetary relations between the Netherlands and the R.I.S. including [1] banking and the monetary system.

The scope of these sub-committees is not clear from the titles.

Sub-committee I will deal with debts and other similar commitments between the Netherlands and Indonesia.

Sub-committee II will deal with real property rights and concessions.

Sub-committee III will deal with matters affecting foreign countries.

Sub-committee IV will deal particularly with internal financial polices.

The activities of sub-committees III and IV will to some extent overlap but arrangements will be made for joint discussion.

4. Military Committee.

This committee has agreed that it has not to consider implementation of the cease-hostilities order in Indonesia although discussions have not proceeded for differences have emerged. The Netherlands for example oppose the Republican suggestion to consider the withdrawal of Netherlands forces before the conclusion of the Conference. In general the Committee work has been held up while the Republicans have been endeavouring to straighten out the matters with the B.F.O. Delegation. The chairman of the B.F.O. on this committee, Sultan Hamid, is their main difficulty. One personal problem which is emerging is that Hamid, who is a Colonel in the Netherlands Army, wants to be Commander-in-Chief of the Federal Forces which is unacceptable to the T.N.I.

5. The Committee for Cultural Affairs and the Committee for Social Affairs Only preliminary discussions have been held in these committees.

1 A sign here indicates 'mutilated'.

[AA : A4357/2, 252, ii]