Special attention has been directed this week to seeking an agreement on the Statute of the Union. All parties agree that if agreement can be reached on this major political problem, discussions on other subjects would be easier and the atmosphere of the Conference vastly improved.
2. The Netherlands first draft of the Union was a Statute of 47 Articles. These provided in detail for (A) The aims of the Union (B) The Crown as head of the Union (C) A Union Council of ten members to fulfil the aims of the Union (D) A parliamentary Committee of 20 members for mutual consultation between the partners and to mediate in case of difference of opinion in or between Union organisation (E) A Union Court to administer justice in the name of the Union (F) Provision for the making of joint regulations (G) Special subjects of co-operation (i) Foreign relations (ii) Defence (iii) Financial and Economic relations (iv) Cultural and Social relations (v) Assistance with personnel (vi) Provision for the fundamental Human Rights and Freedoms (H) Provision for safeguarding the mutual exercise of citizenship (I) Special provisions (i) Inviolability of the Charter of the transfer of sovereignty and of joint regulations (ii) Expenses of the Union to be borne equally (iii) Exchange of High Commissioners (iv) Netherlands and Indonesian languages to be the official languages of the Union.
3. The Indonesians regarded the Dutch draft as too extensive and the proposed permanent machinery as the trappings of a super State. The Republicans accordingly replied with a much simpler proposal in which they stressed that the character of the Union should be that of an International Treaty. The Federalists (F.C.A.) have the same views as the Republicans, and if anything, are somewhat more vigorous in their opposition to an extensive Union.
4. The Netherlands Delegation will not accept the Statute specifically as an International Treaty, but they will agree to a statement that the Union does not prejudice the Statute  of either parties as an independent and sovereign State. Informal discussions have also led to a considerable modification of the Netherlands proposals. There now appears to be an agreement (A) That there shall not be a Union Council, but that the main organ of the Union will be a Conference which will be held regularly and serviced by a permanent secretariat.
(B) That the Conference will take decisions unanimously and that the discussions will only take effect when ratified by the respective parliaments.
(C) That the Union Court will be a Union Court of arbitration.
5. The Republicans and the Dutch were also prepared to compromise on an inter-parliamentary Committee which could be called into session on the initiative of the Conference or of the Parliaments, but only with the agreement of the Parliaments. The F.C.A., however, feels that if the opportunity of reaching a parliamentary body is left open in this way, such a body will, in fact, tend to become accepted to the detriment of the powers on the respective parliaments. The Republicans, to meet the F.C.A. position and in conformity with any earlier decision of the inter-Indonesian Conference, will now oppose proposals for an inter-parliamentary Committee.
6. The outstanding differences are now concerned with the head of the Union. The Netherlands insist that the Crown should have specific functions of a purely formal character such as the appointment of the members of the Court and the signing of decisions reached by the Conference. The Indonesians insist that the Statute should specifically refer to the head of the Union as a symbol, and that the Queen's functions should be limited to very minor matters such as signing the appointments of the Secretaries- General.
7. Although there is no major conflict of principle between the parties, the questions of terminology and form are taken most seriously by both. The Netherlands take their stand on the basis of their Constitution and their internal political problems. The Indonesians stress the psychological problems in Indonesia.
8. The St[eeri]ng Committee (the heads of the three Delegations and the three members of the Commission) will meet privately and informally in Belgium this weekend. The Committee will review the overall activities and progress of the Conference to date, but in particular will seek to reach an agreement on the Union with a view to formalise the agreement in a Plenary meeting next week.