Dutch Minister  here apparently on instructions appealing informally to us to work on the Indonesians especially on military aspects of talks threatening to break down. Situation in Batavia causing anxiety. Financial aspects and New Guinea now not main issues. He has been told we expected situation in Bataavia to deteriorate in absence agreement. Only remedy is to arrive at settlement and at present there is no proposition we could usefully back with Republicans. In any event further pressure on Indonesians may have serious consequences. If they fear talks breaking down, they should ask Commission to suggest solution and undertake to abide by Commission recommendations. They could be sure Commission solution would be reasonable in respect of New Guinea, debts, defence bases, etc., as all members of the Commission influenced by desire to keep Indonesia in western sphere and to prevent slide to extreme left group which certainly will be the case in absence quick, just settlement. Important for Hatta to get back urgently and not empty handed.
2. United States representative  says his Government have informed Cochran to back trusteeship. Netherlands Ambassador , Washington, had asked United States support on some unspecified form naval agreement.  United States, however, puzzled as there was no apparent interest shown by Netherlands in broad defence, but only in prevention of trade in narcotic drugs and observation customs laws. He asked our view and was told we would view favourably defence agreement, as United States of Indonesia must have this assistance, but could not accept naval arrangement designed to give Netherlands opportunity to determine economic issues by use of naval blockade. He was told also that if Dutch had real fears of breakdown only solution at this late stage was for Netherlands to take initiative in admitting no agreement and asking Commission to recommend overall settlement. If United Nations Commission recommended, we would support whole-heartedly and do everything possible to assist in implementation.
3. Reference to Security Council of one episode can do little good, nor can Assembly discussion achieve immediate result, whereas situation in Indonesia requires immediate and urgent action. Netherlands should now determine their course either to continue negotiation, which looks like being protracted, and stand to lose Indonesia to extremist group, or immediately ask Commission to recommend on all main issues and undertaking to carry out recommendations.
4. Glad your urgent comments.