Officially my activities have mainly been concentrated on reporting to the Security Council and on matters connected with the Asian Conference. The telegram  which I sent you on the latter subject containing Republican recommendations to their representative in India should be of value and Section B in particular provides some interesting suggestions for a settlement.
2. It is now clear that it would be impracticable for the Dutch to withdraw behind the old Status Quo Lines-at least there is no possibility of getting their acceptance of such an order. It therefore seems equally clear that free negotiations between the parties would be difficult to arrange. The Republicans would be under the disadvantage of having no territory under their control and of being subjected to strong military pressure. It is therefore, most desirable that if there is to be any settlement the terms, at least in outline, should be laid down by a third party. Perhaps it is still not too much to hope that the Security Council could be induced to take strong positive measures in this direction. In any event the Asian conference may.
3. In general the Netherlands have played down events in Indonesia while their restrictions on pressmen and other observers and their strong censorship have prevented much real information leaking out. In Batavia the three Republican papers have been treated as follows during the past week:-
'Berita Indonesia' was suppressed until further notice by order of the Prosecution Counsel, 'Merdeka' has received a last warning to be more 'moderate'.
'Pedoman' has had two of its editors called up to appear before the Prosecution Counsel because of their lack of 'moderation'.
Nevertheless, there are a number of indications that the Dutch are having a much harder time than they would admit. Sources here claim that postal communications between Indonesia and Holland have been completely disrupted by India's restrictions. Business circles also complain that the lack of communications has brought trade to a standstill. From inland come a series of reports of intensive guerilla and scorched earth activities.
4. Some indication of these is given in the attached Appendices , especially Appendix 1.
Appendix 1 is the most important and is a report based on a personal interview with George Kahin a reliable American who returned from Djokjakarta tonight.
Appendix 2, also an extremely valuable document is a summary of an oral report made to the Consular Commission by Lieut. Col. Rhys and Commander Dierman.
I have heard privately that Lieut. Col. Rhys received much stronger impressions of the efficacy of Republican guerilla tactics than are contained in this report.
Appendix 3 is a personal report of Kahin on the attack on Djokjakarta.
Appendix 4 contains a translation of extracts from a letter from an important Republican in Djokjakarta.
Appendix 5 is a translation of the message contained in Dutch leaflets which have been dropped in Republican areas.
5. I have obtained tonight official statements of Hatta, Sukarno and Natsir made on the morning of the 19th December and am having them translated for inclusion in the next bag.
6. Within the last few days business people in Batavia have been circularised to notify the police if their workers appear hostile or behave suspiciously.
7. Contrary to early reports of the Dutch Army Information Service it is now admitted that Djambi, the oil area in Sumatra, suffered severely as a result of the Republican scorched earth policy. The Dutch reports read in part, 'Large fires were set to the oil installations and other objects in the Djambi area by 'irresponsible bands of communist groups of the TNI command' ...
In the town of Djambi itself the power station and most of the big buildings and markets were arsoned and 65% of the Chinese section of the town was razed to the ground causing 7000 Chinese to be homeless. Most of the Indian homes were also reduced to ashes and 500 Indians are now camping in emergency accommodations'.
8. Adbulkadir, formerly Deputy Lieutenant Governor-General, has returned from Central Java with the pointed suggestion that the renaissance of Central Java should start not from Djokjakarta but from Solo because 'Djokjakarta has gone too far.' He also expressed the opinion that there are 'other Republican leaders than those who were sitting at the top who command the respect of all levels of the population and are keenly aware of their responsibilities'. Could there be a clearer admission that co- operation is not all that was expected.
9. In view of the many difficulties the Netherlands are experiencing in their efforts to subjugate the Republican areas, it will not be surprising if the Committee or some other international body receives appeals to help the Dutch to stop the fighting. Van Royen and several prominent Dutchmen here have already hinted as much.
10. Now that the Committee's Military Observers have gone into the field it should be possible to obtain more regular reports of events in the interior. On the basis of our experience, however, I very much doubt whether the military observers will take full or even adequate advantage of their opportunities.
11. Dutch Palace sources advise me that strenuous efforts are now being made to form an Interim Federal Government. Despite many difficulties it is hoped that the Government will be formed in the near future. At present the unofficial political body which has come to be known as the 'Federal Conference of the Heads of States' is meeting in Batavia to discuss the present political situation. Present are the Heads of States of East and South Sumatra, Pasundan, East Java and Madura, the Head of the autonomous region of West Borneo as well as some representatives of West Sumatra and the permanent representative of East Indonesia in Batavia. Anak Agung Gde Agung, East Indonesia Prime Minister designate, 'had to postpone his arrival in connection with consultations regarding the formation of the New East Indonesian Government'.
12.Beside the Wali Negara of Pasundan, the newly appointed Prime Minister and the former Premier of this State are at present in Batavia. In this connection it has been announced that the resignation of Puradiredja as Prime Minister has been officially accepted and that the Wali Negara has validated a list of cabinet Ministers submitted by Dr. Wiraatmadja, who had been mandated to form the new Government. So far the list contains only five names including one Dutchman and one Chinese.
13. Today the Committee asked the Netherlands for permission to visit President Sukarno and other Republican leaders at Banka, offering to use the G.O.C. plane if this permission could be granted. Schuurman, acting Chairman of the Netherlands Delegation, was obviously taken aback by the request and admitted this was something that had not been foreseen. He promised to reply this evening if possible, but we may expect delaying tactics. Some cynics would suggest the Dutch want time to get the leaders to Banka. However, we will press for a reply in time to cable information to the Security Council meeting in Lake Success on Tuesday.