Your telegram 931. [2] Reviewing all circumstances including
advantage of enabling you to meet Portugal's wishes as far as
possible we are agreeable to sending to Dilli certain Australian
troops now in Dutch Timor to replace equivalent number Dutch
troops whom you suggest should be withdrawn from Portuguese Timor
to Dutch Timor.

This exchange would mean the transfer of two companies of the
A.I.F. from Koepang to Dilli. Because of the importance to
Australia of the defence of Koepang, our Chiefs of Staff draw
attention to the following additional points:-

(1) That if the Dutch will not be party to the proposed exchange
but will withdraw their troops from Dilli, then this should be
done. In this event, no Australian troops should be transferred
from Koepang to Dilli but the reduced force at Dilli viz. one
independent company A.I.F. should be accepted for the present in
preference to depleting the forces at Koepang which are already
insufficient for their important role.

(2) That the composite force that will be established at Koepang
if the proposed exchange is carried out will be less satisfactory
than the present force which is entirely or preponderantly
Australian.

(3) That in no event should there be any change in the policy
whereby the A.I.F. Commander at Koepang [3] is in command of the
composite forces.

(4) That the Department of the Army is investigating the
possibility of forming two rifle companies out of available A.I.F.

reinforcements to replace the two companies that will be
transferred from Koepang to Dilli if the proposed change is
effected. [4]