INDONESIA
In view of long series of cables from Australia including Macmahon
Ball's reports and conversation with Makin, I have reached
following conclusions.

The situation appears to be worsening following failure of
conference [1] with probability of very serious disorders
involving heavy British commitment to use of force including
Japanese Forces to suppress nationalists and consequent legacy of
hatred throughout Southeast Asia with undesirable reaction upon
Australia and difficulties for future development of our policies
of security and welfare in that region.

Australia is the main outside power with direct interest in the
region and is bound in its owed interest to take some initiative.

Fact that initiative may not be successful does not warrant us in
not taking it. Australia is now the only power likely to act. You
will have noted Macmahon Ball recommends third-party intervention.

United States wants to keep out. Public statement along lines of
immediately following telegram [2] including statement our
interest and concrete proposals is designed to avert further
bloodshed and incalculable evils of prolonged guerrilla warfare.

If statement is agreed on between us Dutch could be told we see
proposed action as means of saving lives of prisoners of war and
internees and also of preserving Dutch sovereignty short of a war
of suppression which would hopelessly prejudice Dutch in eyes of
democracies. United Kingdom clearly wishes early solution without
further commitment of forces and to assist them we might offer to
continue in Borneo for further limited period. One important
question is whether we could provide Australian force for limited
task mentioned in proposals in following telegram. This is an
important feature of proposals and if adopted there must be no
doubt as to it being carried out. Undertaking by United Kingdom to
supply adequate shipping for removal of Japanese and prisoners and
internees would be essential.

I understand public feeling in Australia would approve proposals
of this kind.

These are now all matters of great urgency. Please telegraph your
views. I regard matter as of extreme delicacy and to be completely
agreed between us before any mention elsewhere.