Indonesia, my telegram N.21. [1]

1. Information from Java and the Hague seem to contradict earlier
hopes that a really satisfactory solution of the Indonesian
problem was in sight. [2] you may already have received reports
from Batavia regarding the situation there, but in case you have
not, the following two paragraphs summarise the latest information
received here from Java.

2. According to this, since Lord Inverchapel and Van Mook left
Batavia the reactionary element among the Dutch has come into the
open. While he was there Van Mook succeeded in keeping his
reactionary colleagues out of sight, but the field of Dutch
officials is now led by Dr. Blom and Count van Bylandt. [3] The
British Representative in Batavia fears that Spoor must be
included in this group because it is difficult to believe that had
he wished he could not have prevented recent excesses of troops.

At the same time the D. E. Inheid group under Major Jiskoot is
actively unfolding its Nazi principles.

3. According to the same source it is apparent that Sjahrir's
mission to the interior has failed to placate the extremists, and
in fact he may have lost ground. To Indonesian leaders the present
Dutch line seems to justify all their earlier suspicions. They are
becoming increasingly restive over the apparent inconclusiveness
of the talks in the Hague, and they are not reassured by the way
in which the Dutch radio is endeavouring to minimise their
importance.

4. it appears from reports from the Hague that the Netherlands
Government has no immediate intention of carrying out the proposal
of issuing a declaration regarding the agreement with the
Indonesians (see Dominions Office telegram D.359, paragraph 2 [4])
. An official statement released at the time of the departure of
the Indonesian delegates from Holland [5] instead of placing the
matter before Parliament 'in all its ramifications' and then
evolving instructions for Van Mook. The statement adds that the
Government's offer of 10th February of Dominion status with a
later choice between [continuance of that status or independence
still formed the basis of discussions. It stated that the
conference at The Hague had made an important contribution to the
problem that 'it was natural that all differences could not be
bridged'.

5. According to remarks made privately this week by the
Netherlands Minister for Foreign Affairs undue expectations had
perhaps been aroused in regard to the conference, which was in
fact essentially exploratory since Indonesian delegates had not
full powers to speak for Sjahrir. The Minister gave the impression
that the constitutional issue was now the main preoccupation of
the Netherlands Government. If the opposition in Holland could
accuse them of flouting the constitution they would rally the
support of elements who other-wise would be prepared to accept the
Government's decision as probably the only solution to a
disagreeable situation.

6. The general impression given by these reports is that the
Netherlands Government has receded from the determination which
Schermerhorn [6] expressed in London of coming to an agreement
with the Indonesians on the basis then under discussion, and is
once again playing for time. It may be suspected that the court,
instigated possibly by the Army, has intervened to prevent the
Government from committing itself to an agreement which must seem
to those in court circles as an abandonment of Dutch rights and
privileges in Indonesia. It might also be that the Government has
become alarmed at the effect on Dutch opinion of the propaganda
being put out by the opposition that the present proposals would
mean the loss to Holland of] [7] her Indonesian trade and her
consequent reduction to an insignificant and impoverished country
with catastrophic unemployment.