TRADE WITH N.E.I.

With reference to your Minute of 17th June, 1947 [1], 1 have to
advise that I have seen Dr. Oesman on two occasions and have
discussed with him in general terms the availability of goods
which his Government requires.

It is, however, not possible to make much progress at this stage,
as Dr. Oesman is very vague as to actual requirements (including
types and quantities) and also as to the ultimate method of
payment which will be adopted.

I explained to him that, with the exception of 'disposals' goods,
none of the commodities concerned are the property of the
Commonwealth Government and will, therefore, need to be bought on
a commercial basis from manufacturers or merchants.

He appears to visualise some form of barter arrangement, whereby
the Commonwealth Government would make available stocks of the
required goods in return for supplies of sisal, kapok, etc. which
could be brought back in the Dutch ships now loading Dutch-owned
goods in Australia.

Some definite agreement along these lines would appear to be
necessary, or else the grant of a loan to the Indonesian
Government to enable credits to be set up against which they could
purchase goods here. I do not know how far negotiations in this
direction may have progressed at Canberra, but foresee some
difficulties until the Interim Government is set up in Indonesia,
or alternatively, until some arrangement is arrived at with the
Dutch which would enable the Republican Government to trade direct
with Australia. I gathered from Dr. Oesman that he was not
interested in importing goods for the benefit of anybody but the
Indonesians.

It would appear that some clarification of the political position
will be required before any practical steps can be taken to assist
Dr. Oesman to obtain his requirements. It would be obviously
useless at this stage to introduce him to suppliers, or to attempt
to earmark supplies in the hands of manufacturers for eventual
shipment to Indonesia until it is known on what basis and to whom
the goods are to be sold.