Your 256. [1]

I saw Bevin and Addison morning of 23rd July. Bevin opened by
saying that he regarded the Indonesian situation as not being
isolated. If no solution were found promptly it might lead to
similar troubles in Malaya, Burma and may even upset the good work
that has been accomplished in India this year. Its complications
are world wide.

2. Bevin went on to say that India did not want to see the
Indonesian question before the Security Council because discussion
there would have an unsettling influence on India itself if the
proceedings followed the precedent of those on Greece and like
questions and went on in an inconclusive way with the use of the
veto. The only hope was some form of mediation and India was
anxious that this should be achieved. [2]

3. Later today Bevin is to see the United States Ambassador to
enquire what part the United States Government is prepared to play
in concrete action at The Hague. He has in mind some form of
arbitration in which both the Dutch and Indonesians will agree to
accept any award. He expects to make a full statement of the
present United Kingdom position in the House of Commons this
afternoon. [3] Commonwealth Relations Office is telegraphing the
text. Bevin is also to go to Cabinet this afternoon for a
direction as to future action.

4. Dealing with action taken recently Bevin stressed that he had
been at great pains to avoid what has occurred. He talked to the
Netherlands Foreign Minister at Paris recently and he believes
with success. The United Kingdom is of the opinion that the
Netherlands Foreign Minister was overruled by the Dutch Cabinet.

5. At this point I asked whether in view of the fact that the
United Kingdom's attempts had been brought to nought it might not
be possible for some country outside the Great Powers to undertake
mediation. Bevin asked immediately what Australia could do. He
then enlarged again on the action already taken and said that he
was tired of attacks and suggestions that United Kingdom policy
had failed merely because its many efforts had failed to prevent
the Dutch resorting to force. The United Kingdom had put troops in
with great losses and had avoided major catastrophes earlier. The
United Kingdom had assisted to bring about an agreement between
the Dutch and Indonesians and now the range of disagreement
between them had been reduced to the question of the Gendarmerie
and the allegations of failure to observe terms of truce.

6. I said that his question as to what Australia could do was not
immediately answerable. It depended on what mediation might be
acceptable and it depended on developments in the position
generally. But Australia was strongly of the opinion that in view
of our proximity to the N.E.I. and our experience over the past
two years in the issues at stake Australia could make a
contribution. If the Government at The Hague refuses this course
deliberately and refuses to countenance its being settled by
action from The Hague then the only hope might be negotiations and
mediation on the spot in the N.E.I. which would convince the
Government at The Hague. Australia would be able to make a
substantial contribution in such negotiations.

7. I mentioned Australia's admiration for the work of Killearn and
our conviction that his services could be well used in the present
emergency. Bevin elaborated at great length on Killearn's virtues
but said that the form of action to be taken now that The Hague
had declined to accept the United Kingdom's offer of its good
offices must depend on his conversations with his colleagues and
with the Indian and United States Representatives and on Cabinet's
decisions. Bevin said that the United Kingdom Government would not
wish to interfere with any action the Australian Government
decided to take towards stopping hostilities and settling
outstanding problems in the N.E.I. and indeed would welcome it.

But the actual form of our collaboration with the United Kingdom
in a joint effort must necessarily wait the Cabinet's decision
after review of all factors including the attitude of the United
States.

8. Cabinet decision will be reported as soon as available. [4]