Your 133 and 134. [1]

1. Indonesians accepted American offer of good offices and ask
them to be used to obtain arbitration by group of nations. This is
virtually polite rejection and has been so interpreted by American
Consul-General Batavia.

2. Meanwhile Indonesian Prime Minister has accepted our proposals
for joint American-Australian arbitration. This offer was of
course made to both parties.

3. Position now is that Dutch have accepted American mediation.

Indonesians have accepted American offer of good offices and have
requested they be used to secure arbitration by a group of
nations. Indonesians have accepted our proposal for joint
American-Australian arbitration.

4. Way should be open for agreement before Security Council meets
on our proposal or as compromise our proposal with addition of one
other nation for example United Kingdom which would be acceptable
to the Dutch.

5. It is unlikely Security Council will accept proposal of
mediation and Dutch will be faced with choice of eleven power
commission [2] of arbitration or failing agreement between Dutch
and Indonesians on this reference back to Security. Council which
shall itself endeavour to arbitrate. Talk of American veto [3] has
nothing to support it as it would be politically impossible.

Agreement by the Dutch along lines of paragraph 4 above can assure
satisfactory conclusion and they would be unwise to allow
incorrect reports regarding our action to prevent them adopting
this satisfactory course of action.

6. Regarding paragraph 2 your 134. My immediately following
telegram is repeat of message from Hodgson [4] and should be
communicated at once.

7. Please endeavour to obtain another interview with Foreign
Minister explaining position as outlined above.