I have read with interest your Top Secret Despatch (Hag.26/47) of
8th October, 1947 [1], concerning a proposed arrangement between
the Dutch and Portuguese to counter nationalist movements in their
respective portions of . . . Timor.

Reports of nationalist movements in any part of the East Indian
archipelago are always of interest to us: in addition, we have
been concerned since the end of the war to bring about close and
cordial relations with the Government of Portuguese Timor. By
establishing a Consulate there and later by inviting the Governor
of Portuguese Timor to Australia for informal talks [2] we have, I
think, largely succeeded in attaining our objective. The important
thing now is to maintain those relations and for this reason your
despatch was of value to us.

We have up till now received only very fragmentary reports on
Dutch-Portuguese relations. In general, but particularly at higher
levels, they appear to have been cordial.

It is known that in April of this year the Governor of Portuguese
Timor was concerned at the possibility that nationalist agitation
in Dutch Timor should spread to his own territory. Special steps
were taken to strengthen the frontier province guard which in its
zeal evidently crossed into Dutch territory and clashed with Dutch
guards. Strongly worded notes were then exchanged between the
Portuguese Governor and the Dutch Resident at Koepang. [3]

I do not of course regard this incident as important in itself or
as being in any way inconsistent with an agreement between the two
parties to take joint measures against what nationalist agitation
may occur in Timor.

Eaton, while Consul at Dili, paid two visits to Koepang [4] and
had talks with the Dutch Resident and other officials there. His
reports indicated that while there existed a good deal of
confusion resulting from the inclusion of Dutch Timor in the State
of East Indonesia, the trouble was administrative and not
political. In May he reported:

'At the present time, the administration is in a state of flux and
the governing of Timor and other islands is being handed over to
the local councils. The Resident, Assistant Residents and
Controllers are acting as advisers and at the same time,
representatives of the Dutch Government, whereas previously the
Resident was the controlling administrative authority under the
N.E.I. Government with Assistant Residents in Timor, Flores and
Soembawa and their Controllers as his subordinates. Certain minor
powers were given over to the Rajahs.

The Resident told me that he was in a most unenviable position. He
is honour-bound, by the orders of the Queen, to get the new system
going but it is most difficult for him to carry out orders
received from the East Indonesian Government at Makassar and to
meet the wishes of the Dutch Lieutenant Governor-General at
Batavia. He said his position is most invidious as he has to act
as both an adviser and a Dutch Ambassador to the [East] Indonesian
Government. All instructions he receives from Batavia have to be
passed to the East Indonesian Government. The orders he receives
from Makassar are passed on to the Council of the Rajahs and
representatives and he advises accordingly. For Timor and the
Sunda Islands there is a Rajahs' Council consisting of 11 members
and a Representatives' Council of 14 members. The Rajahs' Council
acts as the Upper House and both Councils meet together three
times a year. All financial matters still have to be approved by
the Dutch Lieutenant Governor-General. The N.E.I. Government as
before meets the cost of administration and official wages.'

In the same report Eaton added:

'There is no actual outward political trouble in Timor itself but
I was told that political trouble has extended to Soembawa.'

It may be, of course, that agitation has to some degree extended
East since that time but I do not think that, apart from a limited
amount of Republican inspired propaganda, we have at present to
anticipate any considerable nationalist movements in Timor, or
indeed in those Islands cast of Lombok which fall under the
Residency of Timor.

Nevertheless the question is of the very greatest importance to
Australia and must be watched closely.

If you are able to obtain any further information on the final
outcome of the Dutch approach to the Portuguese in regard to the
matter dealt with in your despatch or on other aspects of Dutch-
Portuguese relations, it would be very valuable to the Department.