Action on your telegram 154 [1] was delayed owing to my absence at
Sourabaya meeting Mr. Calwell. [2]

2. Since my return, I have discussed developments in the meantime
with the United Kingdom Consul-General and have seen numerous
telegrams he has received from S.O.S. [3]

3. Sjahrir followed up a broadcast [4] immediately by a letter on
20th June to the Commission-General officially conveying agreement
to early establishment of interim Government and agreement to the
Dutch proposals on the position of the Crown Representative and
pointed out the necessity for early consultation with East
Indonesia and Borneo and early establishment of Federal organs.

4. This letter crossed a detailed reply by the Commission-General
which closely and argumentatively examined the Republic reply of
7th June [5] which it ended by rejecting. However, Schermerhom on
21st June replied to Sjahries letter which he acknowledged to be
an endeavour to bridge the gap and asked for clarification of the
Republic's attitude to the composition of the federal organs and
the respective roles of interim Government and the two
delegations.

5. The text of this correspondence was sent by air mail yesterday
(my letter PL26).

6. Republicans have now delivered the reply asked for and it is of
a reasonable and positive nature.

7. MOST SECRET: It is reliably believed that instructions have
been received by the Palace from The Hague to refrain from further
recriminations and to make a serious attempt to reach a
compromise. This is indeed borne out by the tone and continuity of
correspondence now being exchanged and improvement in situation
here.

8. You will no doubt know by now the news received here yesterday
that the Dutch Government has told the United Kingdom Ambassador
that his offer of good offices was no longer felt to be necessary,
also you will be aware of the American attitude. [6]

9. For the above reasons I feel that to prosecute action now
according to your telegram 154 would be chasing events and not
anticipating them and that you should have the opportunity of
bringing your instructions up to the minute. Should you desire to
have any communication made to the Dutch side you will no doubt
consider desirable having a parallel communication made at The
Hague.