On Wednesday, March 10th the Lieutenant Governor General set up by
decree 'The Provisional Federal Government for Indonesia'. It
consists of seven Indonesians and nine Dutch, together with Van
Mook as President and Abdulkadir as Deputy. The composition is:

(a) Eleven state secretaries in charge who will be assisted in
some cases by Dutch 'advisers general'.

(b) Three state secretaries, one of whom is already in charge of a
department, who will be given special tasks in connection with
Internal Security, self-governing affairs and Foreign affairs,
with the suggestion that these tasks may lead to the formation of
new departments.

(c) The heads of the three departments of the old Netherlands East
Indies Government, Army, Navy and Attorney General's, all of which
will remain as they were.

2. Examination of the structure shows that no new Government has
been estab-lished. De Jure all powers will continue with Van Mook.

The Old Netherlands East Indies Government remains but a number of
Indonesians have been put in charge of reorganised departments as
a means of gaining experience.

3. On Sunday, the Netherlands East Indies Government Information
Officer issued hand-outs in which the new structure was referred
to as an 'interim' government with the implication that it was an
entirely new Government in which the Republic would be invited to
join. These hand-outs were NOT to be published before six p.m. on
Tuesday March 9th. However, on Tuesday morning the press were
informed that the statements could be released at mid-day. Then at
twelve-fifteen on Tuesday, the decree was released which made No
reference to the word 'interim'.

4. From these developments it may be surmised,
(1) that the new provisional Government was originally devised as
an interim Government which would present the Republic with a fait
accompli,
(2) thence, as a result of instructions from The Hague possibly
stimulated by American pressure, there was a last minute change of
plan based on the realisation that a new structure would be quite
incompatible with the conception of an interim Government
contained in the Renville agreement,
(3) that the Netherlands East Indies authorities, despite
instructions from The Hague, are not prepared to give up wholly
their original conceptions and are endeavouring to confuse the
situation.

The last of these surmises is borne out by the fact that the first
task of the new provisional Government is to consider the
establishment as a public forum of a Senate on which all States
would be represented.

5. My fear is that the Dutch, unless kept on the rails and forced
to reach a satisfactory political agreement with the Republic in
the next few months, will twist the new Government structure as a
basis for a United States of Indonesia. If the Senate is
established, the new structure could easily be transformed into a
Government on the American model. Such a Government without the
checks and balances of the United States Constitution and with a
President appointed by the Dutch is an antithesis to democracy.

6. The main pressures available to the Republic to bring the
Netherlands to a satisfactory political agreement are,
(1) World opinion.

(2) Ability to live alone.

(3) Threat of dislocation and disorder.

The first of these depends upon reports of the Committee and
parties in terms of recent Security Council resolution. [1] The
second depends upon trading opportunities open to the Republic.

Apart from the opening up of commerce and communications in terms
of the truce agreement the most important objective here is to
ensure that Malaya and Singapore do not enter a trade agreement
with the Netherlands East Indies which will tie up all Indonesian
trade. The British Consul-General assures me that the reason for
delay in the proposed agreement has been the reluctance of the
United Kingdom to take action which will assist the Dutch to
regulate Republican trade for their own political ends. I believe,
however, that representations should be made to London requesting
the United Kingdom Government to delay such a trade agreement
until it has the approval of the Republic, or perhaps our own
Government. The third pressure might be used at a later stage to
swing American support behind reasonable Republican objectives.