Reference my K.102.

The Dutch are greatly exaggerating Monday night's incident at
Djocjacarta railway station and the press is unleashing an
hysterical campaign against the Republic. Latest reports are that
the N.E.I. Provisional Federal Government met this morning with
Abdulkadir, who left Djocjacarta for Batavia yesterday. Also
present were various prominent authorities of several states of
Indonesia. After hearing his verbal report on the incident the
Government is reported to have decided that the Republicans'
apologies were not sufficient; that discussions therefore could
not continue in Kaliurang as matters stood at present and further
instructions would soon be sent to the Netherlands delegation.

2. The Good Offices Committee has unanimously agreed that the
members will report to their respective governments their opinion
that the Netherlands are exaggerating the importance of the
alleged incident, that the apologies offered by the Republic
appear to be adequate and that there is no justification for
breaking off the talks in Djocjacarta. if the Netherlands persist
in their present attitude and recall their delegation, the
Committee members will ask their governments for instructions.

Although not yet formally agreed to, a report to the Security
Council would also be inevitable. The Committee's proposed stand
will be passed informally to Van Vredenburch this evening in the
hope that this will prevent a breakdown in the talks.

3. If the present stalemate continues, I shall endeavour to have
the Committee issue a press statement which will express its view
that the delay in continuing the talks is unwarranted. if the
Netherlands go further and recall their delegation to Batavia,
Dubois has already agreed to a press statement to the effect that
the Committee learns with surprise of the Netherlands decision;

that it will remain for the present at Kaliurang and reserve its
decision regarding its future action and movements.

4. The Good Offices Committee today approved a report on political
develop-ments in Western Java which incorporates all the important
points of our original draft. [1] I agreed to refrain from
submitting a minority report on the economic blockade of Bantam on
the basis of a formal agreement with the other members that:

(a) the GOC will press for an early reopening of trade and
communications with
Republican controlled areas as envisaged the truce agreement and
will recommend that a special sub-committee task of the Ecomomic
and Financial Committee be appointed with the specific task of
implementing this. Dubois has agreed to let me draft a statement
which he as chairman would make at the next meeting of the
Economic and Financial Committee.

(b) the Committee will begin immediately the preparation of a
report to the Security Council in terms of the Canadian Security
Council Resolution [2] and that this report will include a section
on the difficulties in reopening trade and communications together
with statement of what the Committee is doing.

(c) the Committee will make immediate and specific efforts to
reopen trade with
Bantam, using the report of the Committee's military observers and
that in particular it will press for permission for the Republic
to remove sugar from Republican Central Java to Bantam.

(d) if within a reasonable time trade with Bantam is not reopened
the Committee will report this in its next report to the Security
Council on political developments in Western Java.