[matter omitted]

Despite a week's recriminations, the atmosphere when the talks
recommenced on Monday, 19th April, did not seem to have
deteriorated. In particular, discussions in the Social and
Administrative Committee and in the Economic and Financial
Committee appear to be progressing satisfactorily. The former has
not yet presented its report on the release of political
prisoners, but Republican representatives hope to be able to
present a satisfactory agreement at Friday's meeting.

All the sub-committees of the Economic and Financial Committee
have reported. Details were included in my telegram K. 108. [1] In
the Political Committee, however, progress is slow. Foreign
affairs was an early issue on which trouble was expected. For the
time being all is quiet on the basis of an assurance by the
Republican Government that the Republic has no intention of
expanding its foreign representation. But, like our neighbour
'Merapi' [2], the foreign affairs issue is likely to blow up at
any time.

Another issue causing trouble is the Union. The Dutch working
paper [3], although it makes the statement that the Netherlands
has no intention of setting up a superstructure, is a confused
paper which does little to eliminate the Republic's fear that the
Dutch are endeavouring to use a Union to retain some control after
the United States of Indonesia is established. For example,
paragraph 11 reads:

'The supreme responsible executive organs of the Union will be the
Ministers of each of the partners to which the promotion of Union
affairs is entrusted. Together they form the Council of Union
Ministers.'

Then again paragraph 2 is unpopular since it represents a danger
that a conference selected by the Dutch and not a democratically
elected body of Indonesians, might be entrusted to draft with the
Netherlands the Statute of the Union. I am still hopeful that
detailed discussions will prove that the Dutch proposals are much
more reasonable and conciliatory than they appear on paper. We
should know more by the end of this week.

More serious is the question of the plebiscite. The Republic
claims that the Renville principle [4] does not provide for a
plebiscite in Republican territory but only in disputed Dutch
occupied territories. This argument seems to me to be weak. it is
also vulnerable to a world opinion which might, with Dutch help,
regard the Republic as afraid to test public opinion. Consequently
I had thought the Republic would readily agree to some compromise,
but the issue is now a major one on which Sukarno has told me
personally 'the Republic will not give way'.

Since it is important that the talks should not break down on an
issue so unfavourable to the Republic, I have been endeavouring to
find a means of getting round the present deadlock. There are two
possibilities: firstly, for the Republic to accept a plebiscite in
the Republican areas taken as a whole, as a means of providing an
opportunity for the people to express their solidarity behind the
Republic. This would probably be satisfactory to the Republic,
although politics and face saving might require that it be
presented as an agreement going beyond the Renville principles. On
the other hand, it is unlikely to be satisfactory to the
Netherlands and the other members of the Committee.

The alternative which appears to me much more reasonable is to
avoid a plebiscite altogether. It can be logically argued that the
Constituent Assembly, which will be responsible for deciding the
respective powers of the States and the federal government should
also be responsible for defining the local administrative units
(to be called States) within the federation.

The proposal would have a number of advantages:

(1) It would produce a better organized administrative system than
one in which boundaries were decided by a plebiscite which would
be limited by the difficulty of posing the issues in a form simple
enough to be understood by the uneducated Indonesian and yet
sufficiently wide to ensure a satisfactory result;

(2) Present Republican insistence on the Republic remaining as a
unit could have serious disadvantages if it resulted after a
plebiscite in a State of many areas cut off from one another. The
Republic realises this difficulty and is in the process of
dividing its present area into separate administrative units.

There is clearly a problem ahead of the Republic and the proposal
that the Constituent Assembly should decide administrative areas
would enable it to be met without loss of face or political
embarrassment;

(3) A democratically elected Constituent Assembly based on
electorates would probably mean stronger representation for the
Republic than if the representatives were appointed by the various
States;

(4) It would be possible to set up the United States of Indonesia
within a shorter period than if a plebiscite had to be held prior
to the election of a Constituent Assembly.

Such talks as I have had with the members of Republican delegation
lead me to believe that a proposal along these lines would be
acceptable. It would also probably be acceptable to the Belgians
and Americans.

In general, I am working on the assumption that the interests of
the Republic will be met if there is an agreement for-
(a) a sovereign United States of Indonesia;

(b) a Union with the Netherlands which will not prejudice in any
way the sovereignty of the United States of Indonesia;

(c) a procedure for democratically electing a Constituent
Assembly, together with agreement as to the general directions to
be given to that Assembly.

If, as I fear, a deadlock develops, I shall endeavour to induce
the Good Offices Committee to take the initiative along the lines
I have outlined above. So far, with only one exception, the other
two members have been anxious to limit the G.O.C.'s initiative.

That one exception was a most unfortunate proposal by the United
States that the Committee should take a lead in obtaining
agreement of the parties to a schedule of the steps to be taken
towards the formation of a sovereign United States of
Indonesia. [5]

Such a schedule, it was proposed, would make it clear that the
United States of Indonesia would be unlikely to be set up by the
1st January 1949, but more likely about 11 months after the
political agreement. The Americans claim that the early
publication of such an understanding 'might hasten the date on
which sovereignty can in fact be transferred to the United States
of Indonesia, enable the various governments concerned to commence
making definite plans, help gradually to create a constructive
atmosphere, and perhaps, above all, forestall widespread
disillusionment which could be most harmful to the atmosphere
should it become apparent that the original target date for the
transfer of sovereignty cannot be met'. As far as I can see, the
only reason for such a statement would be to assist the Dutch in
an awkward spot. The Dutch themselves are wary of publicising the
fact that sovereignty may not be handed over at the beginning of
next year for fear of alienating their Indonesian supporters, in
particular the State of East Indonesia. Since I am firmly of the
opinion that a satisfactory settlement depends on pressure on the
Dutch, and since the present impression in the minds of the people
in regard to the 1st January 1949 is a pressure which the
Netherlands are finding inconvenient, I believe acceptance of the
American proposal, far from encouraging an early political
settlement, would be likely to retard it. In any event, the
Committee is in no position to make any suggestion whatever as to
the steps that will be necessary for the setting up of the U.S.I.

until a political agreement has in fact been reached. My argument
is that the appropriate time to issue a schedule will be at the
time of that political agreement. This should surely be prior to
January 1st, 1949, and would therefore forestall any widespread
disillusionment the Americans fear is in store.

The Republican delegation will submit in the near future a working
paper on an interim federal government. [6] Although I do not
believe the formation of such a government essential to a
political settlement, I know the Dutch will endeavour to insist on
it and will receive support from the Americans. If a satisfactory
agreement on the interim government can be reached, it will
facilitate the solution of a number of problems, particularly
rehabilitation problems, with which the Dutch are particularly
concerned. On the other hand, if, as I fear agreement will be
difficult to arrive at, it would seem preferable to make the
interim period as short as possible and not worry about Republican
participation for the time being. Possibly a democratically
elected Constituent Assembly after completing its tasks could be
converted into a provisional parliament which would elect a
provisional government to which sovereignty could be transferred
by the Netherlands.

The Secretariat attached to the Committee has been considerably
strengthened. Narayanan has returned as leader and has brought
with him an Australian, Timperley, whom you will know, as second
in command, and an economist. A press relations officer is on the
way so that these additions together with the present staff of two
assistant secretaries, an interpreter, an administration officer
and four secretary typists, provides a strong administrative
assistance which should make our job easier.

Narayanan will probably return to New York in approximately two
months leaving Timberley in charge of the Secretariat.

The American Delegation has also been strengthened. Dubois now has
four advisers, including an economist.