Your UN433. [1] Indonesia.

Both parties have been meeting continuously with Committee of Good
Offices in Indonesia to try to reach agreement on outstanding
political and economic issues. While agreement has been reached on
comparatively minor matters, progress on important issues has been
slow. The Dutch have continued to take offence easily over small
incidents, e.g. Djokjakarta Station episode [2] and the recent
Tjoa statement in New York [3], and they are apparently seizing
every opportunity to impute bad faith to the Republicans.

At the present time discussions are centering mainly on questions
concerning the establishment of the United States of Indonesia and
the Netherlands-Indonesian Union. Both parties are in broad
agreement on principle, particularly as regards framework of the
former, but the Dutch are apparently trying to ensure that the
Netherlands-Indonesian Union will be a kind of supra-government
which they themselves would control and which would have effect of
nullifying Indonesian sovereignty. There are in addition
differences regarding steps to be taken to establish U.S.I., and
particularly regarding extent of proposed plebiscite. Meanwhile
main channels of publicity and propaganda are in Dutch hands and
Republicans are being prevented from presenting their case in
Dutch-controlled areas.

Critchley is trying to secure general agreement to political
proposals which would obviate need for plebiscite and which would
in his view provide a short cut to Indonesian sovereignty. He
believes he might be able to secure agreement of Committee, though
Americans still dislike the idea of Committee putting forward
specific proposals. (Critchley reports that American attitude has
in general become increasingly pro-Dutch). Proposals would
probably be acceptable to Indonesians, but Dutch acceptance is
doubtful.

4. While progress has been made towards restoration of internal
trade, question of Republican foreign trade still remains
unresolved. Dutch have shown no disposition to assist Republicans
to import vitally needed goods and equipment from abroad, and
appear to be maintaining tight blockade. You should take
opportunity of emphasising that Republic is greatly handicapped by
inability to obtain goods for reconstruction and ask whether the
Dutch are to be allowed to continue to prevent Republic from
obtaining those goods direct from abroad if necessary. Republican
position has already been considerably weakened, and it is unfair
that United Nations, while recognising Republic as a party to a
dispute still before it, should be virtually conniving at Dutch
action to crush Republic economically.

5. Understand Committee has forwarded to Security Council a
progress report of negotiations. [4]