INDONESIA

1. Palar and Choa Indonesian representatives came this morning to
tell us in great confidence that unnamed person very close to
State Department and previously found helpful and completely
reliable had just conveyed an important proposal to them on behalf
of State Department but on deliberately non-official basis.

2. Proposal is that either Republican Delegation propose to
Committee of Good Offices or Republican Mission here perhaps to
Security Council that de jure sovereignty (which is main issue in
present deadlock in Indonesia) be given to United Nations pending
transfer of sovereignty to United States of Indonesia. De facto
sovereignty in present Republican area to be exercised by Republic
and in remainder of Indies by Netherlands. United States would
support the proposal whether made by Republic in Batavia or at
Lake Success.

3. Palar and Choa had not obtained definite information whether de
jure sovereignty of United Nations would be over-
(a) Whole of Indies, or
(b) Java-Sumatra-Madura i.e. disputed territory, or
(c) Present Republican-controlled area.

4. They did not know whether Dutch or Republicans had been sounded
but sur-mised Van Kleffens' present visit to The Hague and his
reported audience with
Julianna in company with Beel might be connected.

5. They have cabled their Government and asked us to endeavour to
have Critchley informed as early as possible.

6. They believe the proposal would be very advantageous to the
Republic as it would, inter alia-
(a) Give a United Nations guarantee of sovereignty for the future
United States of Indonesia.

(b) Make it impossible for Dutch again to use force against
Republic since the territory would be under United Nations
sovereignty.

7. They think State Department motives are probably
(a) To achieve early economic reorgainsation of Indies and
reintegration into world economic system with relevance to E.R.P.

(c.f. United States endeavours in February to induce Republic to
enter Provisional Federal Government), and
(b) To restore United States prestige in United Nations.

8. Palar used the term 'Trusteeship' but stated this was not used
by American source mentioned in paragraph one above. However, this
was clearly his own conception of proposal which he thought could
be carried out under terms of article 77(1)(c) of the Charter. [1]