Proposals of the Bandoeng Negara Conference [1] (telegram K144
[2]) are entirely unsatisfactory to the Republic as they are
limited to arrangements for the interim period and do not
sufficiently define powers even in respect of that period. The
Republic at this stage can only consider overall proposals.

2. The Republic, which is concerned with the possibility of its
own dissolution unless it takes the intiative, will now call off
all negotiations other than those regarding the implementation of
the truce. Roem will make a statement to the Steering Committee
to-day that no progress has been made in political talks since the
Netherlands refusal to consider Australian - United States
proposals [3] and that until a new and mutually acceptable basis
for negotiations can be found the Republic sees no purpose in
continuing the talks.

3. I shall endeavour to have the Committee report the breakdown in
negotiations and am sounding out the possibility of the Committee
taking some initiative. The latter, however, is unlikely,
particularly in view of the Belgian attitude. Herremans will be
returning to Belgium for a short visit next week, leaving a
deputy.

4. The Committee yesterday completed its report to the Security
Council on trade restrictions. This is as strong as possible for a
unanimous report and makes it clear that Republic's economic
difficulties are largely attributable to Netherlands trade
regulations.