Our local relations with the Dutch are getting worse and worse, as
was demonstrated over the Indonesian party. [1] It was regrettable
that Teppema rang all other Legations and persuaded them that the
holding of the party was a deliberate Departmental attempt to
embarrass him. Having, however, done that it was even worse to
plant his daughter [2] in the hotel listing the names of persons
attending, and worse again to give the press a completely
erroneous account of what transpired. For example, he indicated to
the press that the day after the Indonesian party I invited all
Heads of Missions to meet the American Ambassador and invited also
Usman. In other words this was a deliberate attempt to embarrass
those who had refused to go to the party the previous day. In
fact, my party was held ten days before-but that slight error
constituted a good story.

In spite of strong press campaigning, or perhaps because of it,
Teppema came out very badly, and I understand the Dutch community
in Australia is somewhat hostile and considers that he has let
them down.

However, it is getting worse than this, and Teppema and his off-
sider, Schaepman never refrain from taking an opportunity to make
libellous and defamatory comments about me in particular, and
about many other members of the Department and Government. To make
matters worse, their statements are made frequently in public and
usually to Australians. They in doing so discredit themselves, but
you can imagine it does not help us to resolve difficulties or to
carry on useful relations.

De Ranitz, on the other hand, with whom one normally deals as he
is First Secretary, and with whom one has had the main arguments,
takes a totally different attitude, and we and other members of
the Department remain on the most friendly basis-in fact he is
coming in to have a drink with us quite informally today.

The moral of this is that I think our difficulties are accentuated
by the way in which Teppema and his off-sider are behaving,
privately and publicly. A senior man here of De Ranitz's
intelligence and outlook would make all the difference, as he
could talk to the P.M., Minister and others in an objective and
frank way without causing ill-feeling, as Teppema invariably does.

Your reports [3] on the attitude of the new government are
encouraging and I was glad to see Bevin's comments. [4] At the
same time our reports from Batavia are that the situation is
rapidly deteriorating and that there seems absolutely no intention
on the part of the Dutch to be led into any agreement. If the
Republicans accept a compromise with a view to agreement then
additional demands are made to make agreement impossible.

I do not think it is fully appreciated the shortness of time left
to negotiate a settlement. If the present Republican Government
can show no results and has to give way to [the] Left Wing then no
settlement is possible and the Dutch will be in the position of
finding a Left Wing militant movement which will soon gather
strength through Indonesia. The Dutch, I gather, are looking
forward to this, as it will give them the opportunity to renew
'police action' against a 'Communist' Republican Government, which
'police action' they think would not be resisted by U.S. and U.K.

They have already prepared regulations to deal with 'Communist'
movements.

It is bad enough to have a Malaya situation on our doorstep, and
it would be most serious to us, to Britain and the United States
as well as to the Dutch if they cause the position to deteriorate
in this particular way.

I think the time has come for a bit more frank talking, which I
understand from De Ranitz you manage in the most polite way. But
do not make it too polite! [5]

The Minister will naturally not wish to be placed in the position
of pressing our interests in this matter during a courtesy call in
the Netherlands prior to the Assembly and other meetings in which
cooperation with the Netherlands as such is vital. I would think,
however, that it is possible to press our point of view with
respect to N.E.I. without in any way prejudicing our relations
with the Netherlands. Whether that will be so or not, this is
probably one of the most vital issues Australia has had to face,
and the time factor is important. My own guess is that if there is
no settlement, or convincing indication of a desire for
settlement, within the next month or six weeks, then Indonesia is
lost to a potentially hostile Republican Left Wing movement.

Commercially and in every other way this should be avoided at all
costs.