My immediately following telegram gives background of recent
negotiations between Republic and Dutch.

2. The situation at the moment is more critical than any past
period, and, moreover, could be more embarrassing to the
Australian Government than any past stage if not carefully handled
(see paragraph 6 below).

3. My own view would be that recent events give an opportunity to
demonstrate to the Dutch authorities that our objectives from the
very outset have been compatible with their own interests. It was
because we feared the type of development which is now becoming
apparent throughout South-East Asia that we are anxious to prevent
an Eastern power raising the matter in the Security Council and
championing the cause of the Republic. We have deliberately aimed
at an early settlement on reasonable terms which would have
preserved all Dutch vital interests in the area. Unfortunately,
our motives have not always been fully understood (perhaps largely
because of unfortunate representation at this end), delays have
occurred in reaching a settlement, and now the Dutch are faced
with the strong possibility of a hostile left-wing government in
the Republic who will ultimately draw to them all the native
peoples and present the Dutch with a physically and financially
impossible task of suppression.

4. It would seem to us from here that The Hague authorities, and
particularly the new Government, have some appreciation of this
broader picture. Bevin presented it to them some weeks ago. [2] We
have been encouraged by the reports from Officer of Hague
intentions and hopes, and we have always placed great reliance on
the better judgment of The Hague authorities prevailing.

5. The reports from Batavia, however, have just been the opposite
and even certain Dutch representatives in Australia are prepared
to admit that in Batavia there are a number, particularly the
military, who have been waiting for the situation which will occur
as a result of delay in negotiations, that is the development of a
Communist Government, which would justify further military action.

6. In this connection Teppema saw me yesterday to inform me of
recent political developments in the Republican Government, and he
was obviously pleased rather than distressed at the prospects. [3]
His approach to me was, by implication, a first step in a
challenge to the Australian Government to actively assist the
Dutch in quelling Communist risings as the Government has done in
Malaya. I reminded him that for many months we have been warning
him and his Government of these developments, that it was to
prevent them that we had interested ourselves in the matter, and
that the responsibility very largely rested on the Dutch and that
little assistance could be expected from Australia if the Dutch,
even at this stage, made no attempt to retrieve the position but
were deliberately relying on force of arms as a solution. Teppema,
however, was obviously acting without instructions or,
alternatively, on information from Batavia and not from The Hague.

He appeared to be somewhat impressed by the arguments put forward,
and was particularly impressed when Australian general interest in
European developments was explained to him and the implications of
the recent United Kingdom gift from the point of view of European
countries. [4]

7. In this background, it would seem to me that the way is open
for a frank and friendly approach to the Dutch, offering our good
offices with the moderates in the Republic to come to an immediate
settlement on reasonable terms, including a definite date for the
establishment of full sovereignty and the exercise of real power
meanwhile by a provisional elected government. If, however, there
is no spirit of give and take in the interests of immediate
settlement, and there is delay on details, Australia's influence
on the Republic will be negligible, and the Republic will look to
other countries for support in a long-term campaign against Dutch
interests in Indonesia and Western influences generally in South-
East Asia. Dutch future interests in many respects lie in
Australia's influence on the Republic. We are losing that
influence because of delays in settlement. See Critchley's
telegrams. [5]

8. We have been encouraged by The Hague's decision to send De
Ranitz to the Netherlands, as he has always endeavoured to
understand our point of view and has always acted on the
assumption, despite differences of point of view, that our
fundamental relations with the Netherlands are those of two
friendly nations and that, therefore, there must be good reasons
for our policy.

9. On the whole question of Indonesia and the related problems, we
hope, in future, for much closer relations with The Hague
authorities and the Government of the Netherlands, particularly as
the developments of South-East Asia are related financially and
politically to European problems in which we have a strong
interest. If the Netherlands Government felt disposed to direct
their representatives at Batavia to reach a firm settlement which
we could reasonably support, we would play our part, not only in
seeing that it was accepted, but that it was also implemented.

10. You should know that Australian press opinion has undergone a
change recently. The ridiculous behaviour of the Dutch regarding
the Indonesian party [6] lost them many friends, including members
of Dutch-Australian Association, and the press found that the
local diplomatic community was, in many cases, antagonised by
Teppema's pressure on them. For the first time, the press have run
favourable articles, and recently both the Melbourne Herald and
the Telegraph published a feature article very much in favour of
Critchley, his objectivity, and reasoned approach. [7] He was
featured as one of the Minister's special officers, with the
direct implication, therefore, that the policy being pursued was
objective and aiming to be reconstructive. Moreover, there is an
absence of criticism of the Government on matters related to
Indonesia. An approach by you to the Dutch, therefore, in the
above objective way, while, at the same time, maintaining our
positions and never at any stage doing anything which would in the
eyes of Indonesia and South-East Asia, be letting them down, would
be well received.

11. A second local point you might have in mind [is th]at Elliott
and Healey have approached the Prime Minister with regard to
shipping, and are inclined to call on the ban again because of
reports from Indonesia of even more repressive measures and an
even tighter blockade. [8] The Prime Minister has informed them
that you are visiting Holland, and hope to have discussions on
this and related matters, and there will be no action by the
Waterside Workers until the Prime Minister communicates again with
Elliott and Healey. We have already supplies which Dutch and
Republicans have asked for and arrangements made for scholarships,
and we are ready almost immediately to send a full technical
library to Batavia and the Republic amongst other countries in
South-East Asia. It would be of tremendous value, and in a sense
an answer which the Prime Minister could give to the Waterside
Workers, if you could get an assurance that the supplies consigned
to the Republic will be transferred to them on the assurance of
the Australian Government that they contain no weapons of war or
anything which could not be legitimately classed as relief
supplies. Healey has asked the Australian Government to try an
experimental shipload of its own goods to see whether they get
through the blockade, and to test the statements made by the
Dutch. This proposition, of course, has not been accepted, but the
free flow of relief supplies might be the means of establishing
normal commercial relations between the Republic and the Dutch and
the rest of the world.