INDONESIA

Your 912. [1]

1. Lacy, State Department, had not yet completed assessment of
situation in the light of Stikker's visit to Java. Our advice from
Cochran was that replacement of Van Mook by Beel and other changes
in Batavia might adversely affect negotiations. Lacy himself
considered this surprising. He believes personal meeting between
Stikker and Hatta should assist rather than hamper negotiations.

2. We stressed the serious consequences of any 'ultimatum' by
Stikker and the need for firm attitude towards Dutch. Cochran said
State Department had also received reports of possible police
action and admitted that there was always a danger the Dutch would
at least threaten such action. However, State Department did not
fear any drastic steps unless infiltration and violence increased
to such an extent that the Renville Truce began to crumble. Lacy
did not believe either Stikker or Beel favoured police action.

3. State Department information is that Hatta will visit Batavia
in a few days time. Lacy anticipates, though he has no information
on the point, that Stikker will ask action by Hatta to restrain
infiltration and violence in order to create a more favourable
atmosphere. Hatta will probably require relaxation of the blockade
with the same objective.