I saw Palar this afternoon at his request. He explained that he
had asked to see me because the G.O.C. fourth interim report [1]
had been received and there were several matters arising from it
which he would like to mention to us.

The first of these was that he had reports of dissension in the
Dutch Government arising from a strong difference of opinion
between Sassen and Stikker. There appeared to be pressure on Drees
to acquiesce in a solution by force. A note prepared by his office
summarising and interpreting these reports is attached.

Secondly, he would like our opinion on the means of making the
best use of the material provided in the report, which generally
showed the Indonesians in a much better light than the Dutch. He
said that the local New York Times correspondent had been well
briefed regarding Indonesia and had stated that he would be
prepared to write a story providing he had some informed comment
on the gravity of the situation on which to base it. Palar
suggested that Australia might consider commenting without any
published attribution of sources. He thought also that India and
China might possibly be prepared to comment on the same basis.

(Timperley is due back to-day and will be staying at the
Baltimore.)

Attachment

Contrary to the optimism publicly displayed by the Dutch
government, the actual atmosphere in the Dutch cabinet at this
time is one of dissension and pessimism. It is apparent that
Stikker has failed in his efforts to win the support of the whole
cabinet when he reported to them his conviction that there exist
real possibilities for reaching an agreement through discussions
with Hatta. Sassen, the Minister for Overseas Territories, stated
to the cabinet that he did not believe in any such possibilities
and furthermore he assured the cabinet that he was positive that
he would be able to swing the governments of the puppet states to
the side of the Netherlands, so that they would legalize a
military action against the Republic. Sassen stated that this
support of the puppet states could be had by brushing aside the
expected opposition of the parliaments of certain of these states.

Sassen's view was shared by the majority of the cabinet, including
almost all Catholic members.

This difference in viewpoint between Stikker and Sassen, together
with personal antagonisms between the two men, gave rise to a
serious open clash between them. It also caused great confusion in
the cabinet upon which the Prime Minister, Drees, stated that in
such a situation of open conflict between two ministers he would
feel compelled to resign. This crisis was overcome by the
intervention of the influential Catholic Party Vice-Premier, Van
Schaik, who then stated that if any minister should resign, it
should certainly be Sassen. Sassen, however, did not resign but
stayed in the cabinet where his presence can enable Romme, the
leader of the Catholic parliamentary bloc, to carry his opinions
into the cabinet. The Catholic members of the cabinet then decided
to back down a little from their original stand. Realizing that
they could not get away from strong international pressure they
consented to send Stikker back to Indonesia, but they stipulated
that this time he was to be accompanied by Sassen and by Neher,
the representative of the crown.

The fact still remains, however, that the majority of the Dutch
cabinet does not have any faith in this mission nor in the
possibilities or even the necessity for a peaceful solution. This
lack of faith is also manifested in the mission itself in the
personality of Sassen and even of Neher who, in private talks in
the Netherlands, is reported to have stated that there would be no
other way out than crushing the Republic.

Up to the present, the Prime Minister and the other Labor Party
ministers have dissociated themselves from a policy based on the
assumption that a peaceful solution is neither necessary nor
probable. However, confidential statements by the Prime Minister
have indicated some possibility that he would acquiesce [in]
military action, although he has also been reported to have
expressed his conviction that, while such a military action would
entail the downfall of the Republic, it might also entail the
downfall of Holland.

Another possibility, however, is that the Labor Party may decide
to oppose military action. Such opposition-the chances of
realization of which are still uncertain-would force the Labor
ministers to resign. If such opposition from the Labor Party
became definite, it would be likely that the Catholic Party would
refrain from such a step because they realize that a government
without the support of the Labor Party would not be able to secure
social stability in Holland.

The political atmosphere in Batavia is also seriously influenced
by the presence of a Parliamentary commission of observers
consisting of the parliamentary leaders representing the larger
factions in the Dutch parliament. This commission was sent out to
secure the necessary parliamentary backing for any decision
reached by the Dutch ministerial delegation in Indonesia. This
parliamentary commission includes Professor Romme, whose political
influence reaches beyond the limits of his Catholic Party, and who
actually is the formulator of Catholic policy both in parliament
and in the cabinet. In addition to these two protagonists of
Catholic policy, Sassen and Romme, there is also in Indonesia at
this time Beel who, in his position of High Representative of the
Crown, is able and in fact has already seriously influenced the
political scene in Batavia. There is reason to believe that in his
actual policy Beel does not deviate from the general line of
action of the Catholic Party. Beel is personally responsible for
the denial of Stikker's statement, made on the latter's arrival in
Holland after his first mission, about a clear decline in the
number of Republican truce violations. [2] Beel's ban on
permitting newspaper correspondents to enter Republican territory-
which has since been rescinded-only arouses deeper suspicions
about his intentions.

It is feared, in those Dutch political circles which still believe
in the possibility and the necessity for a peaceful solution and
which oppose a military action, that the cooperation of these
three people (Beel, Romme and Sassen) in Batavia will have a bad
effect on the situation since all signs indicate that these three
men are fundamentally unwilling to settle the Indonesian problem
by peaceful means. This is making it difficult if not impossible
for Stikker to pursue his policy of sincere negotiations. In fact,
the predominance of this Catholic bloc in Indonesia could easily
enable Beel and the Dutch colonial clique, through the existing
colonial machinery, to create and provoke such circumstances that
a military action by the Dutch would be justified in the eyes of
the world. There are already indications of this tendency. It is
therefore of the utmost importance that to these three people
should be made clear the international implications and
repercussions which such a policy would bring about. Such pressure
could also be brought to bear by the members of the COG, and would
give Stikker a freer hand to carry on the negotiations with the
Republic along the lines he originally set out.