The Committee today telegraphed the Security Council its report on
the breakdown of direct talks between parties. [1] Annexed to the
report are separate accounts of the breakdown received from each
party (K.205 and 206), the Australia - United States plan [2], the
United States plan [3], and the Dutch amendments [4] to the
latter.

2. Combination of report and annexes, read in conjunction with
introduction of fourth interim report [5], should make it clear to
the Security Council that one party desires a settlement while the
other does not, and, that failure to reach a settlement will
inevitably mean most serious disorder and further hostilities in
Indonesia.

3. The conclusions drawn by the Committee in the report are:-

(a) The collapse of direct talks has served to aggravate dangers
in an already grave situation, reported in introduction to fourth
interim report.

(b) The establishment of an Interim Federal Government, without
the Republic, will contribute further to Republican opinion that
the Netherlands have been proceeding unilaterally to the
establishment of a United States of Indonesia on its own terms,
and without the Republic, will greatly complicate a negotiated
settlement of Indonesian dispute, and could create serious unrest
in Indonesia.

(c) In the light of the Netherlands statements the Committee does
not foresee the possibility of its bringing parties together in
bona fide negotiations.

(d) The Committee envisages a further deterioration of truce and
the intensification of factors already making for further economic
deterioration, general unrest and social upheaval. Widespread
hostilities involving conflict of organised armed groups on a
large scale may be the outcome.