Indonesia.

Your 79 to New York for Kirby. [1]

1. After full consultation with Kirby, Forsyth today had a frank
discussion at the State Department with Lacy (South East Asia
Division) and Bancroft (United Nations Affairs Division) making
the following main points-
Australia shares the concern of America with the stability and
economic reconstruction of Indies area but considers it
fundamentally important that in the process Indonesian aspirations
should not be prejudiced and particularly that the position of
Republic [a]s effective political entity must not be impaired. The
Renville principles leave difficult questions, in the settlement
of which general considerations of world economy should not be
allowed to prejudice the Republic's immediate and eventual
position. These questions include control of trade and foreign
representation. Constant watchfulness and where necessary exertion
of American and other influence will be needed to safeguard the
Republic's position. The points listed in paragraph 4(C) of
Kirby's telegram UN 106 (with the addition of plebiscites as in
paragraph 1 of his 109). [2]

2. Reception of these points by the officials concerned who are
principal advisers in this question, were on most points very
satisfactory, and they were definite that the United States firmly
intends to secure just implementation of the Renville principles
and assist the Republic to maintain its position as an effective
political entity.

3. Specifically
(A) United States desires 'supervision' of plebiscites and
officials concerned were confident that this could be secured by
the Committee's own action and evolution. They felt, however, that
if formally proposed in the Security Council the Dutch would feel
obliged to resist for reasons of prestige.

(B) Similarly, in regard to stronger powers for the Committee
(public suggestions as in paragraph 4 UN 106).

(C) Should the Dutch show disposition to reject the request of the
Republic for continuance of Committee after political agreement
the United States would undoubtedly make strong representations.

(D) They would regard creation of new States by the Dutch as
contrary to the spirit of Renville agreement and inconsistent with
the status of the Republic as a party to settlement involving the
whole area. In their opinion the Dutch would be foolish to
continue such action and they believe the Dutch realise this.

(E) As regards foreign representation of the Republic, American
advice to the Dutch would be to treat this issue gently with a
view to settlement at a convenient time in relation to future
overseas representation of the Indies and in such a way as to save
face of the Republic.

4. In regard to Trade, the State Department's general position has
not altered from that stated to the Minister by Lacy, vide
Washington cable to you number 156. [3] Officials interviewed
envisaged a relationship between this question and the powers of
provisional [and] [4] interim Governments. Recalling the desire
expressed by Butterworth (see UN 106 paragraph (2)) that the
Republic join the present provisional Government, they felt that
if the provisional Government were revised to possess real powers
the Republic might see its way to merge control of its Trade in
[control] [5] of Trade of the whole area in which it would
participate. Adequate representation of the Republic would be
necessary though United States would not be able in view of Dutch
sovereignty to go further than make suggestions to the Dutch on
this. They said that the Netherlands Government is concerned with
problems of avoiding arbitrary exercise of sovereign powers by
officials of the Indies. The Americans are very conscious of the
desirability of restraining the Dutch from over legalistic
attitude, especially now the Dutch are committed to handing over
the sovereignty in the not distant future.

5. Lacy and Bancroft said that the Dutch wish to avoid difficult
issues in the Security Council and would feel better able to do so
if the Indonesians also refrained. They said that the United
States certainly does not wish such issues to be raised. In
[re]ply to direct question as to whether Australia intended to
raise such issues, including [trade] [6] and foreign
representation, Forsyth said that while the Australian attitude
might be influenced by conversations of Monday [7] and today,
unless the Australian Government felt convinced that everything
possible would be done to ensure successful and just
implementation of Renville principles, the Australian
representative must be free to raise fundamental questions in
Security Council, in order that Council should not be left in
ignorance of real obstacles to settlement still remaining.