During the past week there has been little overt political
activity here, but a great deal of manoeuvring behind the scenes.

My telegram K.263 [1] sets out the response of the B.F.O.

(dictated by Beel) to the conditions laid down by Hatta and
Sukarno for the commencement of talks with the Federalists
(Telegram K.256 [2]). Although the Republican Delegation reported
to me the manner in which Hatta proposed to reply to the B.F.O.

(see telegram K.264 [3]), no such reply has yet been forthcoming.

Instead, Sukarno has sent a telegram to the B.F.O. Chairman [4]
indicating that he will not be able to reply to the B.F.O.

invitation until he and Salim have conferred with Hatta and the
other Ministers on Bangka, and asking for air transport for that
purpose. Accordingly, a Catalina left Batavia on Sunday for Prapat
and Bangka. The inevitable trio, Darmasetiawan, Supomo and
Sudjono, along with Leimena, went with it.

2. Anak Agung Gde Agung of East Indonesia and Ateng of East Java
are making the trip on behalf of the Federalists. I understand
they are authorised to delete from the B.F.O. invitation to the
Republicans (Telegram K.263) the stipulation of the Government of
Indonesia that 'If consultations lead to the possibility of
establishment of an interim federal government at short notice the
question of general freedom of movement of those persons now under
certain restrictions can be regarded in the light of the
circumstances at the time.' It is difficult to see, however, what
practical significance this amendment can have. Of more interest
is the choice of Anak Agung Gde Agung to represent the
Federalists. There was a report that Sultan Hamid, Chairman of the
B.F.O and a spokesman of the Netherlands, was not altogether happy
that the Prime Minister of East Indonesia, who was known to be
more closely associated with the Republicans than most other
federalists should be selected to contact the leaders. On the
other hand, as attachment 1 [5], a 'Nieuwsgier' editorial
indicates, the Dutch are particularly anxious to see whether the
Federalists can persuade the Republicans to talk business. Anak
Agung Gde Agung may be the best man to do this persuading,
particularly as he seems to be behind the new informal Dutch
proposals for an early transfer of sovereignty (telegram K.264)
which will doubtless be discussed at Bangka.

3. Informal Dutch Proposals
According to Schokker, assistant to Koets, who has discussed these
proposals with Cutts, the Dutch are strongly averse to
implementing the Security Council's resolution. [6] Their
strongest aversion is reserved for the proposed restoration of the
Republican Government to Djokjakarta; to this they would 'much
rather die than say yes'. They are, therefore, seeking ways and
means of avoiding the embarrassment of flatly refusing to
implement the resolution. Hence the proposals for an early
transfer of sovereignty which, so far formulated, run as follows:-

(1) The Dutch will establish an interim government as early as
possible, and transfer sovereignty to it within three months. The
transfer of sovereignty would be conditional only upon completion
of such technical matters as-
(a) Drafting of a constitution (by the interim federal
government),
(b) Preparations for elections (by the interim federal
government),
(c) Settlement of the terms of the Union Statute,
(d) Taking over by the interim federal government of the machinery
of administration.

(2) For the scheme to have any hope of success, the Republican
leaders must be persuaded to join the interim federal government.

However, it is suggested that, if the Republicans will not come
in, an interim government will be formed in any case and
sovereignty transferred to it according to plan.

(3) The organization of the interim federal government and its
subsequent programme are matters of exclusively Indonesian concern
to be settled between the Federalists and the Republicans. The
only obligation of the Netherlands is to transfer sovereignty at
the appropriate time.

(4) Regarding the three conditions laid down by the Republicans
for commencing conversations with the Federalists regarding the
interim federal government (see K.260 [7]), the Dutch position
would be as follows:-

(a) Republican leaders could be released unconditionally subject
to personal undertakings not to provoke disorder,
(b) arrangements could be made for the Republican ministers to
meet as a government, and
(c) whether the members of the B.F.O. will recognize the
Republican leaders as the Government of the Republic is a matter
for them to decide. Dutch recognition is irrelevant as the Dutch
would not be taking part in the talks.

(5) The position of the Republic in the future United States of
Indonesia and in the interim period is a matter for the
Indonesians themselves to decide.

4. These proposals are still strictly informal and may not even be
in writing. The question which cannot yet be answered is whether
they represent a sincere offer by the Dutch or whether they are
simply a bait to persuade the Republicans to abandon their
position regarding recognition of their status and implementation
of the Security Council's resolution. Personally I view the
suggestions with some suspicion. In the first place, I very much
doubt whether the legislation necessary for an early transfer of
sovereignty could be passed through the Dutch parliament.

Secondly, if the proposals represent a sincere offer, why should
they not be made openly rather than whispered around the corridors
of the Palace?
5. Off the record information from the Government Spokesman in
Batavia casts further doubt on Dutch intentions. He explains-
(1) the proposals originated from Beel,
(2) The Hague authorised Beel to sound out people in Indonesia
before decisions were taken at The Hague,
(3) Indonesians refused to be sounded out because of the vagueness
of the proposals,
(4) The refusals have been reported to The Hague and it is
expected that an official statement will be made shortly.

6. It is premature to come to any conclusions, but there are
indications that the Dutch proposals would provide for the
continuation of the Dutch army in Indonesia and there would not be
a transfer of what we understand by sovereignty.

7. In any event, Republican leaders can hardly afford to abandon
their insistence upon implementation of the Security Council
Resolution in the hope of obtaining an early transfer of
sovereignty, unless proposals are put forward in a satisfactory
form and contain suitable guarantees for early independence. I am
suggesting the Commission formally ask the Dutch for details of
the plan as the best means of smoking out Netherlands intentions.

Commission's Activities
8. Meanwhile the Commission is still awaiting a decision from The
Hague as to what the Dutch propose to do regarding the resolution
of January 28. It looks, indeed, as though we may have to wait
some time before getting a clear answer. Possibly Cochran's return
and his discussions in Europe may give some impetus to the
Commission's activities, but there is very little we can do until
the Dutch make their standpoint clear. All we know so far is that
they have taken no steps to implement the resolution, and I am
endeavouring to have the Commission make an early report to the
Council to bring this out clearly. At the same time we are keeping
a continual pressure on the Netherlands Delegation and this at
least is having the effect of evoking Netherlands protests at
Washington about the undue activities of the Commission. An effect
which I have come to regard as a very good sign.

Restrictions on Press
9. In last week's letter [8] I dealt at some length with the
question of political prisoners in Batavia and West Java. Another
unpleasant aspect of Dutch policy here is the absence of freedom
of expression. Attachment 2 [9] is a memorandum prepared by the
Commission's Press Officer regarding Indonesian newspapers which
have been suppressed by the Dutch since December 19. You will, no
doubt, be surprised at the number of suppressions, but that is
only half the story. Anyone who publishes views unfavourable to
the Dutch is very likely to see the inside of a prison without
much ado. By virtue of the Dutch judicial system he is likely to
stay there for many months without charge and without trial.

Latumeten and Sastrosuwignjo who were recently imprisoned
following Netherlands disapproval of the Republican Delegation's
'Press Review' (see my preceding letter) have informed the
Republican delegation that they expect, as a result of the
Commission's interest in them, to be tried shortly. This is
considered somewhat unusual and, apart from the Commission's
intervention, it is most unlikely that they would have received a
trial.

B.F.O.

10. In telegram No. K.263 [10] (paragraph 2) I indicated that the
B.F.O. had stalled on the Dutch request for its views regarding
the Security Council's resolution. Attachment 3 [11] is a
communique issued by the B.F.O. chairman, justifying the refusal
to comment on the resolution on the ground that it 'might possibly
influence projected consultations with the Republican leaders in
an unfavourable manner'. Also of interest in this connection is
Attachment 4 [12], a statement issued by the B.F.O. on February 1,
regarding the current controversy as to the status of the
Republican leaders.

Your Letter
11. I have received your letter [13] of January 26, and agree that
the future task is 'to convince the Dutch of the hopelessness of
their position as well as keep Republican hopes alive and stiffen
their resistance'. In next week's letter I shall endeavour to
include an analysis of the Federalists.

12. An important feature of the present situation is the strength
of Indonesian public opinion and the refusal of people from the
territories previously under Republican control to co-operate with
the Dutch. Attachment 5 [14], a statement of the Sultan of
Djokjakarta (see K.263), is interesting in this regard.

13. Another significant feature is that the Dutch by their
military action have probably irrevocably destroyed all hope of a
smooth settlement of the Indonesian dispute. Guerilla bands are
necessarily becoming more scattered. While they continue to fight
the Dutch there is a common integrating purpose, but I find it
difficult to see how the fighting can be effectively stopped and I
am very much afraid that the Dutch by their last military action
will have at last justified their complaints of lawlessness in
Indonesia. Attachment 6 [15], a confidential letter from
Simatupang, a young and particularly bright T.N.I. Colonel, who
was a member of the Republican Delegation, to Colonel Mayer,
formerly Senior U.S. Military Observer, gives an insight into this
problem. Simatupang is now with the guerillas in West Java. The
letter was relayed to Batavia via Djokjakarta.

White Australia
14. In last week's letter I mentioned the reactions here to
reports of the decision to deport Mrs. Annie O'Keefe. You will
have heard by now of Sultan Hamid's statement that he would expel
all Australians from West Borneo by way of retaliation. Attachment
7 [16] is a 'Dagblad' editorial which is a fair sample of the type
of publicity which incidents of this nature are likely to earn us
abroad. A number of foreign pressmen have queried why we throw
overboard so recklessly the very extensive goodwill we have built
up in Asia since the war.