It is expected that an official statement on the Dutch Cabinet
decisions will be given simultaneously in Batavia and The Hague on
Saturday, February 26th. Palace sources say that the Dutch policy
will probably be:-

(1) To offer release of Republican Leaders for negotiations with
the Federalists, possibly under the auspices of the Commission
authorised to restore the Republican Government at Djokjakarta;

(2) To offer an early transfer of sovereignty, details to be
worked out at a round table discussion, which would include
Federalists and Republicans. Main matters to be discussed would be
the Statute of the Union and the powers to be temporarily retained
by high representative of the Crown. Palace sources do not
anticipate difficulty in reaching agreement on the Statute of the
Union, but admit the powers of the high representative,
particularly in relation to the Army, would cause trouble.

2. If these forecasts are correct, Cochran agrees that the
Commission will have no alternative but to report Dutch non-
compliance to the Security Council on March 1st. He has urgently
telegraphed the State Department this morning, February 23rd,
asking that special representations be made to Van Kleffens or at
The Hague for decisions turning towards implementation of the
resolution. [1] The Prime Minister of East Indonesia made a
statement yesterday, February 22nd, expressing his belief that
'loyal acceptance and implementation of the Beel plan could
undoubtedly avert a disaster threatening Indonesia and the
Netherlands'. He stressed the importance of a transfer of
sovereignty being offered without reservations and saw no
objection to the Commission taking a part in a settlement 'so long
as such efforts can contribute to a speedy settlement of the
question'.