INDONESIA

You will by now have learnt that Dutch and Republican Governments
have reached agreement on terms of a preliminary settlement [1]
for restoration of Republican Government in residency of
Djokjakarta to be followed by round table conference at The Hague
to discuss final settlement including transfer of sovereignty to
United States of Indonesia. Critchley's telegrams reporting
developments leading to preliminary settlement are being forwarded
by bag.

2. After having shown evidence early last week of continued
intransigence the Dutch at the weekend accepted the main
Republican desiderata including (a) restoration to Republic of
authority throughout the whole of Djokjakarta residency and not
merely city itself (b) release of all political prisoners captured
since 17th December 1948 and (c) continued functioning of
Republican police and officials in all areas where they have not
been replaced. In accounting for apparent change in the Dutch
attitude, Critchley emphasises that the Netherlands delegation has
obviously been testing out Republican reactions in order to see
how far Republican delegation could be pushed, and have been made
to realise that breakdown was inevitable unless they changed their
line. It is also clear that pressure from Cochran has had some
influence on the Dutch some of whom at last realise that in their
own interests a settlement must be obtained this time.

3. We have expressed to Critchley satisfaction with result
achieved and have authorised him to attend the proposed conference
at The Hague. At the same time we are 'keeping our fingers
crossed'; this is merely a preliminary agreement and there are
still pitfalls and opportunities for delay even before The Hague
conference can meet. Nevertheless, the agreement implies a firm
commitment on the part of the Dutch to carry through negotiations
to a final settlement. In the meantime we have urged that the
United Nations Commission should do everything to expedite matters
and should ensure that the public is kept fully informed of
progress.

4. There are reports that some Republican leaders consider that
Republican delegation's handling of recent negotiations has been
too weak. We think it is important that Republican leaders should
maintain a united front and do everything possible to hold their
supporters in line at least until The Hague conference has had a
chance to succeed. We have asked Critchley to use his personal
influence to this end and we think it would be useful if Indian
Government could do likewise.

5. We have been considering in the light of latest developments
what course should now be followed in the General Assembly which
will have to consider Indonesia as an agenda item within the next
few days. Because of the time factor we shall have to leave a
certain amount to the discretion of our representatives in New
York but our present inclination is to suggest that the Chairman
of the ad hoc political committee which has the matter before it,
should take the initiative in recommending that the item be held
over until the next Assembly session in September. This would
avoid unprofitable discussion and possible acceptance of a
resolution merely expressing satisfaction with present limited
agreement, which in view of our reservations concerning the
genuineness of the agreement we would prefer to avoid. Please
explore with Indian Government and ascertain their views.