Many thanks for your letter [1] of 2 August. I am sorry that so
far we have not been able to arrange a radio transmitter for the
Republic. The need was very great. However, I realise our
technical limitations.

New Guinea
2. I was especially glad to receive your views on New Guinea.

Naturally I agree with them. Unfortunately this question is
certain to be brought up at The Hague and will become an extremely
contentious subject of discussion. The East Indonesian members of
the Republican delegation are anxious that Dutch New Guinea should
be included in the USI but it has been my impression that the main
Republican leaders, such as Hatta, have felt that they have enough
on their hands without New Guinea and that the latter can wait.

The situation has been complicated, however, by the prominence the
Dutch have insisted on giving the BFO. Anak Agung Gde Agung,
Premier of East Indonesia, appears dedicated to ensuring that
Dutch New Guinea is included in East Indonesia. It was he who
raised the subject in connection with the Round Table Conference
and it has been mainly his insistence that has attracted
Republican interest. Naturally the Republicans must seek the
closest collaboration with Anak Agung Gde Agung as a vital key to
Indonesian unity. They can therefore hardly afford to withhold
support for his demands on New Guinea. It was significant that
Anak Agung Gde Agung's first statement on getting out of the plane
in Holland was to say emphatically that Netherlands New Guinea
should remain a part of Indonesia.

3. I shall do my best to keep New Guinea out of the discussions
but as you will realise this is a lost cause and, as you point
out, it is most important that I act discreetly. One possible line
is to suggest that New Guinea be made a bargaining point. For
example, the future economic stability of Indonesia depends upon a
generous Dutch approach to the problem of Indonesian debts. My
suggestion to Hatta has been that at the RTC this subject should
be discussed in general terms and that detailed financial
negotiations should be postponed until next year. In the meantime,
of course, technical experts could be studying the problem in
cooperation. Such a procedure would be consistent with the policy
followed by Britain in India where the debt position was the
reverse of that in Indonesia but the technical and psychological
problems very similar. Clearly the Dutch will be opposed to
postponing the financial negotiations. Hatta might consider
postponement of the New Guinea problem as a 'quid pro quo' to the
Dutch.

Policy of the Netherlands
4. Jim Hill's notes [2] on Indonesia have arrived. I am glad to
have them but have not yet had an opportunity to study them. There
has, of course, been an important change of policy since the
failure of the second police action. The question now is not so
much whether sovereignty will be transferred as what strings will
be attached to the transfer and whether those strings will
endanger economic and political stability in Indonesia.

Undoubtedly we have stiff fights ahead with the need for the
Commission at some stages to exert pressure on the Netherlands.

Cochran's comment on this view is: 'absolutely'.

5. It is unfortunate that the Dutch will find it beyond them to be
gracious and generous. Their difficulties are increased by the
prevailing political tension in Holland on the subject of
Indonesia. Even within the Government there are said to be serious
differences.

6. Nevertheless the Second Chamber debate, which was completed
last night, was much more favourable than generally expected.

Romme, the key figure, was unusually restrained and I was
agreeably surprised. When Van Royen returned from Indonesia, he
told Romme that Hatta was not concerned with what people like
Welter and Gerbrand[y] would say in the debate but was greatly
concerned with what he, Romme, would say. Van Royen therefore
suggested that Romme should see Hatta. Some time after Hatta's
arrival a statement was issued that Romme had spoken to Roem and
had made unsuccessful efforts to see Hatta. Since, according to
the Republicans, there was no truth whatever in this report, there
was every reason to fear that Romme was up to some political
manoeuvre.

7. In general, it appears that critics of the Government, such as
Romme, appreciate there is no alternative to the present
Indonesian policy, but will make every effort to see that all
points against the Republicans are pressed home to the limit. As I
have reported frequently, I believe this is a misguided view of
the Netherlands interests. Hatta and the other Republicans have
confidence in Stikker and Van Royen but are distrustful of most of
the other Dutch leaders.

Implementation of Cease-hostilities
8. The Dutch are expressing concern about breaches of the cease-
hostilities agreement. Their complaints so far are not very
convincing and provide at least as much evidence of Dutch
disregard of paragraph 17 [3] of Part II of the Manual as of TNI
infringements.

Position of the Commission
9. The position of the UNCI in the Round Table negotiations is the
issue of the moment. The Netherlands will undoubtedly endeavour to
push the Commission to the side-lines and seek to make the
Conference an internal matter. Their opportunities to do this will
depend to no small extent on the rules of procedure which are at
present under discussion. I have made special efforts to ensure
that the Commission insists on two points.

(a) That the English text be accepted as the authentic text of any
agreements.

(b) That the Commission chair the Steering Committee.

10. On the first point I have convinced Cochran that the
Commission's obligations to the Security Council and the looseness
of the Dutch language require official English texts, but on the
second point I have been far less successful. Cochran's view is
that the RTC is primarily the responsibility of the Netherlands
and that the parties have a responsibility for reaching a
successful settlement within two months. He does not want the
Commission to intrude on this responsibility at this stage unless
the parties request it. As reported by telegram, the Federalists
are supporting the Netherlands stand that the Commission should
not chair the Steering Committee. The best that can now be hoped
for is a clear statement in the rules of procedure that the
Commission shall participate in all meetings of the Steering
Committee.

The position of the B.F.O.

11. The Republicans have been greatly disappointed by the
Federalist support [4] of the Dutch position on the Steering
Committee. They informed me that only a few days ago they had
obtained the informal agreement of the BFO, including chairman
Hamid, to their proposal for UNCI control of the Steering
Committee and that they were taken aback when Hamid at the
informal meeting went the other way. Apparently the Republicans
are only learning slowly that the Dutch advisers are the real core
of the BFO. In practice the BFO consists of:

a) Sultan Hamid, who is very much influenced by Dutch advisers and
since his arrival in Holland has made no attempt to associate with
any but the Dutch.

b) Anak Agung Gde Agung, who, although a nationalist at heart, is
not a strong personality and is influenced by his Dutch advisers.

c) The Dutch advisers:

(i) Mr. Vleer, Secretary-General BFO.

(ii) Mr. Hamelink, Minister of Finance, East-Indonesia.

(iii) Mr. Hangelbroek, Secretary-General, General Affairs, East
Indonesia.

(iv) Dr. J. Eisenberger, adviser BFO.

The Indonesians-the rank and file of the BFO-are largely
Republican sympathisers but they are too weak and inexperienced to
stand up against the Dutch advisers. The weakness of the
Indonesian position is illustrated by the fact that Vleer, the
Secretary-General of the BFO, at present shares with Hamid and
Anak Agung representation of the BFO at the informal meetings of
the heads of delegations. The Republicans will probably seek to
have Vleer removed to a proper position and an Indonesian
representative appointed in his place. They will also seek to have
the Indonesians in the BFO bring increasing pressure on Hamid and
Anak Agung.

Hatta to visit London
12. Hatta had been informed that if he went to London this week,
Bevin would see him before leaving for the United States. Hatta
was considering going after a firm date had been established for
the opening of the Round-Table Conference when there could be no
accusation that the Indonesians were responsible for delays. He
has put off the trip, however, until Bevin returns in September as
a result of advice that the Dutch would not take kindly to the
visit. I agree with the postponement. As mentioned earlier in this
letter, I believe that sometime during the Conference considerable
pressure will need to be exerted on the Dutch. Hatta's visit now
in the light of the Dutch reaction might cause the British some
embarrassment and affect their willingness to join in the pressure
when the need arises.

13. In London I talked with Dening and Scott. It was my impression
that the British tend to minimise the difficulties ahead and to
over-emphasize the dangers of bringing pressure to bear on the
Netherlands.

14. I should be glad if you would show this letter to John Burton
and anyone else who may be interested. I shall continue to send
regular reports to John knowing they will be passed on to you.