I enclose herewith (attachment 'A' [1]) a copy of the Dutch
proposals on which I reported in my cablegrams Nos. K.341 and 342.

[2] At s'Jacob's request the Republican Delegation agreed to treat
the proposals as confidential and I was given the text by Ali
Budiardjo for my personal information. The Republican Cabinet met
to consider the proposals last night but no news is yet available
as to its decision.

2. Nearly 7 weeks after the Cease-Hostilities became effective,
the situation as at the Cease-Hostilities merely remains more or
less 'frozen'. Neither party having been willing to concede the
other's military position and to acknowledge it as having civil
and military control over territory, but each seeking rather to
consolidate its own position, the discussions on delineations and
civil administration have either made little progress or reached
deadlocks (the situation is very clearly illustrated in the report
from the local Joint Committee at Kediri (attachment 'B' [3])).

Consequently measures for the restoration of law and order have
been delayed and lawlessness continues at an abnormal rate; the
civil administration is still unable to function freely and
effectively; there have been no arrangements for supply and for
many of the essential services for the population; the economy is
frustrated and there can be only the most elementary measures for
rehabilitation.

3. It is natural that events in Indonesia should largely wait on
the RTC discussions and that neither party will be prepared
substantially to change its position here until satisfied as to
progress at The Hague. However, this attitude can be carried too
far; the situation here cannot merely be 'frozen', because the
military and administrative instability creates its own problems
which, with the political tensions thereby provoked, and arising
naturally in any case, from the static situation, place undue
strain on the Cease-Hostilities and could lead to local breakdowns
with the most unfavourable repercussions at The Hague.

4. Provisional local arrangements have been made in some areas to
avoid contact between troops, but in general the forces remain
intermingled and the only provision against a breakdown of the
Cease-Hostilities continues to be the strict observance of the
Cease-Fire and Stand-Fast. On the whole, this has so far been
generally successful (though the Dutch still claim that the TNI
effected widespread improvements of its military position and that
only the restraint of the Dutch forces has prevented a resumption
of hostilities). However, the scattered nature of the TNI
dispositions, arising from their guerilla tactics, the extreme
difficulty in contacting and in maintaining close contact with
them, owing to the lack of communication facilities, the growing
difficulty of supply and the attendant necessity for the TNI
forces to move about and to requisition from the population, make
the implementation of the Cease-Fire and Stand-Fast extremely
difficult for the Republic; in comparison, the Dutch forces are
coherently organized, in fixed positions, regularly rationed and
supplied and are equipped with modern communication facilities and
so in a far superior position to ensure co-ordinated and effective
implementation of orders. It is now apparent that the Cease-
Hostilities cannot depend much longer in some areas merely on the
observance of the Cease-Fire and Stand-Fast. Early measures are
necessary to relieve the military tension and to overcome the
deadlock in administration and the delays in supply.

5. The provisions of the Cease-Hostilities Agreement and paragraph
7 of Van Royen's statement of 7 May [4] afford the machinery for
this, but delineations are at best a temporary measure designed to
buttress the Cease-Fire and Stand-Fast and to proceed with them at
this stage appears pointless when larger opportunities are
offering. The present Dutch proposals purport to offer these
opportunities.

6. However, so long as the basic deadlock mentioned above
continues, it is unlikely that any alternative arrangements will
meet with any more success, and since it is the Dutch, who by the
transfer of sovereignty must eventually surrender their military
and administrative positions, it does not seem unreasonable to
expect them to make the major concessions and the first moves to
overcome the deadlock.

7. In their preliminary reactions to the Dutch proposals the
Republicans showed that they suspected the proposal for troop
concentrations, without at the same time any clear indication that
a start would be made with Dutch troop withdrawals, to be a mere
manoeuvre to weaken the Republican position. They were also
unhappy about the emphasis on the Negaras and the Inter-Indonesian
Conference, and the reservations concerning Bantam and the
Semarang Recomba (where the Dutch have a Sultanate and the Central
Java Council through which to intervene in inter-Indonesian
affairs). They further complained that exclusion of the 'federal'
services would involve the Republic in a subordinate position to
the Central Government, which of course, is quite contrary to
established policy. They were also worried as to how their
acceptance of the proposals would be received by the population,
and as to how co-operation with the Dutch along the lines proposed
would affect the Republic's status as the leader of the
independence struggle.

8. The first question then, as always, is what do the Dutch intend
by their proposals and how far do they mean to go? While
uncertainty in this respect persists, further discussions and new
arrangements will have to deal with much the same problems as have
already delayed progress in the last six weeks.

9. Further to my cablegram No. 342, we decided that Dow, Chairman
of the week, had better visit Pasundan to find out what was going
on. I attach a copy of his report (attachment 'C' [5]). It is
interesting to note the extent of control the Dutch exercise over
the Negaras. Should the Republican Cabinet accept the Pasundan
proposal, it will be quite clear which party is delaying a
settlement.

10. There has been no news as to Wongsonegoro's trip to East Java
other than a press report that he found the situation 'stiff'.

Presumably he had little success.

11. I am also attaching for your information (attachments 'D' [6]
and 'E' [7]) two communications concerning New Guinea, which have
been received by the Commission.

12. I should be grateful if you could arrange for copies of cables
from Tom Critchley to be sent to me by the weekly bag.