The main problems outstanding are still those set out in paragraph
3 of my C.23. [1] Intensive high level discussions are continuing
and it is expected to conclude the Conference on or about the 1st
November.

2. The Steering Committee has established a Debt Commission (see
paragraph 10 of my C.23) consisting of one representative from
each of the Netherlands, Republican and B.F.O. delegations and one
representative from the Commission (Cochran). The task of the
Commission is to propose the amount of the debt which will be
accepted by the R.I.S. at the date of the transfer of Sovereignty.

In determining this amount due consideration will be given to-
(a) The amount of extra military expenditures
(b) The amount of other expenditures which the Commission may
attribute to military action.

3. The Commission can also make proposals with regard to-
(a) Interest and amortisation of the recognized debt
(b) Undertakings required by the creditor from the debtor.

(c) Escape clause.

4. The Indonesians and Netherlands delegations agree they will
accept the proposals of the Commission, and if unanimity cannot be
obtained the delegations are ready to accept proposals from the
representative of the U.N.C.I. The Debt Commission will report by
24th October.

5. The undertakings (paragraph 3(b)) will be limited to
generalities such as an undertaking to follow economic and
monetary practices approved by international standards and to seek
a sound economic and monetary system. It has been agreed that
there will be no specific guarantees such as a continuation of the
'tin pledge' but the Netherlands delegation has reserved the right
to raise this question elsewhere.

6. The escape clause (paragraph 3(c) above) refers to the
possibility of providing for mutual consultation and readjustment
in the event of the debt service proving too heavy. The
Indonesians are also anxious for a right to reopen the question of
the size of the debt if figures which become available
subsequently show that the decision of the Commission was wide off
the mark.