Your 91. [1]

I fully agree with your reply to the Netherlands Minister. [2] The
Steering Committee, with the assistance of the Heads of the
delegations to the various Committees, is now thrashing out all
the remaining differences. Points on which the parties cannot
reach agreement are referred to the Commission for suggestions. So
far the procedure is working satisfactorily. We have not yet
attempted to deal with the major difficulties, however, and there
is no undertaking by the parties to abide by the Commission's
recommendations. So far complete agreement has only been reached
in the Social and Cultural Committees, but there is a firm
intention on all sides to complete the Conference on or about the
1st November.

2. Cochran has only vague advice from the State Department on New
Guinea and Naval agreements. I believe he has been left full
freedom of action.

3. The Indonesians insist they cannot go back to Indonesia without
New Guinea. Providing Sovereignty is transferred to the R.I.S.

they would be willing to undertake immediately a long-term
agreement permitting the Netherlands full economic and
administrative rights. Postponement of the New Guinea issue may
prove the most practical way out of the difficulty. Cochran is
inclined to support me in this.

4. Last week the Indonesian delegations were confident of early
agreement in the Military Committee. It is now clear that the
three points mentioned in paragraph 3 of my C.23 [3] and
particularly the question of the Sourabaya Naval Base will be
troublesome. Basically the Netherlands want a special concessional
status for the Naval Base which is opposed by the Indonesians as
inconsistent with a complete transfer of Sovereignty. The
delegations are still considering their positions and the
possibilities of compromise. The problem is scheduled for
discussion in the Steering Committee tomorrow, 26th October, and I
shall report the results in detail.