Officially my activities have mainly been concentrated on
reporting to the Security Council and on matters connected with
the Asian Conference. The telegram [1] which I sent you on the
latter subject containing Republican recommendations to their
representative in India should be of value and Section B in
particular provides some interesting suggestions for a settlement.

2. It is now clear that it would be impracticable for the Dutch to
withdraw behind the old Status Quo Lines-at least there is no
possibility of getting their acceptance of such an order. It
therefore seems equally clear that free negotiations between the
parties would be difficult to arrange. The Republicans would be
under the disadvantage of having no territory under their control
and of being subjected to strong military pressure. It is
therefore, most desirable that if there is to be any settlement
the terms, at least in outline, should be laid down by a third
party. Perhaps it is still not too much to hope that the Security
Council could be induced to take strong positive measures in this
direction. In any event the Asian conference may.

3. In general the Netherlands have played down events in Indonesia
while their restrictions on pressmen and other observers and their
strong censorship have prevented much real information leaking
out. In Batavia the three Republican papers have been treated as
follows during the past week:-

'Berita Indonesia' was suppressed until further notice by order of
the Prosecution Counsel,
'Merdeka' has received a last warning to be more 'moderate'.

'Pedoman' has had two of its editors called up to appear before
the Prosecution Counsel because of their lack of 'moderation'.

Nevertheless, there are a number of indications that the Dutch are
having a much harder time than they would admit. Sources here
claim that postal communications between Indonesia and Holland
have been completely disrupted by India's restrictions. Business
circles also complain that the lack of communications has brought
trade to a standstill. From inland come a series of reports of
intensive guerilla and scorched earth activities.

4. Some indication of these is given in the attached Appendices
[2], especially Appendix 1.

Appendix 1 is the most important and is a report based on a
personal interview with George Kahin a reliable American who
returned from Djokjakarta tonight.

Appendix 2, also an extremely valuable document is a summary of an
oral report made to the Consular Commission by Lieut. Col. Rhys
and Commander Dierman.

I have heard privately that Lieut. Col. Rhys received much
stronger impressions of the efficacy of Republican guerilla
tactics than are contained in this report.

Appendix 3 is a personal report of Kahin on the attack on
Djokjakarta.

Appendix 4 contains a translation of extracts from a letter from
an important Republican in Djokjakarta.

Appendix 5 is a translation of the message contained in Dutch
leaflets which have been dropped in Republican areas.

5. I have obtained tonight official statements of Hatta, Sukarno
and Natsir made on the morning of the 19th December and am having
them translated for inclusion in the next bag.

6. Within the last few days business people in Batavia have been
circularised to notify the police if their workers appear hostile
or behave suspiciously.

7. Contrary to early reports of the Dutch Army Information Service
it is now admitted that Djambi, the oil area in Sumatra, suffered
severely as a result of the Republican scorched earth policy. The
Dutch reports read in part, 'Large fires were set to the oil
installations and other objects in the Djambi area by
'irresponsible bands of communist groups of the TNI command' ...

In the town of Djambi itself the power station and most of the big
buildings and markets were arsoned and 65% of the Chinese section
of the town was razed to the ground causing 7000 Chinese to be
homeless. Most of the Indian homes were also reduced to ashes and
500 Indians are now camping in emergency accommodations'.

8. Adbulkadir, formerly Deputy Lieutenant Governor-General, has
returned from Central Java with the pointed suggestion that the
renaissance of Central Java should start not from Djokjakarta but
from Solo because 'Djokjakarta has gone too far.' He also
expressed the opinion that there are 'other Republican leaders
than those who were sitting at the top who command the respect of
all levels of the population and are keenly aware of their
responsibilities'. Could there be a clearer admission that co-
operation is not all that was expected.

9. In view of the many difficulties the Netherlands are
experiencing in their efforts to subjugate the Republican areas,
it will not be surprising if the Committee or some other
international body receives appeals to help the Dutch to stop the
fighting. Van Royen and several prominent Dutchmen here have
already hinted as much.

10. Now that the Committee's Military Observers have gone into the
field it should be possible to obtain more regular reports of
events in the interior. On the basis of our experience, however, I
very much doubt whether the military observers will take full or
even adequate advantage of their opportunities.

11. Dutch Palace sources advise me that strenuous efforts are now
being made to form an Interim Federal Government. Despite many
difficulties it is hoped that the Government will be formed in the
near future. At present the unofficial political body which has
come to be known as the 'Federal Conference of the Heads of
States' is meeting in Batavia to discuss the present political
situation. Present are the Heads of States of East and South
Sumatra, Pasundan, East Java and Madura, the Head of the
autonomous region of West Borneo as well as some representatives
of West Sumatra and the permanent representative of East Indonesia
in Batavia. Anak Agung Gde Agung, East Indonesia Prime Minister
designate, 'had to postpone his arrival in connection with
consultations regarding the formation of the New East Indonesian
Government'.

12.Beside the Wali Negara of Pasundan, the newly appointed Prime
Minister and the former Premier of this State are at present in
Batavia. In this connection it has been announced that the
resignation of Puradiredja as Prime Minister has been officially
accepted and that the Wali Negara has validated a list of cabinet
Ministers submitted by Dr. Wiraatmadja, who had been mandated to
form the new Government. So far the list contains only five names
including one Dutchman and one Chinese.

13. Today the Committee asked the Netherlands for permission to
visit President Sukarno and other Republican leaders at Banka,
offering to use the G.O.C. plane if this permission could be
granted. Schuurman, acting Chairman of the Netherlands Delegation,
was obviously taken aback by the request and admitted this was
something that had not been foreseen. He promised to reply this
evening if possible, but we may expect delaying tactics. Some
cynics would suggest the Dutch want time to get the leaders to
Banka. However, we will press for a reply in time to cable
information to the Security Council meeting in Lake Success on
Tuesday.