My immediately preceding telegram Indonesia.1
1. In view of the worsening situation in Java and the reported
discussions in London between the Dutch representatives and
English Ministers [2], we have been giving consideration to the
policy to be adopted towards the Dutch-Indonesian conflict.

2. Certain factors have in this situation impressed themselves
upon us as being significant. Some of these factors have been
stressed to us by observers formerly interned in Sumatra.

Incidentally we are fully conscious of the need for having as many
observers as possible on the spot and are making plans
accordingly.

(a) There is a paramount need for the elimination of Japanese
influence if only for reasons of prestige. It is obvious that
whilst the Japanese troops remain in the area they will be a
potential source of trouble. Furthermore, indications up to the
present are that the main responsibility for removal of Japanese
influence will fall upon British forces. This is a fortunate
result in as much as prior to capitulation all groups looked to
the United States for relief.

(b) The Indonesian fear of reprisals as a result of the severe
handling of political offenders in the past by the Dutch
administration.

(c) At least in the outer possessions, Java being an unknown
quantity, the Dutch will lack for some time to come any real
organized administrative structure. Many of their district
officers will have perished and the Dutch will be very much
dependent for some time to come on local native representatives.

In any case in pre-war days administrative staff was under manned.

Whether these local natives will be able to cope with all
necessary administrative work is doubtful. Relations between
older, more stable elements in population and local collaborators
formerly working for the Japanese require investigation. The
Japanese trained volunteer army (heihos) [was] largely recruited
from undesirables and some possibly may still have arms.

(d) Another important factor which has weighed with the Indonesian
movement, and which appears to be a valid contention, is the
opportunity that has been afforded to commercial interests. It may
be that there are elements in the Dutch administration who are
genuinely opposed to the primacy of commercial interests but the
fact remains that these interests have occupied an over-
influential position in the government of the islands. General
feeling is that profits from exploitation of the rich natural
resources of the East Indies flow to the mother country and
entirely insufficient proportion of the profits is devoted to
raising standards of living of local, population and development
of N.E.I. generally.

(e) It is difficult to estimate the dependence of the Dutch in the
immediate future upon Australia in the matter of supplies of food
and materials needed in the Indies but it would appear likely that
the Indies will look to Australia for assistance in
reconstruction.

(f) Observers believe that the Indonesians would more readily
accept non-Dutch white troops in carrying out the expulsion of the
Japanese. It must be realised, however, that in such a situation
as exists in the Indies today, there would be a continual danger
of serious clashes between the Indonesians and, for the sake of
argument British troops. This might have unfortunate effect upon
prestige of the British citizen in the eyes of the Indonesians.

Any action taken would therefore have to be on such a scale as to
be definitive.

(g) It seems at least doubtful whether the Indonesians are ready
for full self government. Probably a period of tutelage will be
necessary. Furthermore, it is difficult to estimate the real
strength and for that matter the capacity of the republican
movement.

(h) It must be acknowledged that the Dutch have a sound
administrative record particularly in the matter of health
services and material development. The majority of the natives
were apparently fairly satisfied with such progress as was
achieved and were not as a whole, it seems, politically conscious
nor were they encouraged to be so. Indeed, at least certain
sections of the nationalist movements in pre-war days did not seek
immediate independence and moderate opinion in all circles
favoured something approaching Dominion status. Of course the
effect of Japanese occupation on the outlook of the Indonesians
must be allowed for. On the one hand it may be that the effect of
Japanese occupation has been to make the majority of the
Indonesians more willing to accept the return of white rule. On
the other hand it is possible that the overthrow of white rule and
consequent loss of the prestige of the white man may have
strengthened the forces working for immediate and full self-
government. It is difficult to estimate without adequate
observation which of these two consequences has followed.

3. Bearing all these factors in mind, we have come to the
following conclusions and would appreciate your urgent comments:

(a) The Dutch will be dependent on the United Kingdom for military
support in the immediate future at least and may possibly be
compelled to look for supplies of food etc. from Australia. For
guidance of our own policy information therefore desirable
regarding United Kingdom objectives and available forces.

(b) It does not seem unreasonable that in return the Dutch should
be prepared to give certain guarantees such as:-

(i) Guarantees that Indonesians are not punished because of their
political convictions.

(ii) A public recognition by the Dutch of the obligations imposed
on countries responsible for dependent territories under Article
73 of the United Nations Charter.

(iii) The securing of a pledge by the Dutch that they will be
prepared to place the Netherlands East Indies under the
International Trusteeship System envisaged in Chapter 12 of the
Charter (Article 77 (C)).

4. It is fully appreciated that the Dutch will be extremely
unwilling to pledge themselves to (ii) or (iii) above let alone
the first two guarantees. Furthermore, it is also appreciated that
the securing of such a pledge to place the Netherlands East Indies
under the Trusteeship provisions of the Charter would carry
certain implications in regard to Malaya, French Indo-China and of
course New Guinea and Papua and other dependent areas in the South
East Asia region. These implications would necessarily have to be
faced by the United Kingdom, French and our own Governments. It is
felt, however, that the situation in the South East Asia Area is
so full of explosive possibilities in the future that only fairly
drastic remedies applied now will have any hope of successfully
resolving the situation by meeting the legitimate demands of the
native peoples whilst at the same time preserving some order and
stability by permitting the return of the previous administration,
experienced and skilled in handling these peoples. There is no
need to stress the vital security interests of Australia in
fostering a liberal settlement of the problems of the dependent
peoples of this area.

We shall be communicating with the New Zealand Government on this
subject merely at this stage acquainting them with a few of the
considerations listed above under paragraph (2) and perhaps
mentioning the possible course of action to them, without
committing ourselves before you comment as to the adoption of any
particular course of action. It may be that the New Zealand
Government will feel disposed to support us in any representations
to the United Kingdom and the Dutch authorities.