We are greatly concerned at deterioration in Indonesian situation
during last few days. We have watched negotiations carefully and
patience of Republican authorities in the face of provocation.

Your reports confirm that recently it was the Republican
authorities that made the compromise. [1]

2. Since the Republican authorities have accepted Dutch demands,
with the exception of the internal police force, Dutch who were
intending to be less uncompromising now give us the appearance of
returning to their over-confident position and are again acting in
provocative ways. Recently, in an attempt to encourage the
agreement between the two parties which appeared well on the way,
and after the discussion at a low level with representatives of
both parties, it was indicated that the Australian Government
would be willing to assist the new Interim Government in any way
it could, having in mind particularly the supply of parts and
other equipment immediately required for the rehabilitation of the
general economy. [2] This offer, made in generous and most
friendly terms, was the subject of a formal protest from the Dutch
authorities. [3]

3. United Kingdom and United States representatives at Batavia,
acting on instructions, have more than once appealed to the
Republican authorities to compromise and to meet the Dutch. Having
watched these approaches and the responses, it would seem to us
that the effect has been unduly to encourage the Dutch into
believing that, in the event of crisis, United Kingdom and United
States authorities would continue to seek compromise from the
Republican authorities.

4. We consider that it is important and urgent that any such
impression left with the Dutch authorities should be corrected.

5. As far as our own relations with Dutch and Republican
authorities are concerned, over many matters, including the
shipping from Australia of Dutch owned goods, we have always found
Republican authorities most anxious to avoid friction and most
willing to disregard feelings of self-respect, if by so doing
trouble could be avoided. On the other hand, we can tabulate lists
of acts on the part of the Dutch authorities well calculated to
destroy any Indonesian-Dutch relationships we may have been able
to build up and to undermine any arrangements which may have been
made to move goods from Australia or to recommence trade
generally. For example, if the full facts were known, it would be
readily agreed that the Australian waterside workers have over a
period tolerated to an amazing degree unnecessary acts of
provocation on the part of the Dutch. Ships are loading now, but
each day we are having to take action to see that the agreement
entered into between the Republican and Dutch authorities is
observed.

6. Previously we have represented to you that Australia is vitally
concerned in events in Indonesia and that we think it would be an
advantage if we were consulted before the good offices of the
United Kingdom authorities were employed. [4] That has not been
done, advantage has not been taken of our considerable experience
in relation to N.E.I. authorities, and at present the consequences
indicated in paragraph 3 above look serious.

7. Because of the importance of British Commonwealth maintaining
the closest relations with the Netherlands Government at The
Hague, the United Kingdom Government has exercised tolerance. The
Australian Government throughout the period has always kept this
in mind. However, events in the N.E.I. are of vital concern to us
and we consider that, in exercising that tolerance, our interests
should equally be kept in mind by the United Kingdom Government.

For our own part, having gone as far as we consider we can in
encouraging Indonesian and the Dutch authorities to come to
agreement, and having seen the Dutch arriving at a position where
Republican authorities were prepared to co-operate, we now expect
the Dutch to demonstrate that spirit of United Kingdom - United
States mediation. If, at this stage, it would seem that agreement
cannot be reached, the Australian Government will have no recourse
but to raise the matter perhaps in the Security Council or the
Assembly and by that means made known the facts of the situation
as they appear to us, and by so doing allow world public opinion
to express itself on Dutch-Indonesian relationships.