INDONESIA

1. It has been announced from Batavia that the Republican
Government has for a second time clearly rejected the United
States offer of good offices. [1]

2. The United States authorities have stated that they propose to
inform the Council that, while the Dutch have accepted their
offer, the Republicans have not.

3. It is also officially stated from Batavia that the Republican
authorities accept the Australian proposal of arbitration by
Australia and the United States. If therefore, the United States
makes such a statement as indicated above, you should state that,
while the Republican authorities had accepted an offer of
arbitration, the Dutch authorities had rejected it.

4. It is now almost a week since we asked that the Australian
resolution concerning a Commission of Arbitration and a Commission
of Observers be put forward. [2] The prompt action taken by the
Security Council originally has now been prejudiced by the
delaying tactics being employed in the Council and you should, at
the earliest oppurtunity, press these two separate proposals to a
vote even though you are not confident of the numbers. The
original resolution of the Council spoke of arbitration, not
mediation, and we are confident that you would not only have the
numbers on the Commission of Observers, but probably, if the
matter were forced to a vote, have the numbers on the question of
arbitration.

5. We would have no objection if the Security Council nominated
for the Commission of Observers members of the staff of Consular
officers already at Batavia. It should be made clear, however,
that this arrangement was a matter of expediency to save time, and
the appointments were as from the Security Council. It is a matter
of great urgency that a team of observers should commence work
immediately, without the loss of a day. This question should be
dealt with first and separately. This would meet points (a) and
(b) of the Chinese resolution [3] and should therefore receive
their support.

6. Point (c) of the Chinese resolution, merely enabling the
Council to act if the Settlement is unduly prolonged, is quite
unacceptable and, in any case, mediation is now ruled out by the
legitimate refusal of one of the parties. Mediation between the
two parties, one of which has a great predominance of force and of
economic power and is supported by other countries with economic
power in this area, can only lead to unjust bargaining of the type
initiated by the Axis powers before the war. There is no room for
compromise on the principle of arbitration by the appropriate
international body or by a group of arbiters nominated by that
body. We would, however, be prepared to accept a Commission of
three, one of whom would be nominated by each of the two parties
and a third by the Security Council. This should be put forward as
a compromise, in view of the position which has now been reached,
that is, the Indonesian rejection of the United States offer and
the Dutch rejection of our own offer.