PART I

The Sultan issued a press statement before his departure for
Djocja in which he stated that the rapidly deteriorating situation
in East Java was full of explosive possibilities and if the Dutch
continued to be unreasonable it was feared than an armed clash was
not only inevitable but would soon spread throughout Java and
Sumatra. He had been twice in consultation with Lovink but had
been unable to make him see the dangers inherent in the East Java
situation. The Dutch stand was characteristically an adherence to
the letter of the law while ignoring its spirit. To maintain such
an inflexible position in the face of an untenable and explosive
situation was to ignore reality and endanger both harmony in
Indonesia and the successful outcome of the conference at The
Hague.

2. Antara reports that on arrival in Djocja the Sultan further
stated that there was still a possibility of a third Dutch
military action and that his mission to Batavia had ended in
failure.

3. The Dutch issued a preliminary communique last night expressing
amazement at the Sultan's statement and pointing out that it
infringed paragraph 4(a) [1] of the Joint Proclamation.

4. It is true that the military position is deteriorating both
because of failure to date to define the military locations and
responsibilities of the parties and because of the increasingly
aggressive Dutch patrolling which has already led to local clashes
in East Java and East Pasundan. Nevertheless, the Sultan was most
ill-advised and his statements could seriously complicate an
already delicate situation, more particularly by their unsettling
effect on the TNI. Budiardjo left for Djocja this morning to
obtain the Cabinet's reply to Lovink's Aide Memoire [2] and I
stressed to him that while answering the Dutch points, the reply
should be moderate in tone.

5. The Dutch claim that the Republican General Staff is fast
losing control and that extremist elements (very often Communists)
absorbed by the TNI after the Cease-Hostilities, are gaining
influence to the detriment of TNI discipline and the authority of
the Hatta Government. (They are taking every opportunity to
impress the new American Consul-General, Beam, with these views.)
The Dutch attitude is that they are still responsible for law and
order in Indonesia and well within their rights in taking vigorous
action on a local scale. s'Jacob told Dow last night that should
this policy lead to fighting then it were better to get it over
now than to have it in six months' time.

6. TNI discipline has so far prevented widespread shooting
resulting from the intensification of Dutch 'police' measures, but
it might not be possible to avoid a breakdown if a provisional
military settlement cannot be reached shortly. This will largely
depend on the Republic accepting in the first instance, a fair
degree of delineation of zones and on the Dutch stopping their
policing and being prepared to allocate reasonable zones of
responsibility to the TNI throughout the island.

7. The Central Joint Board will now meet tomorrow. Without
prejudice to the Sultan's proposals, the Republicans will accept
the UNCI proposal of October 14 [3] or as a preliminary measure,
the inclusion of East Java among the areas on which the UNCI is to
make recommendations. The Dutch are likely to be more difficult.

8. (For Critchley only). In the meantime it is important that the
Republicans at The Hague refrain from alarmist comment and it
would be helpful if they could express confidence that a solution
will be found for the difficulties here. Glad of any line on Dutch
policy which might be apparent at The Hague. Any optimistic
Conference news, especially as to the Dutch attitude, would also
be most useful at present.

PART II

9. My No. 10 (K.344 [4]) paragraph 2. For 'Temanggoeng-Magelang
area' read 'the areas of Parakan and Tjandiroto in Magelang'.

10. Paragraph 6. The Republican proposals were for the Netherlands
troops to concentrate in the Regencies and residency capitals.

They would maintain control of their communication roads plus 3
kilometres each side, but the TNI after consultation with the
Netherlands commanders would have full use of the roads. There
would be no Netherlands patrolling outside these roads and the
troop concentration areas. Estate guards could remain at their
posts.

11. Lovink's reply claimed that the seriousness of the situation
particularly in East Java, was almost solely resultant from the
fact that sections of the TNI instead of remaining in their status
quo positions have spread over areas where they were not present
before in many cases making civil administration impossible. In
spite of existing objections the Netherlands Delegation had
submitted detailed proposals to improve a situation of actual or
impending administrative dislocation. These proposals, which took
into account the actual situation created by the action of the TNI
units, were initiated because it was necessary to ensure a well
organized and orderly administration over the whole of Java,
particularly in view of The Hague discussions for the earliest
possible transfer of sovereignty. In drafting its proposals the
Netherlands Delegation took into consideration the agreements
reached at the Inter-Indonesian Conference. [5] When it appeared
that the Republic could not fully accept the proposals and in
particular, because the Republic objected to bind itself to
refrain from intervention in the Pasundan and East Java Negara
administrations, the Netherlands Delegation worked out a more
limited proposal on the explicit condition that the original offer
remained open. The intention was to start immediately with
measures which might guarantee orderly administration while
discussions on the more advanced proposals continued. Lovink's
reply then rehearsed the provisional arrangement [6] of October 10
and continued 'the High Representative of the Crown regrets that
the Republican Government takes an unco-operative attitude toward
all those items on which the Netherlands Delegation has made
proposals or on which provisional arrangements had been reached
between the Delegations to achieve a satisfactory solution of the
problems. The Republican Government deems it sufficient to advance
a proposal which the Sultan himself acknowledges not only deviates
completely from the regulations made within the frame of reference
of the Cease-Hostilities Agreement but would in some respects
contrary to the Van Roijen-Rum statements.' [7] (The Sultan denies
this acknowledgment). Lovink concluded that it was not possible to
give an immediate reply, especially because of the possibility
that the military and administrative consequences of the
Republican proposal would be at cross purposes with The Hague
discussions on these items. He had referred the proposal to The
Hague.