64 Proud to Department of External Affairs

Cablegram 53 SINGAPORE, 31 January 1946, 6.48 p.m.

MOST IMMEDIATE SECRET

1. I had a long discussion with Sir Archibald Clark Kerr this morning. I had previously met him in Chungking and Singapore and the interview was very friendly and informal.

2. He discussed his Directive and said that there was very little he could add to it at the moment as, although he had been doing a lot of reading, all the impressions he had collected were second hand. He said that as far as he could see his principal objective was 'to bash their heads together and make them talk sense'. Since he had arrived in Singapore he found that the situation was more difficult than he had expected.

3. I told him that my impression over there was that there was not such a great divergence between the opinions of Indonesian leaders and moderate Dutch. Face saving was a vital consideration on both sides. I told him of the split, on the question of confiscation of European property and the popular front and he had not heard of this.

4. He mentioned the difficulties over currency and, when I suggested that it was precipitate of the Dutch to issue their own currency in view of the pending negotiations, he stated that Doll, Chief Financial Adviser in this theatre, had recommended to the Dutch that they hold the issue so as to avoid an incident which would occur if the Indonesians decided to carry out their threat of issuing their own currency. It is likely therefore that the Dutch currency issue will be stalled for some days. He mentioned that there was another factor in the currency issue and that was that the Dutch were trying to peg the Guilder at 7.25 per pound sterling and, in Doll's opinion, it was not worth more than ten to the pound sterling.

5. He stated that he proposed to see as many people as possible over there on both sides, and was particularly interested to hear of Abdul Kadir's [1]activities (which I have referred to in my previous report) and would make a point of seeing him in Batavia.

6. We then discussed Australia's representation and policy. Clark Kerr agreed that it was wise for me to have informed Sjahrir that the policy of the Australian Government was not necessarily the policy of the Australian waterside workers. [2] He also agreed most wholeheartedly that Australia had a major interest in the Netherlands East Indies' problem from the point of view of the future, and stated that he would welcome a senior Australian Representative and would be very happy to work closely with him.

He had previously asked me if I were going to Batavia with him, but I then stated that I thought that this was undesirable at the moment in view of the suggestion which I have had from you that a senior representative might be sent there. I mentioned to him that I was contemplating sending Brookes across and he promised to place all facilities at Brookes' disposal.

7. Clark Kerr then said that if an Australian Representative were sent to Batavia he felt that they should work 'in each other's offices' and that an independent approach to the Dutch by Australia, as suggested in your telegram 36, at this moment might be embarrassing. He stated that he presumed that Australia would consult with London before making such an appointment and that he would be very happy to co-operate fully with anybody sent by Australia as a result of an agreement with the United Kingdom. He stated in this connection that he had no worries of personal prestige at all.

8. I asked Clark Kerr if he considered he would be in the position of mediator or only act as chairman at meetings of the two parties. He said that he could not form an impression on this until he arrived at Batavia. He was quite prepared to mediate if necessary.

9. I mentioned the trouble we were having over shipment of relief supplies and told him of the suggestion that the Command should supervise distribution (this is already accepted) [3] and Sjahrir's request to Indonesian seamen. [4] I told him of the difficulties I had with both the Dutch and Sjahrir in discussing this matter in Batavia [5], and he said that he would be glad to use any influence he might have with both parties as he realized the vital urgency of getting these supplies up as soon as possible.

10. There is no further word on the internal situation in Java and I rather gather that everybody is holding their hand until Clark Kerr's arrival.

11. Your telegram 42 has just arrived and I am taking the question of relief supplies up with S.A.C.S.E.A. immediately. I am considerably influenced in not going to Batavia by the fact that we have only one set of cyphers. If I sen[d] Brookes to Batavia he can report factually to me here through S.A.C.S.E.A. channels and I can interpret it to you. In the meantime I have arranged Brookes' passage on Saturday morning and request that you advise me urgently whether in view of this report you still wish me to proceed. [6]

1 The N.E.I. Govt's Head of Allied Liaison Section.

2 See Document 41, note 6.

3 See Document 42, note 2.

4 To man Dutch ships carrying relief supplies from Australia to the N.E.I.

5 On 23 January Proud reported to Dunk that the Dutch objected to Sjahrir being associated with an appeal to the Australian Govt for relief supplies, on the grounds that it 'would build up Sjahrir and the Indonesian Cabinet at a time most awkward in view of pending negotiations'; and that Sjahrir did not want to be associated with a Dutch appeal as 'their official policy is that they do not wish for any Dutch supplies ...' 6 Proud decided to begin a visit to Batavia On 4 February. The External Affairs Dept replied on 1 February that it agreed with his decision, adding that a senior Australian representative would not be sent to Java unless the situation changed, and then only on Proud's recommendation.

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