I have the honour to report that another month is drawing to a close without the Dutch-Indonesian agreement having been signed.
To judge from the public statements made by each side, a deadlock has been reached, but there is a little evidence that an attempt is being made to close the gap. In a statement issued on the last day of January, the Republican Minister of Information, Dr.
Natsir, had urged the immediate signature of the agreement, taking the line that the cease-fire was not the key to the situation, but that signature would constitute a political application of the truce and provide a basis for the solution of all remaining issues, political as well as military. The Dutch reply asserted that the Commission-General was anxious to sign, but that military activities had confused the situation and had a delaying effect;
the Commission-General was naturally bound by the Romme - van der Goes van Naters motion , and had [itself]  imposed the issue of a cease-fire as a preliminary condition.
2. It was against this background, and more important still, under the shadow of the Krian incident reported in my Despatch No.5/1947 , that the two Delegations met early in the month. There is no doubt that the Commission-General had been perturbed by Krian into a sense of urgency, and Professor Schermerhorn, I believe, hoped that the signature would take place early in February. At the delegation meetings, it was agreed that Krian should be treated as an abnormality, that the demarcation line should officially hold good, and that the occupied areas should be returned 'when conditions returned to normal'.
3. The Republican Delegation then left for a Cabinet meeting at Djokjakarta, at which the Government decided to adhere to its previous readiness to accept all that took place at Linggardjati, and nothing else. The communique announcing this, and the Dutch reply in which their former position is maintained, are contained in my telegram No.19 of 12th February. Any public statements since made by either side have merely consisted of dialectical justifications of earlier statements, and contributed nothing new.
Since the return of the Indonesian ministers to Batavia, there have been no further meetings with the Commission-General,-only the secretaries of the two delegations are in contact. The Commission-General appears not to be a happy family, and Dr.
Schermerhorn declined an invitation to meet Sutan Sjahrir alone, fearing to compromise himself.
4. Dr. Romme, parliamentary leader of the Roman Catholic Party and co-author of the disputed motion has now left for Holland. He seems to have spent most of his time in military circles, and did not make contact with any Indonesian leaders. The tone of his reported speeches has been quite uncompromising, as can be judged from a typical pronouncement made at Medan on February 12th. He there said 'If the Indonesian Delegation and the Dutch Commission- General interpreted some important points differently at the time when the agreement was initialled, the whole agreement has no feasibility and is really a horrible misunderstanding. I am not prepared, and parliament with me, to follow a different line.' 5. What difficulties the Commission-General is having with the Netherlands Government can only be guessed at, but a press report appeared here on 22nd February of a memorandum on the budget of the Ministry of Overseas Territories saying that the Government did not intend to make any change in its policy towards Indonesia, 'even if the Government were compelled to resort to the use of arms'. The report proceeded: 'The Government rejects the use of force in order to restore the old constitutional structure in the country in preparation for the new. On the other hand, the Commission-General has also been instructed not to sign the Linggardjati agreement as long as violations of the truce agreement still occur.' My earlier statement that attempts to find a way out were being made by the Commission-General is based on hints that it is submitting various compromise formulae to The Hague.
6. The Republican military authorities issued a cease-fire order which came into operation at midnight on 15th February, and withdrawal two kilometres behind the demarcation lines has been provided for. This was officially welcomed by the Dutch, though their military spokesman, having no military actions to report on 17th February, could not refrain from announcing the death of one soldier from wounds previously received. Since the cease-fire, there has been a lull generally, but some clashes have occurred, the blame for which cannot be placed with certainty.
7. General Spoor has returned from Holland-with what directives, one does not know. It is the opinion of the British Military Liaison Officer, who has been here since the first British landing, that Indonesian activity has recently been less than former activity against A.F.N.E.I., but seems more because of the scale on which the Dutch hit back. It is undoubtedly their policy to hit hard whenever there is an excuse, and their use of aircraft is more extensive than in British times. It does seem to be true that the Krian operation was conducted relatively easily, but more significant is the way the Service people were able to complete the operation and force the civilian side into tortuous justifications of it; this, allied to the aggressive service temper, is potentially dangerous. It is interesting, in this connexion, to learn that General Spoor, some days after the cease- fire, sent Sutan Sjahrir a letter in uncompromising terms demanding revolutionary changes in demarcation lines, and that Professor Schermerhorn, disclaiming knowledge of it, but faced with a copy, had to pass it off as a 'misunderstanding'.
8. The Netherlands navy, too, is active. It has been busy stopping and detaining small ships, mostly Singapore-British, in connexion with the economic blockade; a large American vessel, the Martin Behrman is now loading rubber and other prohibited exports at Cheribon, and subsequent happenings are being awaited with some interest.  There has been a naval reconnaissance of the south Java coast, and a landing party went ashore at a point which has a strategic relation to the Bandoeng sector. Action has also been taken against what is described as a fleet of prahus to be used for Republican landings and infiltrations on Bali, and with the same object, a coastal battery at Banjoewangi was destroyed.
9. Republican Government circles after the last Cabinet meeting were very pleased at what they felt to be the increasing political unity of the Republic, and the cease-fire order was issued with more confidence that it would be obeyed, than would have been possible earlier. The T.R.I.  has been reformed by a reduction in rank to a more realistic level of many senior officers; the civil police is considered now to be ready to take sole charge of police activities in the interior, and arrangements are being made to withdraw the army from these duties. A Republican Purchasing Agency has been established to conduct all commercial transactions in Batavia on behalf of all the Republican ministries. Under the impulse of Dr. Gani, consideration is being given to the rationalisation of government industries, with special attention to control of costs and elimination of surplus personnel. The Komite Nasional (K.N.I.P.) began its session on 25th February.
Pre-session expectations were that it would discuss the activities of the working committee of the K.N.I.P., as well as the Presidential Decree No.6 of 29th December last, increasing the number of members of the Komite, and, if the decree is approved, that the new augmented Komite would meet.