53 Ballard to Department of External Affairs

Cablegram 126 BATAVIA, 11 May 1947, 12 noon

IMMEDIATE SECRET

On Saturday afternoon we had discussion at the Consulate-General with Gani and Van Hoogstraten. The latter was accompanied by two senior officials.

2. Van Hoogstraten said that his Government was willing to join the Republic in a joint request to the Australian Government designed to remove the ban, but insisted that this should be subject to no conditions. Later he modified this to objection to published conditions. He also gave an assurance that the Indonesians' share of goods would be unloaded at Indonesian port or ports and distributed by Indonesians.

3. Gani at first wanted delivery in non-Dutch shipping and the right of preliminary Indonesian inspection in Australia. Van Hoogstraten was adamant against discrimination against Dutch shipping, i.e. against Republican ports being open only to non- Dutch ships and also refused to consider inspection of the goods which are Dutch property. Gani then changed his grounds to seeking guarantees that the Republic would actually get goods. This was secured by Van Hoogstraten conceding that bills of lading would be given to the Indonesians and repeatedly affirming that no Government could incur odium of going back on its word in regard to promised delivery. Gani again pressed for inspection by an Indonesian official in Australia, and secured the principle of this on the compromise that goods would be inspected on arrival at Indonesian ports before acceptance.

4. It appeared that although there is a general agreement in principle on a division of goods between the Republic and the Dutch, no detailed allocation, commodity to commodity, has yet been made. Also delivery of goods to the Republic is tied up with the provision to the Dutch of goods from the Interior e.g. rice.

Detailed agreements for this have not yet been made but would be worked out pari passu with deliveries from Australia.

5. Throughout the talk Gani displayed marked lack of confidence in the actual fulfilment of Dutch undertakings, but accepted the view that there were three sanctions in his hands viz:

(a) Inquiry [1] to Netherlands East Indies Government's reputation in world opinion in the event of non-fulfilment of an agreement known to third parties and publishable in the event of a breach.

(b) Since the goods cannot all be moved simultaneously, the shipments must necessarily take some time and satisfactory handling of the first shipload would be a test of Dutch sincerity;

similarly with subsequent shipments.

(c) In the event of any breach of agreement by the Dutch, the Indonesians would still be able to withhold further supplies from the interior and such a breach would almost certainly result in a revival of the present difficulties.

6. The foregoing points were chewed over during the remainder of the discussion until, when it appeared that the parties were substantially agreed, Gani suggested a written agreement with Van Hoogstraten. The latter agreed to meet him to draft this on Monday.

7. We feel that the discussion was constructive and that if both parties meet on Monday in the frame of mind in which they left us, positive results a-re possible. We are seeing Gani again on Sunday.

1 This presumably should read 'injury'.

[AA:A1838/278, 401/1/3/2, ii]