73 Ballard to Department of External Affairs

Cablegram 163 BATAVIA, 30 May 1947, 6.54 p.m.

IMMEDIATE SECRET

My telegram 162. [1] Although Linggadjati Agreement confirms the sovereignty of the Netherlands during the transitional period the Republic wants to continue its international adventures which are based on political relations with certain Asiatics (mainly India and Egypt) and with Communist centres in Australia and Singapore (and possibly United States).

2. Up to the present they have refused to agree to general economic measures and restoration of property to non-Indonesians owners of estates, factories etc. The current smuggling of estate products and other looted property apparently is one of the main sources of income for the Republican authorities and their armed bands, although profit in foreign exchange and returned goods is far below the value of exports. Reports of wholesale embezzlement in Singapore and India by agents of the Republic are frequent.

Certain shady characters like the Australian Communist, Campbell, and Singalese newspaperman Thambu act as Representatives of Djokjakarta.

3. The Republic hesitates to accept necessary assistance of the Netherlands in variety of services, because they know that many bad practices will come to light and that several incapable people in high places will have to be dismissed. on the other hand there is a growing repugnance among the better class Indonesian officials against fraud and the amateurish way in which the business of the Government is being conducted and an increasing unrest among the population who have to furnish armed bands with food and other expenses and who experience only a continuous deterioration in return.

4. It seems impossible to come to rational execution of agreement without a certain pressure from outside. The Netherlands Government have unconditionally decided to put the Linggadjati Agreement into effect whether with the Republic or with other organised groups. A fairly complete scheme has been drawn up for this purpose and was handed over to the Republican Delegation today. [2] It is however essential that they act quickly because otherwise the rehabilitation of the country will become an insoluble problem due to the increasing chaos and rapid decline of production, machinery and capacity. Any further concession in the direction of immediate independence would simply mean perpetuation of decay.

1 Document 72. See paragraph 3 promising the text of the Dutch memorandum.

2 In fact on 27 May. See Document 71, note 3.

[AA:A1068/1, E47/23/10/1]