Despite a week's recriminations, the atmosphere when the talks recommenced on Monday, 19th April, did not seem to have deteriorated. In particular, discussions in the Social and Administrative Committee and in the Economic and Financial Committee appear to be progressing satisfactorily. The former has not yet presented its report on the release of political prisoners, but Republican representatives hope to be able to present a satisfactory agreement at Friday's meeting.
All the sub-committees of the Economic and Financial Committee have reported. Details were included in my telegram K. 108.  In the Political Committee, however, progress is slow. Foreign affairs was an early issue on which trouble was expected. For the time being all is quiet on the basis of an assurance by the Republican Government that the Republic has no intention of expanding its foreign representation. But, like our neighbour 'Merapi' , the foreign affairs issue is likely to blow up at any time.
Another issue causing trouble is the Union. The Dutch working paper , although it makes the statement that the Netherlands has no intention of setting up a superstructure, is a confused paper which does little to eliminate the Republic's fear that the Dutch are endeavouring to use a Union to retain some control after the United States of Indonesia is established. For example, paragraph 11 reads:
'The supreme responsible executive organs of the Union will be the Ministers of each of the partners to which the promotion of Union affairs is entrusted. Together they form the Council of Union Ministers.'
Then again paragraph 2 is unpopular since it represents a danger that a conference selected by the Dutch and not a democratically elected body of Indonesians, might be entrusted to draft with the Netherlands the Statute of the Union. I am still hopeful that detailed discussions will prove that the Dutch proposals are much more reasonable and conciliatory than they appear on paper. We should know more by the end of this week.
More serious is the question of the plebiscite. The Republic claims that the Renville principle  does not provide for a plebiscite in Republican territory but only in disputed Dutch occupied territories. This argument seems to me to be weak. it is also vulnerable to a world opinion which might, with Dutch help, regard the Republic as afraid to test public opinion. Consequently I had thought the Republic would readily agree to some compromise, but the issue is now a major one on which Sukarno has told me personally 'the Republic will not give way'.
Since it is important that the talks should not break down on an issue so unfavourable to the Republic, I have been endeavouring to find a means of getting round the present deadlock. There are two possibilities: firstly, for the Republic to accept a plebiscite in the Republican areas taken as a whole, as a means of providing an opportunity for the people to express their solidarity behind the Republic. This would probably be satisfactory to the Republic, although politics and face saving might require that it be presented as an agreement going beyond the Renville principles. On the other hand, it is unlikely to be satisfactory to the Netherlands and the other members of the Committee.
The alternative which appears to me much more reasonable is to avoid a plebiscite altogether. It can be logically argued that the Constituent Assembly, which will be responsible for deciding the respective powers of the States and the federal government should also be responsible for defining the local administrative units (to be called States) within the federation.
The proposal would have a number of advantages:
(1) It would produce a better organized administrative system than one in which boundaries were decided by a plebiscite which would be limited by the difficulty of posing the issues in a form simple enough to be understood by the uneducated Indonesian and yet sufficiently wide to ensure a satisfactory result;
(2) Present Republican insistence on the Republic remaining as a unit could have serious disadvantages if it resulted after a plebiscite in a State of many areas cut off from one another. The Republic realises this difficulty and is in the process of dividing its present area into separate administrative units.
There is clearly a problem ahead of the Republic and the proposal that the Constituent Assembly should decide administrative areas would enable it to be met without loss of face or political embarrassment;
(3) A democratically elected Constituent Assembly based on electorates would probably mean stronger representation for the Republic than if the representatives were appointed by the various States;
(4) It would be possible to set up the United States of Indonesia within a shorter period than if a plebiscite had to be held prior to the election of a Constituent Assembly.
Such talks as I have had with the members of Republican delegation lead me to believe that a proposal along these lines would be acceptable. It would also probably be acceptable to the Belgians and Americans.
In general, I am working on the assumption that the interests of the Republic will be met if there is an agreement for- (a) a sovereign United States of Indonesia;
(b) a Union with the Netherlands which will not prejudice in any way the sovereignty of the United States of Indonesia;
(c) a procedure for democratically electing a Constituent Assembly, together with agreement as to the general directions to be given to that Assembly.
If, as I fear, a deadlock develops, I shall endeavour to induce the Good Offices Committee to take the initiative along the lines I have outlined above. So far, with only one exception, the other two members have been anxious to limit the G.O.C.'s initiative.
That one exception was a most unfortunate proposal by the United States that the Committee should take a lead in obtaining agreement of the parties to a schedule of the steps to be taken towards the formation of a sovereign United States of Indonesia. 
Such a schedule, it was proposed, would make it clear that the United States of Indonesia would be unlikely to be set up by the 1st January 1949, but more likely about 11 months after the political agreement. The Americans claim that the early publication of such an understanding 'might hasten the date on which sovereignty can in fact be transferred to the United States of Indonesia, enable the various governments concerned to commence making definite plans, help gradually to create a constructive atmosphere, and perhaps, above all, forestall widespread disillusionment which could be most harmful to the atmosphere should it become apparent that the original target date for the transfer of sovereignty cannot be met'. As far as I can see, the only reason for such a statement would be to assist the Dutch in an awkward spot. The Dutch themselves are wary of publicising the fact that sovereignty may not be handed over at the beginning of next year for fear of alienating their Indonesian supporters, in particular the State of East Indonesia. Since I am firmly of the opinion that a satisfactory settlement depends on pressure on the Dutch, and since the present impression in the minds of the people in regard to the 1st January 1949 is a pressure which the Netherlands are finding inconvenient, I believe acceptance of the American proposal, far from encouraging an early political settlement, would be likely to retard it. In any event, the Committee is in no position to make any suggestion whatever as to the steps that will be necessary for the setting up of the U.S.I.
until a political agreement has in fact been reached. My argument is that the appropriate time to issue a schedule will be at the time of that political agreement. This should surely be prior to January 1st, 1949, and would therefore forestall any widespread disillusionment the Americans fear is in store.
The Republican delegation will submit in the near future a working paper on an interim federal government.  Although I do not believe the formation of such a government essential to a political settlement, I know the Dutch will endeavour to insist on it and will receive support from the Americans. If a satisfactory agreement on the interim government can be reached, it will facilitate the solution of a number of problems, particularly rehabilitation problems, with which the Dutch are particularly concerned. On the other hand, if, as I fear agreement will be difficult to arrive at, it would seem preferable to make the interim period as short as possible and not worry about Republican participation for the time being. Possibly a democratically elected Constituent Assembly after completing its tasks could be converted into a provisional parliament which would elect a provisional government to which sovereignty could be transferred by the Netherlands.
The Secretariat attached to the Committee has been considerably strengthened. Narayanan has returned as leader and has brought with him an Australian, Timperley, whom you will know, as second in command, and an economist. A press relations officer is on the way so that these additions together with the present staff of two assistant secretaries, an interpreter, an administration officer and four secretary typists, provides a strong administrative assistance which should make our job easier.
Narayanan will probably return to New York in approximately two months leaving Timberley in charge of the Secretariat.
The American Delegation has also been strengthened. Dubois now has four advisers, including an economist.