Proposals in your 106  would seem to provide sound and practical basis for political settlement and subsequent establishment of United States of Indonesia. It is all the more disappointing that Dutch should still be insisting at this stage on Republican compliance with demands (your K.11  which, as seen from here, are largely matters of 'face'. Republican refusal to accept them in present form is readily understandable. At same time it seems to us unthinkable that political settlement should be held up indefinitely on minor issues which would surely be quite unimportant if both sides could be made to concentrate on main objective of establishing U.S.I. as soon as possible.
2. We take it Dutch have not yet finally rejected your proposals  on present informal basis. If they do so, and if you are unable to persuade your colleagues to present the plan formally and bring pressure on the Dutch, situation will have to be brought in some way to attention of Security Council. This should not, however, be done before every possibility of securing some measure of agreement is exhausted, and not before further reference to Canberra.
3. What basis of agreement has been reached on structure of Netherlands-Indonesian Union? We presume Committee and Republic are guarding against any Dutch attempt to constitute Union as a kind of supra-government which Dutch themselves could control and which would have effect of nullifying Indonesian sovereignty.