173 Du Bois and Critchley to Van Mook

Working Paper KALIURANG, 10 June 1948

CONFIDENTIAL

The Committee of Good Offices' Third Interim Report to the Security Council [1], now nearing completion, will show that in the five months that have passed since the signing of the Renville Agreement, no significant progress has been made toward a political settlement between the Kingdom of the Netherlands and the Republic of Indonesia. We have, indeed, for some time had the impression that negotiations toward such a settlement have been approaching a standstill. Your Excellency's letter of June 4 to the Prime Minister of the Republic [2], expressing the view that the bridging of the gap between the points of view of the two delegations along the lines followed so far would be difficult, and inviting the Prime Minister and his principal advisers to discuss outstanding problems with you and the Royal Commissioners, indicates that we are not alone in fearing that a protraction of the procedures so far followed in the discussions (in which, it must be added, the Committee's role has been largely passive) will prove barren. Furthermore, your evident belief that direct conversations between the most highly placed officials of both Governments might accomplish what negotiations between the delegations of the two Governments, under the auspices of the Committee of Good Offices, have so far failed to achieve raises the question whether the Committee's effort can be of value unless the Committee can make a positive contribution to an agreement, which it has in the past refrained from attempting.

Before receiving a copy of Your Excellency's letter of June 4, we had discussed among ourselves the difficulties that appear to stand in the way of a successful conclusion of the negotiations and the manner in which the Committee might be of assistance.

The enclosed working paper, which has taken shape from these discussions, is tentative and subject to reconsideration in the light of the discussions, questions, or objections which it may provoke. We believe that only by coming forward with such a suggestion now that the delegations of the parties appear unable to make further progress towards an agreement, can we acquit ourselves of our obligations and justify the seven and a half months the Committee has spent in Indonesia endeavoring to assist the parties.

Our Belgian colleague is reserving his position with respect to the working paper.

We are offering this working paper informally to Your Excellency and to Dr. Hatta in the sincere hope that it may prove useful in any conversations that may take place between you and to the delegations of your respective Governments should negotiations continue between them. It is not our intention to refer to the substance of the paper in any public statement or in any report to the Security Council, unless, of course, we are forced to the conclusion that the parties are unable to reach a political agreement on the basis of our proposals or any other basis. In this case we should feel obliged to include the working paper, with such revisions as are called for in the light of the comments of the parties, and to set forth the circumstances of the parties' inability to come to an arrangement in a report to the Security Council.

Enclosure

WORKING PAPER ON AN OUTLINE OF A POLITICAL SETTLEMENT [3]

Submitted by the Australian and United States Delegations of the Committee of Good Offices

This paper offers suggestions for the principles of a political agreement between the Government of the Kingdom of the Netherlands and the Government of the Republic of Indonesia which would provide the basis for the formation of a sovereign United States of Indonesia in equal partnership with the Kingdom of the Netherlands in a Netherlands-Indonesian Union. We believe that the principles as set forth below will safeguard and reconcile the proper and essential interests of the two parties as these have been clarified in the current negotiations between their delegations.

We have come to the conclusion that the main issues between the parties involve the following:

1. The extent of the Republic's representation in the Provisional Federal Government, which will constitute the Government of Indonesia prior to the transfer of sovereignty by the Kingdom of the Netherlands.

2. The powers to be transferred to the Provisional Federal Government (in the sense that this will be a government by Indonesian representatives) by the Kingdom of the Netherlands.

3. The powers to be transferred to the Provisional Federal Government by the Republic of Indonesia.

4. The powers and functions to be reserved to the Netherlands- Indonesian Union in the Statute of the Union as against those to be exercised by the United States of Indonesia as a member nation.

We believe that the parties' differing positions on these issues may be resolved in accordance with the letter and spirit of the principles accepted by the parties on board the U.S.S. Renville.

OVERALL POLITICAL AGREEMENT

With regard to the problems pertaining to the interim period (the period prior to the transfer of sovereignty by the Netherlands), we are of the view that the key to a solution may be found in the second of the Six Additional Principles, which states that 'in any provisional federal government created prior to the ratification of the constitution of the future United States of Indonesia, all states will be offered fair representation'. [4] This principle may be taken as grounds for maintaining that a provisional federal government cannot be created until the states have been delineated and formed.

We believe, however, that this principle need not be interpreted so as to delay the creation of a provisional federal government until the final delineation and formation of the component states of the United States of Indonesia. At the same time, it is clear that the representation of the Republic, as one of the states in the future United States of Indonesia, must be based upon the extent of the Republic if such representation is to be fair; that is, proportional to the representation accorded the other areas.

The present geographical extent of the Republic is defined solely by the location of the demilitarized zones, which were established purely as a means of making possible a military truce between the parties. The establishment of these zones, according to Article 3 of the Truce Agreement [5], 'in no way prejudices the rights, claims or positions of the parties under the resolutions of the Security Council of 1, 25 and 26 August and 1 November 1947'. [6] In short, the area which the Republic properly represents is yet to be determined. The area at present under the control of the Republic contains, according to the Committee's information, about two-fifths of the population of Indonesia. The islands of Java, Madura and Sumatra contain about four-fifths of the population of Indonesia. According to the fourth of the Six Additional Principles [7] which, 'among others, form a basis for the negotiations toward a political settlement,' accepted by the parties on board the U.S.S. Renville, the states in Java, Madura and Sumatra will be delineated in accordance with a plebiscite or with another method for ascertaining the will of the populations upon which the parties may agree. Should the populations of these islands so elect, all may be incorporated in the Republic. (In this connection, the Committee should point out that in its view nothing in the Renville principles precludes the Republic from subdividing into a number of states in the interests of a balanced Indonesian federation, and that this subdivision could be effected either on the basis of the territories it now controls or of the territories that it may come to control when the populations have had an opportunity to express their will in accordance with the fourth of the Six Additional Principles. Insofar as an agreement with the Netherlands is concerned, we consider that the Government of the Republic represents all the territories of Java, Madura and Sumatra the populations of which may, when the time comes, demonstrate through democratic procedure their desire to be incorporated in the Republic, irrespective of whether these territories be ultimately included in a single Republican state or be divided with the consent of the Republic into a number of states.) The fundamental question is whether it is possible to create a Provisional Federal Government in which all the states, including those which at the time of the formation of this Government have not yet come into existence, may be fairly represented. We believe that there is a solution to this problem and propose that the following principles, which we believe contain such a solution, be accepted by the parties:

1. Upon the agreement of the parties to the following principles, the Netherlands to undertake as soon as possible to obtain the agreement of the representatives of the areas outside Java, Madura and Sumatra to the procedure envisaged in these principles in order that it may apply to the entire territory of the future United States of Indonesia.

2. Immediately upon the signing of the political agreement, the parties to set up a Joint Commission of Technical Experts which would have the task of studying the problem of the future administration of Indonesia from an objective, non-political point of view and of proposing the delineation of the future states, taking account of all relevant considerations but particularly the necessity for an efficient system of administration.

3. The Constituent Assembly (see below) to be empowered to delineate the states of the United States of Indonesia but to be bound to accept as states areas delineated as such by the Joint Commission of Technical Experts, unless a proposal for a change in any of the boundaries delineated by the Commission should receive the support of the majority of the delegates to the Constituent Assembly and the majority of the delegates elected from the areas within the proposed states directly affected by the proposed change.

4. Elections to the Constituent Assembly to be held as soon as practicable after the signing of the political agreement but the Assembly not to be convened before the Joint Commission of Technical Experts has reported on the provisional delineation of states.

5. The provisions for free and uncoerced discussion of vital issues accepted by the parties on board the U.S.S. Renville to apply in the period preceding the election, and persons charged with abusing the freedom of speech, assembly and publication as assured under the Renville principles to be tried without delay.

6. The Regencies in Java and the equivalent administrative areas in other parts of Indonesia to constitute electoral districts for the Constituent Assembly. Where a Regency or equivalent area is divided by the status quo line, the two portions to constitute separate electoral districts.

7. The number of delegates to the Constituent Assembly from each electoral district to be in proportion to the population of the district (perhaps one delegate for each 500,000 inhabitants).

8. An elector (or electors) to be elected by each dessa and by the lowest administrative subdivision of each municipality within the Regency or equivalent administrative area. The electors so elected to convene at the seat of the Regency (or other area) government and there elect delegates to the Constituent Assembly.

9. Secrecy of the ballot to be assured at both stages, at the primary level by a method of voting suitable to a partially illiterate electorate.

10. The Committee of Good Offices to place itself at the disposal of the parties for observation of the election in accordance with the fourth of the Six Additional Principles.

11. The Constituent Assembly to convene and to have the status both of a Constituent Assembly and of a Provisional Parliament.

12. The Provisional Parliament to form the Provisional Federal Government by electing a President, the President in turn to appoint a Prime Minister who will select a cabinet. (The Parliament, however, to be free to form the Provisional Federal Government in any other democratic manner should it desire). The Prime Minister and the Cabinet to be collectively responsible to the Provisional Parliament and to cease to hold office in the event of a vote of no confidence.

13. The Constituent Assembly to approve the delineation of states recommended by the Joint Commission of Technical Experts subject to any changes made in accordance with paragraph 3 above, the delegates in the Constituent Assembly from the electoral districts included within the boundaries of the states as delineated to be considered thereafter as the representatives of these states in the Constituent Assembly/Provisional Parliament. (The question arises as to what would take place should a number of states be represented in the Assembly by delegations of which the majority of members are adherents of the Republic. Obviously the delegations would have the option of voting to combine their states in a single Republic of Indonesia which, subject to the approval of the majority of the Assembly as a whole, would as such become one of the component states of the United States of Indonesia. The Republic of Indonesia, in these circumstances, could be so enormous in population by comparison with the other states as to throw the federation out of balance and render it virtually unworkable and meaningless. Since the Government of the Republic has, however, subscribed to the principle of a federal Indonesia, we assume that it would not wish to vitiate, in this manner, the planning of the Joint Commission of Technical Experts and that, instead of combining, the states which have elected Republican adherents to represent them in the Constituent Assembly would choose to consider themselves 'Republican' states. However, with the progress toward a sovereign Indonesia as far advanced as it will be at this stage, we anticipate that the concept of the Republic will have become merged with the concept of the United States of Indonesia.) 14. The representatives of each state in the Provisional Parliament to elect provisional state governments to prepare for the election of duly constituted state governments.

We have the following observations to make in connection with these principles:

Time of elections for the Constituent Assembly: The sixth of the Twelve Principles [8] 'forming an agreed basis for the political discussions' accepted by the parties on board the Renville states that after a period of not less than six months or more than one year after the signing of the agreement, free elections will be held for self-determination by the people of their political relationship to the United States of Indonesia. There is a difference of opinion as to whether 'the agreement' referred to the political agreement or the truce agreement. Irrespective of which agreement was referred to, we believe that no obstacle exists in the Renville principles to the parties' agreeing to shorten the interval between the political agreement and the holding of the elections. It was not anticipated by the Committee, which originally suggested the limitation on the time of holding the election, that such a long period would elapse between the signing of the truce agreement and the signing of the political agreement as has been the case. Since full political and economic stability in Indonesia cannot be achieved until the process of transition now in progress is completed, we suggest that the elections be held no later than three months after the signing of the political agreement and that the assembly be convened as shortly thereafter as possible, subject to the report of the Joint Commission of Technical Experts on the delineation of states having been made.

Feasibility of election: We are aware that the present division of Indonesia by the demilitarized zones, creating areas under separate authorities, civil and military, imposes certain obstacles to the smooth operation of election machinery. We regard these obstacles as by no means insuperable, however, and consider that between the present time and the time of the elections the parties should devote their major effort toward the working out of an electoral procedure. This procedure should, in the first instance, give the candidates for election and the political parties in all areas full opportunity to present their programs and make their appeal for popular support without jeopardising the maintenance of law and order, and in the second instance, assure the absolute secrecy of the ballot. By these and other means the effect of possible unwarrantable influences over the electorate could be reduced to a minimum. We believe that no more constructive step toward the creation of a stable United States of Indonesia could be taken by the parties than the acceptance of the principle of a representative Provisional Federal Government.

We do not see how the unification of Indonesia can now feasibly be accomplished except under such a government or how such a government can be created except through an Indonesia-wide election, whatever difficulties this may present. During our stay in Indonesia, we have come increasingly to believe that the outstanding obstacle to a settlement between the Netherlands and the Republic of Indonesia has been the disagreement between them as to who, in fact, is qualified to speak for the Indonesian people.

Until this question is settled and a representative body assembled-and we know of no means of reaching this goal except by an election-there would seem to be little hope of building the foundations of the future United States of Indonesia on a broad and stable basis. We should be glad to offer suggestions on the subject of an electoral procedure, making use of the research at present being undertaken in the United Nations.

The pre-election period: After the signing of a political agreement looking toward the early creation of a representative Provisional Federal Government of all Indonesia, we conceive that the parties will have every incentive to closer cooperation. We therefore believe that in addition to preparing for the election the parties will also wish to proceed as far as possible, in the interval between the agreement and the election, with the economic rehabilitation of Indonesia as a whole and with preparations for the integration, administratively, of the territories now under the control of the Republic with the territories now under the control of the Netherlands, so far as this will be necessary upon the transfer of powers to the Provisional Federal Government. We foresee the desirability of creating a number of joint commissions to work on the problems of the pre-election period and suggest the following:

1. Joint Commission of Technical Experts to delineate the future states of Indonesia, as previously set forth.

2. Joint Electoral Commission to institute an electoral procedure and to control the conduct of electioneering and of the elections themselves.

3. Joint Reconstruction Board to expedite the restoration of non- Indonesian private properties in Republican-controlled territories to their owners and the resumption of trade and commerce with Republican-controlled territories.

4. Joint Preparatory Commission to plan the integration of the Republican fiscal and monetary systems and the administrative system of the territories at present controlled by the Republic (insofar as it includes federal functions) into the provisional federal system.

5. Joint Defense Commission, including a joint staff, to carry out the progressive reduction of the armed forces of the parties as contemplated in the fourth of the Twelve Principles and to plan the integration of the Tentara Nasional Indonesia into the army of the Provisional Federal Government.

6. Joint Evacuee Commission to facilitate the return to their homes of personnel displaced since 1942, including demobilized soldiers and their families, and to make possible greater freedom of movement by persons across the status quo lines.

We believe that as soon as the parties have agreed upon the broad terms of the political agreement it would be highly desirable to form the Commissions suggested above in order that study and planning in connection with the problems to be dealt with by the Commissions may proceed without awaiting the formal signing of the political agreement. In particular, the period intervening before the elections might be appreciably shortened by progress in planning by the Joint Electoral Commission before the signing of the political agreement and in preparing the country for the election. During the pre-election period the Republic would remain responsible for the security of areas under its control and retain command of the Tentara Nasional Indonesia. With regard to the Republic's foreign relations, the Republic would be expected to give assurances that these relations would not be expanded during the pre-election period.

Division of powers in the pre-federal period: We visualize a division of powers in the pre-federal period between the Lieutenant Governor General, as the representative of the Crown, and the Provisional Federal Government, as an organization of Indonesian representatives. We assume that in order to complete the transitional process and to create the United States of Indonesia as soon as practicable, the actual government and administration of Indonesia would be progressively turned over to Indonesian officials as rapidly as the development of an Indonesian organizational structure would permit. In the first instance, we believe that a delegation of powers on the highest level should take place and that apart from certain specified powers reserved to the Lieutenant Governor General, the full powers of internal government should be vested in the Provisional Federal Government immediately upon its formation. The Provisional Federal Government would then itself determine how rapidly the governmental and administrative functions could be transferred on progressively lower levels from the present governmental and administrative organization to the developing Indonesian organization. We consider that key officials of the present Netherlands Indies Government should by all means be asked to remain in an advisory capacity even when, in the course of time, their responsibilities have been taken over by officials designated by the newly elected Provisional Federal Government.

Sovereignty in the interim period would rest with the Netherlands, but it is suggested that the Crown issue a certificate of instruction to the Lieutenant Governor General that the exercise of his power be limited (1) to a veto over acts of the Provisional Federal Government which are in contravention of the Charter of the United Nations or of the Union Statute and (2) to the direction, after consultation with the Provisional Federal Government, of the employment of the federal armed forces and other federal agencies in cases of civil conflict which the Provisional Federal Government proves unable to control.

Coincidentally with the transfer of full powers of internal government to the Provisional Federal Government by the Netherlands, the Republic would transfer to the Provisional Federal Government all federal functions which it now exercises, including control of its armed forces, foreign relations, foreign trade and currency.

With regard to the external affairs and relationships of Indonesia, ultimate authority would remain with the Kingdom of the Netherlands, but in practice the actual conduct of such affairs and relationships would be taken over by the Provisional Federal Government step by step with the organization and staffing of a Ministry of Foreign Affairs (the Minister to be a member of the initial Provisional Federal Government) and of an Indonesian diplomatic and consular service. It is proposed that such Indonesian overseas offices as already exist or may be established in this period should operate in conjunction with the diplomatic and consular posts of the Netherlands.

All armed forces in Indonesia in the pre-federal period should, it is considered, be under the control of the Provisional Federal Government with the following exceptions:

(1) The Netherlands command to operate such bases as may be set aside for the use of the Netherlands in an agreement between the Netherlands and the Provisional Federal Government of Indonesia, and, (2) components of the Netherlands army to be free to engage in non-tactical movements from one base to another or in preparation for evacuation under the sole authority of the Netherlands command.

Apart from its duties as a Provisional Parliament, the Constituent Assembly should have the duties of formalizing the delineation of the states, drafting and ratifying a constitution for the United States of Indonesia and submitting it for ratification by the representatives of the states, and of ratifying the Union Statute.

These tasks completed, the United States of Indonesia could, in our view, be considered formed and to be eligible to receive the transfer of sovereignty from the Netherlands and to seek recognition as a sovereign state by other states and membership in the United Nations and other international bodies.

The Committee offers the following comments on the foregoing procedures: Drafting of the Union Statute: It is our understanding that the Union Statute, out of which the Union of the Kingdom of the Netherlands and the United States of Indonesia is to arise, will provide the basis for the cooperation and consultation between the member nations on all matters of common interest and will contain basic guarantees of the legitimate economic, cultural and military interests of the one nation in the other, together with provisions for a judicial body to interpret the statute.

Principles which both parties might find acceptable as the basis of the Statute are suggested below in the section headed The Union Statute.

In any case, we feel strongly that in order to bring definitive Netherlands-Indonesian negotiations to as prompt a conclusion as possible, the complete and final text of the Union Statute should be incorporated in the political agreement between the Netherlands and the Republic, the Netherlands Delegation in this connection to represent the interests of Indonesian groups outside Java, Madura and Sumatra as well as of its own Government. The Statute as drafted in the political agreement would be submitted to the Constituent Assembly for ratification when the Assembly had completed its other tasks. Ratification and the transfer of sovereignty to the United States of Indonesia would be simultaneous events. Should the Assembly fail to ratify and express a desire to renegotiate the Statute in whole or in part, the Kingdom of the Netherlands would reserve all rights respecting the relinquishment of sovereignty.

Ratification of the Constitution: In accordance with the fifth of the Six Additional Principles [9], approval of the draft constitution by a majority of the delegates to the Constituent Assembly will register the Assembly's ratification of the constitution. Since the representation of the states in the Assembly will be in accordance with their populations, such ratification may be taken as an expression of the will of the Indonesian people as a whole. With regard to obtaining ratification by the states, we suggest that the constitution be submitted to the representatives of each state in the Assembly. In accordance with the sixth of the Six Additional Principles [10], any state failing to ratify the constitution may negotiate a special relationship with the United States of Indonesia and the Kingdom of the Netherlands.

Scope of the political agreement: Matters that fall entirely within the competence of the future United States of Indonesia, such as the federal constitution and federal defense forces are, in our view, outside the scope of the political agreement and are subjects for consideration and decision by the Constituent Assembly.

THE STATUTE OF THE UNION Upon the transfer of sovereignty to the United States of Indonesia in accordance with the terms of the political agreement, the Kingdom of the Netherlands and the United States of Indonesia will associate themselves together in a Netherlands-Indonesian Union.

In our view, the character of the Union must be based upon:

(1) The sovereignty of the member nations.

(2) The common interests of the member nations and the proper and legitimate interests of the one in the other arising from many years of close association and interdependence.

In our opinion, the aim of the Statute of the Union, out of which the Netherlands-Indonesian Union will arise, should be to give maximum assurance consonant with the full sovereignty of the member nations that the member nations will consult and cooperate and to the full extent possible follow a concerted policy in all fields of common interest and that the interests of one member nation in the other, which we construe to be primarily cultural, economic, and military, will be safeguarded.

The powers, functions, and responsibilities of the Union will be enunciated in a Statute of the Union annexed to and incorporated in the political agreement.

We offer the following tentative suggestions for the principal provisions of the Statute of the Union:

A. General 1. The Members of the Union will be the United States of Indonesia, on the one hand, and the Kingdom of the Netherlands, on the other hand.

2. Each Member will be a sovereign, independent state, united in partnership on a footing of equality. (Immediately after the transfer of sovereignty to the United States of Indonesia, the Kingdom of the Netherlands will take the required steps to obtain the admission of the United States of Indonesia as a member of the United Nations, the International Trade Organisation, the International Monetary Fund, the International Bank for Reconstruction and Development, the Food and Agricultural Organisation, and other appropriate international bodies.

3. The Union will be established when on the one hand the Constituent Assembly of the United States of Indonesia has taken the steps under the political agreement precedent to the transfer of sovereignty, and when on the other hand the Kingdom of the Netherlands has (1) transferred sovereignty to the United States of Indonesia in accordance with the terms of the political agreement and (2) ratified the Statute of the Union.

4. Any state in Indonesia that decides by failing to ratify the constitution not to join the United States of Indonesia may have a special relationship both to the Kingdom of the Netherlands and to the United States of Indonesia.

5. The Union will ensure: (a) lasting cooperation between the Members; (b) the mutual rights of the Members and the fulfilment of their mutual obligations; (c) provision for mutual assistance;

(d) mutual exercise of rights of citizenship by Netherlands and Indonesian citizens; (e) maintenance in both parts of the Union of fundamental human rights and freedoms in accordance with the Charter of the United Nations.

6. The Union will promote the common interests of the Members through cooperation with regard to foreign relations, defence, finance and economic and cultural matters.

7. These common interests will be ensured by cooperation and consultation in the Union organs.

8. Her Majesty Queen Wilhelmina and her legitimate successors to the Crown of the Netherlands shall be the Head of the Union.

9. The executive organ of the Union will be the Council of Union Ministers composed of an equal number of ministers of the United States of Indonesia and of the Kingdom of the Netherlands entrusted by their respective governments with the direction of Union affairs.

10. The members of the Council of Union Ministers are responsible only to their respective governments according to the constitutions of the Members.

11. The Members of the Union will consult the Council of Union Ministers with respect to legislation on Union affairs. Such legislation will be enacted by the Parliament of each Member in conformity with the constitution of each Member.

12. In their inception the constitution of the United States of Indonesia and the Statute of the Union will not conflict.

Thereafter the constitution of the United States of Indonesia will be the supreme law of the United States of Indonesia and the constitution of the Kingdom of the Netherlands will be the supreme law of the Kingdom of the Netherlands. The Statute of the Union will have all the force of a solemn treaty obligation entered into by sovereign states.

13. The Members of the Union may conduct their own foreign relations subject to the provisions of the Statute of the Union for cooperation and consultation. By the agreement of the Members of the Union in each case, the Union itself may take part in international affairs and maintain diplomatic representation on behalf of the Members.

14. A Union Court of Justice composed of an equal number of judges of the highest court of the Kingdom of the Netherlands and of the highest court of the United States of Indonesia, will be instituted. The jurisdiction of the Union Court of Justice will be limited to cases brought by the government of the Kingdom of the Netherlands or the government of the United States of Indonesia arising under the Union Statute, provided that in all cases arising within the exclusive jurisdiction of the Members, the highest courts of the Members may request the Union Court of Justice for an advisory opinion.

15. In cases where the judges of the Union Court of Justice are equally divided, the court itself may designate an additional judge to cast the deciding vote; in the event of the court's being unable to agree upon an additional judge, provision shall be made for reference of the case to the International Court of Justice or another international legal tribunal.

B. Economic and Financial Provisions 1. Non-discrimination. The principle of non-discrimination to apply to all economic relations between the United States of Indonesia and the Kingdom of the Netherlands.

2. Equality of import duties. Articles or products of one Member imported into the territory of the other Member to be subject to no import duty in excess of the duty imposed with respect to like products or articles which are imported from any other country, or to no import duty at all if such duty is not imposed with respect to all such articles and products.

3. Equality in internal taxes. Products of one Member imported into the territory of the other Member, or articles manufactured wholly or in part from such products, to be subject to no internal tax in excess of the internal taxes imposed with respect to like products or articles from any source; and to be subject to no internal tax at all if an internal tax is not imposed with respect to such like products and articles.

4. Non-discriminatory import and export controls. To the extent that selective or quantitative import or export controls are applied by either Member, these to be applied in a non-discriminatory manner as regards the products or articles originating in or destined for the territories of the other Member.

5. Equality of export taxes. To the extent that either Member levies export taxes or duties on articles or products destined for the territory of the other, such taxes or duties not to exceed those levied on like articles or products destined for the territory of another country.

6. National treatment. National treatment to be accorded the citizens and enterprises of one Member resident in, conducting commercial, agricultural, mining, industrial, or other business activities in, or seeking to conduct such activities in, the territory of the other. National treatment to be taken to mean that the legal status, rights and obligations under legislative acts and administrative regulations, and liability to taxation of citizens and enterprises of one Member in the territory of the other Member to be not less favorable than is accorded to the citizens and enterprises of the other Member. The right to require ownership of land not, however, to be granted under this article.

7. Supplementary agreements. Agreements elaborated under the foregoing clauses of this section to extend for a period of, say, 20 years and to be renewable by mutual agreement thereafter.

8. Exemption from tax of articles for official use. No tax to be imposed or collected in the territories of either Member with respect to articles or products imported for the official use of any department or agency of the other Member.

9. Currency and exchange agreements. The value of the currency of one Member in relation to the currency of the other Member not to be altered, the convertibility of the currency of one Member into the currency of the other not to be suspended, and restrictions not to be imposed upon the transfer of funds from the territory of one Member to the territory of the other, except after consultation between the Governments of the United States of Indonesia and the Kingdom of the Netherlands.

10. Guarantees of Property Rights. Contractual rights and physical properties held or owned by the nationals, business enterprises, corporate bodies, or governments of one Member in the territory of the other to be guaranteed. The Government of the United States of Indonesia to honor for their full terms contracts and agreements entered into with non-Indonesians by the Government of the Netherlands East Indies prior to March 1942 and to restore to non- Indonesian owners physical assets located within the territory of the United States of Indonesia but not yet returned to them. In those cases in which contracts and agreements entered into by the Government of the Netherlands East Indies for any reason cannot be honored or in which physical assets owned by non-Indonesians are taken ever by the Government of the United States of Indonesia, full indemnification to be made. Nothing in the foregoing to protect the property rights of ex-enemy nationals.

11. Assumption of obligations. The Government of the United States of Indonesia to assume all debts, internal and external, incurred by the Government of the Netherlands East Indies prior to March 1, 1942, subject, however, to the qualification that adjustments may be made to take account of territories previously under the jurisdiction of the Government of the Netherlands East Indies that may not join the United States of Indonesia. The proportion of debts later incurred by the Government of the Netherlands East Indies to be assumed by the Government of the United States of Indonesia to be negotiated.

12. Transfer of rights and properties. The Government of the United States of Indonesia to enjoy the privileges and rights previously enjoyed by the Government of the Netherlands East Indies within the territories coming under the jurisdiction of the United States of Indonesia; and to assume full title to the property owned by the Netherlands East Indies Government within these territories and, subject to the terms of peace settlements, to the properties of ex-enemy countries and of the nationals of ex-enemy countries.

13. Reciprocity. All rights, obligations, and duties conferred or assumed under the economic and financial agreement elaborated in accordance with these provisions to be reciprocal.

C. Military 1. A combined Netherlands-United States of Indonesia staff to be instituted to exchange information, to consult and to make recommendations to the Governments of the Members on all matters relating to the defence of the Union with the object of achieving coordinated defence policy and system. 2. Each Member to be granted base-rights in the territory of the other on a basis of long-term leases.

3. The military education and training, equipment, organisation and doctrine of the armed services to be standardised as far as may be allowed by (a) the nature of the theatres of operation in which the Members' forces may be engaged, (b) the sources of supply of equipment available to the Members, (c) the possibility of a severance of the lines of communication between the Members in the event of large-scale conflict, and (d) the requirements of such regional defence arrangements as the Members may enter.

4. Military personnel to be exchanged between the Members for the purpose of assisting in the attainment of the foregoing ends, particularly for purposes of giving and receiving instruction.

Military personnel assigned by one Member for duty with the armed services of the other to be eligible to serve in any capacity other than in a command capacity, which would require special agreement.

It is suggested that provision be made in the Statute of the Union for supplementary agreements to be entered into by the Members elucidating and providing for the implementation of the principles contained in the Statute which relate to economic, military, and other special relations between the Members.

To recapitulate, the following schedule is offered as an outline of the steps to be taken toward the creation of a sovereign United States of Indonesia:

1. The delegations of the parties to initial the terms of the political agreement, including the text of the Statute of the Union.

2. Joint Commissions to be formed as soon as possible to delineate provisionally the future states of the United States of Indonesia;

to prepare for the elections to the Constituent Assembly; to prepare for the integration on a federal level of the government of territories under the control of the Republic with the governments of other areas; to plan the economic rehabilitation of Indonesia as a whole; to carry out the reduction of the armed forces of the parties and to plan the integration of the residual Republican armed forces with those of the Provisional Federal Government; and to remove barriers to the free movement of persons across the status quo line.

3. The political agreement including the text of the Statute of the Union, to be submitted to the Governments of the parties for approval and signature.

4. The elections for delegates to the Constituent Assembly to be held throughout Indonesia as soon as practicable after the signing of the political agreement, and preferably within at most three months.

5. The Constituent Assembly to be convened as soon as possible after the elections and after the Joint Commission of Technical Experts has reported on the delineation of the future states.

6. The Constituent Assembly acting as the Provisional Parliament to form a Provisional Federal Government.

7. The Provisional Federal Government to receive simultaneously:

a. Full powers of internal self-government from the Netherlands with the provision that the Lieutenant Governor General may exercise certain rights within specified limits.

b. All powers now exercised by the Republic of Indonesia properly pertaining to the Federal Government.

8. The Constituent Assembly to draft and ratify a constitution of the United States of Indonesia.

9. The constitution to be submitted to the representatives of the states in the Assembly for ratification and to be considered in effect for all Indonesia with the exception of states failing to ratify.

10. The Constituent Assembly to ratify the Statute of the Union, and simul-taneously:

a. The United States of Indonesia to be considered formed and to receive the transfer of sovereignty from the Kingdom of the Netherlands.

b. The United States of Indonesia to be considered eligible to seek recognition as a sovereign state by other sovereign states and membership in the United Nations and other international bodies.

c. The Kingdom of the Netherlands having ratified the Statute of the Union, the Netherlands-Indonesian Union to come into being.

1 See note 5 to Document 184.

2 See Document 168.

3 Registered as S/AC.10/132.

4 See Principle 1 of Document 24.

5 See Article 3 of Document 22.

6 See note 4 to Document 7.

7 See Principle 4 of Document 24.

8 See Principle 6 of Document 23.

9 See Principle 5 of Document 24.

10 See Principle 6 of Document 24.

[AA:A1838, 403/3/1/1, xviii]