238 Critchley to Department of External Affairs

Cablegram K157 [KALIURANG, 10] September 1948

IMMEDIATE SECRET

My telegram K. 156.

In all important respects the American draft follows in detail earlier Australian - United States proposals. [1]

2. The most apparent difference is the naming of July 31st, 1949, as the latest date for transfer of sovereignty to the United States of Indonesia, subject only to- (A) The ratification of the constitution of United States of Indonesia by representatives of the States.

(B) The acceptance by the Federal Representative Assembly of Union Statute based on principles outlined in Agreements.

(C) The conclusion of Agreements defining relationship between the Netherlands and United States of Indonesia on financial, economic and defence matters.

This difference which may have psychological advantages to Indonesia, is more apparent than real. The important thing is that the stages leading to transfer of sovereignty should be clearly outlined and that initiative for completing the stages should be left in Indonesian hands.

3. An additional body of a Federal Council is proposed to- (A) decide boundaries of States in the unlikely event of a deadlock in Federal Representative Assembly;

(B) determine with the assent of the High Commissioner, the size the State constitutes.

All Member States, other than the Republic and Administrative Board of each of the participating Territories, were to nominate one representative to the Federal Council while the Republic would appoint a number of representatives equal to half of the total of other nominees, i.e. one-third of the total membership.

4. In contrast with our previous proposals the Netherlands would retain control of all Netherlands forces in Indonesia. It should be possible to have this amended so as to restrict, except in emergency, movements of these forces under the sole authority of the Netherlands Command to non-tactical movements from one base to another or in preparation for evacuation.

5. The financial and military provisions proposed in the Australian - United States plan for inclusion in the Statute of the Union have been re-stated as continuing to be incorporated in the Agreements to be negotiated between the Netherlands and the Federal Representative Assembly. There is no indication of the proposed duration of such Agreements. Clause B (9) of the Australian - United States proposals on currency and exchange which was left a matter for consultation only appears in new Draft as a matter for firm agreement.

6. Provision is made for continuation of the services of the Committee of Good Offices and military assistants until [the inauguration of the Provisional] [2] Federal Government:-

(A) to assist parties in arriving at a common interpretation should any questions arise regarding the present Agreement which cannot be settled by direct talks;

(B) to observe elections;

(C) to continue to assist in the implementation of the Truce.

7. Please amend paragraph 2 of my telegram K.156 to read 'during January, 1949' instead of 'not later than 1949'.

1 See Document 173.

2 Inserted from a copy on file AA:A4357/2, 48/254, v.

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