64 Kirby to Department of External Affairs

Cablegram 197 WASHINGTON, 13 February 1948, 12.49 p.m.

SECRET

Your 79. [1]

Your concern that fundamental importance of trade question in relation to Interim position of Republic and ultimate just settlement should not be overlooked by United States will be impressed upon State Department; also necessity for continuance of Committee and cessation of formation of new states.

2. As regards raising of trade issue in Security Council I feel that as member of Good Offices Committee I cannot do this and also that it is inadvisable for Australian representative to do so for following reasons.

(a) Control of Trade (and of Foreign Exchange accruing therefrom) involves question of sovereignty. Dutch sovereignty has not only never been questioned by Security Council but has been explicitly admitted by Republic in accepting the Renville political principles [2] which Committee has sponsored. Thus to raise trade question will be to challenge Dutch on ground where their position is strongest. (Same applies to Foreign representation).

(b) Any public questioning of Dutch sovereignty would seem to court out-of-hand rejection by Dutch of further United Nations connection with Indonesian situation. No member of Committee could reconcile this with endorsement of Renville principles.

(c) Trade difficulty is envisaged in political principles as matter for adjustment by negotiations under auspices of Committee of Good Offices. To bring it before Security Council would in effect be to seek direction from Council. This would imply Committee is incompetent to achieve adequate solution. Such implication could only weaken Committee's position whereas my considered opinion is that chief hope of just settlement is to strengthen Committee. See my UN.106 paragraph 4 sub-paragraph 1.

[3]

(d) Security Council could quite properly decide trade is not its concern in absence of threat to peace arising directly from trade question.

3. While I fully realise fundamental importance of trade issue, I may say that from tactical viewpoint far from wishing to raise it in Security Council, I consider it would be best handled by Committee who have given the question immediate priority.

Indeed I have been apprehensive Dutch themselves would raise it in Security Council with object of inferring from sovereignty complete powers over trade in whole Indonesian area. Indonesian representatives yesterday raised question with us and seeing full cognisance of its fundamental importance expressed view that it would be better for trade questions to be handled by Committee and not in Security Council. Of course if it is raised we will deal with it fully.

4. I must point out also that Australian and American views on trade question are divergent though not incompatible. Chief concern of United States is clearly to bring economic resources of Indies into non-Soviet world economy with least possible delay.

What happens to Republican aspirations in this process is to U.S.A. a secondary consideration, although they would prefer at present to assist Republic party case particularly because of Graham's influence. On the other hand your view, with which I am in complete accord, is that preservation of Republic as effective political entity has priority. Solution seems to me to be American pressure on Dutch to implement political principles. If properly implemented Republic as state in U.S. of Indonesia retains political identity and due share in country of trade.

5. As to immediate position Republic would be best advised in my view to enter provisional Government provided- (a) Provisional Government has real powers (including trade).

(b) Republic has adequate representation, and (c) Dutch undertake not exercise sovereign powers arbitrarily but in spirit of partnership.

6. I must make it clear that the points in paragraph 4 of my UN.106 are a summary of my impressions and not of a concrete proposition from the U.S.A. See in this connection paragraph 5 of same telegram.

7. My own position as member of Committee is clear to me and as regards trade question is stated above but I do not feel I should make specific suggestion to Forsyth as to his action in Security Council (in accordance with your 65 to Washington [4]) unless you send specific views on this to me or specific instructions to him.

Please understand that I at all times welcome your views and of course it would be entirely proper and fully acceptable to me if distinct instructions were sent for Forsyth. He and I have been in the closest possible consultation throughout.

8. As regards your paragraph 5, I feel that key to just settlement is a strengthened Committee backed by an American policy of enforcing implementation of Renville principles and that formal agreement between Committee and Dutch prior to Security Council meeting is not practicable.

9. Please send reply to New York earliest possible.

1 Document 57.

2 See Documents 23 and 24.

3 Presumably paragraph 4(c), sub-paragraph 1 of Cablegram UN106 (Document 51).

4 Dispatched on 22 January, it instructed Forsyth to attend the Security Council meeting with Kirby because the former would be able to make points which the latter, as a member of the Committee of Good Offices, could not.

[AA:A1838, 854/10/4/2, iv]