Neher invited me yesterday for a 'Friendly Talk' about developments in Indonesia.
The main points were- (A) Neher and Van Mook hope to have informal talks with Hatta regarding a political settlement based on Republic participation in a provisional Federal Government.
(B) Neher considers Republic must choose between joining in a provisional Federal Government now and waiting until the United States of Indonesia is finally established. As the latter course might give rise to distrust between the Republic and other Negaras, the Republic will then have to face the possibility of coming into the Federation on somewhat less favourable terms than if it joins in the provisional Government and helps in building up a Federal structure.
(C) Neher as good as admitted that a provisional Government would be set up shortly without the Republic, that the Netherlands would decide its organisation and powers and that there will be no question of negotiating these.
(D) Neher gave his view that the provisional Federal Government should embody the following principles:-
(i) all States within the Federation to have equal status and powers.
(ii) the Federation to be responsible for defence, currency, trade and customs, and foreign affairs. (This is not given as a complete list).
(iii) Government would be Privy Provisional Council which would take decisions subject to votes of the Lieut. Governor-General (who has stressed that the veto would tend to be used only if there were disagreements within Council). The total membership of the Council would be eleven or twelve of which the Republic would probably be confined to three members.
(iv) a Senate representing various Negaras might be established for public discussion. Unfortunately at this stage it is impossible to have democratic elections in the Western sense.
(v) responsibility for internal security through a civil police force could remain with individual states. This might provide the Republic with a face saving device as regards the position of its army.
(E) Neher stressed the importance of giving Indonesians the opportunity to obtain experience in running Government Departments.