Your telegram 79. 
In considering the apparent change in the Dutch attitude, it should be remembered that the Netherlands delegation has been pursuing bargaining tactics and testing out Republican reactions to see how far the Republican delegation could be induced to give way. The Republican reaction to the earlier Dutch draft (see K.304 ) showed the Dutch they were trying to push Roem too far and that an early breakdown in discussions was inevitable unless they changed their line. Some members of the Republican delegation believe that this earlier Dutch draft was prepared by the Palace clique and did not represent Van Royen's own views. It is rumoured, for example, that Van Royen has used the reactions of the Republican delegation and Cochran to this draft to obtain agreement in the Netherlands delegation to a more liberal approach. Certainly, some of the Dutch realise that in the interests of the Netherlands, a settlement must be obtained this time.
2. Cochran has also exerted as much influence as possible to bring about a change in the Netherlands attitude. He has personally talked to Van Royen (see my telegram K.305 ) and has hinted that Washington has also been at work.
3. Roem has reported from Bangka yesterday, 6th May, that the Republican Delegation will accept the draft statements (see my telegram K.306 ) as they stand. Roem insists that his Delegation will not go further, and that if the Netherlands Government does not agree to the return of the Residency of Djokjakarta, the rest of the statements will be unacceptable.
4. The Netherlands Government met at The Hague yesterday afternoon. In general, there is an air of optimism in Batavia.
Cochran hopes that the parties will be able to make agreed statements at a formal meeting under the auspices of the U.N.C.I.
this weekend. I am afraid, however, that the Netherlands Government is likely to raise further conditions, particularly regarding the restoration of Maguwo airfield in the Residency of Djokjakarta. This issue could still lead to delays and even to eventual deadlock.
5. The most that can be said, at present, is that the likelihood of a round table conference at The Hague has increased but the real problems in the Indonesian dispute are still to be solved.
The old colonial hands of the Netherlands Army authorities are not working in the direction of a settlement. If there is an initial agreement on the lines set out in my telegram K.306, the talks will continue on the details of the restoration of the Republican Government, the cease hostilities orders and the round table conference. There will be any number of headaches. For example, Spoor is likely to endeavour to use 'Communism' to continue to attack the T.N.I. bands.
6. Most of the difficulties could be overcome by a quick transfer of sovereignty, but there is still no clear indication of what the Dutch statement on Indonesia at the round table conference will be. Hatta has informally made a series of detailed enquiries of Van Royen on this subject, but even if the replies are not altogether satisfactory, he will probably want to proceed with the conference in the hope that with federalist backing a satisfactory settlement can be forced on the Dutch.
7. There is a nest of Republicans including Sjahrir, some younger members, and Information Minister Natsir, who believe that the Republican Delegation has been too weak in the present talks.