I interviewed De Ranitz today and explained that my conversation  with Schrader had led in two directions: the first to informal discussions between Schrader and Dr. Ali on the question of standards for selection; the second, concerning the allocation of the scholarships, led back to De Ranitz.
I said I would like to raise the general point of the 50/50 allocation, in respect of both the scholarships and the Educational Supplies. In making its offers on this basis the Australian Government took cognizance of the de facto position of the Republic in Indonesia; its offer was based not on population and territory but on the political circumstances of the area, presumably as defined in its 1947 recognition of the Republic in the terms of the Linggadjati Agreement.  Again, owing to these political circumstances, the merits of which were not under discussion, the Republic had for some years been denied access to the facilities we were now offering and its need could be taken to be so much the greater. I explained that I was not empowered to discuss any modification of the government's offer and I should like advice as to whether the Netherlands Government would approve it or not.
De Ranitz said that the 50/50 allocation raised political questions which made approval difficult. He regarded the Republic as a part of Indonesia and could not accept the de facto argument.
The allocation distinguished between the Republic and the rest of Indonesia in a manner which 'all good natured men' were working to avoid; furthermore the federal states would certainly object to the Republic receiving the same facilities as did they and at the offer being made direct.
I said it was open for him to blame Australia in this and to point out to the states that it was question of accepting the offer or receiving nothing. I also drew his attention to the fact that Indonesia was doing very well out of the deal in that by the division of the allocation, it was receiving much more than other countries in S.E. Asia.
It is apparent that the separate allocation to the Republic cuts right across the Netherlands policy of pretending that the Republic is merely a federal state of Indonesia and of playing down the special relations which do in fact exist between the two parties. Also, the equal distribution of the gifts would strain relations between the Netherlands and the Federal states. De Ranitz promised to think things over and let me have a decision shortly.
It might be possible for the Republicans to secure some agreement among B.F.O. circles to their receiving the supplies [and scholarships. This would assist De Ranitz to approve the allocation. I suggest this approach be taken up with Dr. Ali as he returns from Sumatra.]