484 Critchley to Department of External Affairs

Cablegram C10 THE HAGUE, 8 September 1949, 5.15 p.m.

SECRET

SUMMARY OF NETHERLANDS ORAL NOTE [1] PRINCIPLES TO SERVE AS A BASIS FOR THE FINANCIAL AND ECONOMIC AGREEMENT.

1. The object of co-operation is mutual prosperity.

2. Essential that the R.I.S. form an economic unit and that every effort be made to maintain or establish a sound financial and economic structure and good conditions for international credits.

3. The Netherlands will place knowledge, experience and personnel and, wherever possible, credit and capital at the disposal of the R.I.S. which will accept them on a most favourable basis.

4. All financial and economic rights and obligations applying to the Netherlands Indies will pass to R.I.S.

5. The Netherlands are entitled to securities and safeguards in connection with the financial obligations of Indonesia and Netherlands investments.

6. The generally existing civil code and the actual contractual and other rights acquired under the former Government structure will not be changed.

7. In trade, economic and financial policies, both parties will at all times take account of one another's interests and will act as a unit with respect to foreign countries when the interests of both parties can thereby be served. They will not annul existing agreements or enter new agreements without prior mutual consultation.

8. Monetary policy, note issue, customs, foreign exchange regulations, trade policy will be unified for the Territory of the R.I.S.

9. As long as there exist financial obligations of Indonesia towards the Netherlands, and as long as there are guarantees given by the Netherlands for debts of the R.I.S., the monetary system and the system of the bank of issue of the R.I.S. will be arranged by agreement between the parties. The Netherlands will be represented in the board which will determine the foreign exchange policy of the R.I.S.

10. The termination or alteration of the official rate of exchange will take place only after mutual agreement.

11. Both parties guarantee security under the law in the financial and economic fields and there will be no differences in legal standing between the respective subjects.

12. Both parties will create favourable conditions to attract necessary capital without prejudice to investments by one party in the area of the other. They will also ask the most liberal and lively traffic of goods services and payments between themselves.

In this connection the arrangements and agreements made between the Netherlands Government and the Government of Indonesia will be accepted as a basis.

13. Expropriation, Nationalisation and other measures shall only be taken for the benefit of public welfare in accordance with legally prescribed procedure and against complete indemnification.

The latter entails that previous agreement regarding transfer has been reached with the parties entitled to indemnification.

Moreover, such measures will not be taken if the interests of other parties entitled to transfer are prejudiced.

14. The R.I.S. recognises all debts and other obligations of the Netherlands Indies under the effective conditions. As long as those debts and other obligations exist, the R.I.S. will contract no foreign monetary loans without the concurrence of the Netherlands.

1 See Document 482.

[AA : A1838, 854/10/4/3, vi]