The Sultan issued a press statement before his departure for Djocja in which he stated that the rapidly deteriorating situation in East Java was full of explosive possibilities and if the Dutch continued to be unreasonable it was feared than an armed clash was not only inevitable but would soon spread throughout Java and Sumatra. He had been twice in consultation with Lovink but had been unable to make him see the dangers inherent in the East Java situation. The Dutch stand was characteristically an adherence to the letter of the law while ignoring its spirit. To maintain such an inflexible position in the face of an untenable and explosive situation was to ignore reality and endanger both harmony in Indonesia and the successful outcome of the conference at The Hague.
2. Antara reports that on arrival in Djocja the Sultan further stated that there was still a possibility of a third Dutch military action and that his mission to Batavia had ended in failure.
3. The Dutch issued a preliminary communique last night expressing amazement at the Sultan's statement and pointing out that it infringed paragraph 4(a)  of the Joint Proclamation.
4. It is true that the military position is deteriorating both because of failure to date to define the military locations and responsibilities of the parties and because of the increasingly aggressive Dutch patrolling which has already led to local clashes in East Java and East Pasundan. Nevertheless, the Sultan was most ill-advised and his statements could seriously complicate an already delicate situation, more particularly by their unsettling effect on the TNI. Budiardjo left for Djocja this morning to obtain the Cabinet's reply to Lovink's Aide Memoire  and I stressed to him that while answering the Dutch points, the reply should be moderate in tone.
5. The Dutch claim that the Republican General Staff is fast losing control and that extremist elements (very often Communists) absorbed by the TNI after the Cease-Hostilities, are gaining influence to the detriment of TNI discipline and the authority of the Hatta Government. (They are taking every opportunity to impress the new American Consul-General, Beam, with these views.) The Dutch attitude is that they are still responsible for law and order in Indonesia and well within their rights in taking vigorous action on a local scale. s'Jacob told Dow last night that should this policy lead to fighting then it were better to get it over now than to have it in six months' time.
6. TNI discipline has so far prevented widespread shooting resulting from the intensification of Dutch 'police' measures, but it might not be possible to avoid a breakdown if a provisional military settlement cannot be reached shortly. This will largely depend on the Republic accepting in the first instance, a fair degree of delineation of zones and on the Dutch stopping their policing and being prepared to allocate reasonable zones of responsibility to the TNI throughout the island.
7. The Central Joint Board will now meet tomorrow. Without prejudice to the Sultan's proposals, the Republicans will accept the UNCI proposal of October 14  or as a preliminary measure, the inclusion of East Java among the areas on which the UNCI is to make recommendations. The Dutch are likely to be more difficult.
8. (For Critchley only). In the meantime it is important that the Republicans at The Hague refrain from alarmist comment and it would be helpful if they could express confidence that a solution will be found for the difficulties here. Glad of any line on Dutch policy which might be apparent at The Hague. Any optimistic Conference news, especially as to the Dutch attitude, would also be most useful at present.
9. My No. 10 (K.344 ) paragraph 2. For 'Temanggoeng-Magelang area' read 'the areas of Parakan and Tjandiroto in Magelang'.
10. Paragraph 6. The Republican proposals were for the Netherlands troops to concentrate in the Regencies and residency capitals.
They would maintain control of their communication roads plus 3 kilometres each side, but the TNI after consultation with the Netherlands commanders would have full use of the roads. There would be no Netherlands patrolling outside these roads and the troop concentration areas. Estate guards could remain at their posts.
11. Lovink's reply claimed that the seriousness of the situation particularly in East Java, was almost solely resultant from the fact that sections of the TNI instead of remaining in their status quo positions have spread over areas where they were not present before in many cases making civil administration impossible. In spite of existing objections the Netherlands Delegation had submitted detailed proposals to improve a situation of actual or impending administrative dislocation. These proposals, which took into account the actual situation created by the action of the TNI units, were initiated because it was necessary to ensure a well organized and orderly administration over the whole of Java, particularly in view of The Hague discussions for the earliest possible transfer of sovereignty. In drafting its proposals the Netherlands Delegation took into consideration the agreements reached at the Inter-Indonesian Conference.  When it appeared that the Republic could not fully accept the proposals and in particular, because the Republic objected to bind itself to refrain from intervention in the Pasundan and East Java Negara administrations, the Netherlands Delegation worked out a more limited proposal on the explicit condition that the original offer remained open. The intention was to start immediately with measures which might guarantee orderly administration while discussions on the more advanced proposals continued. Lovink's reply then rehearsed the provisional arrangement  of October 10 and continued 'the High Representative of the Crown regrets that the Republican Government takes an unco-operative attitude toward all those items on which the Netherlands Delegation has made proposals or on which provisional arrangements had been reached between the Delegations to achieve a satisfactory solution of the problems. The Republican Government deems it sufficient to advance a proposal which the Sultan himself acknowledges not only deviates completely from the regulations made within the frame of reference of the Cease-Hostilities Agreement but would in some respects contrary to the Van Roijen-Rum statements.'  (The Sultan denies this acknowledgment). Lovink concluded that it was not possible to give an immediate reply, especially because of the possibility that the military and administrative consequences of the Republican proposal would be at cross purposes with The Hague discussions on these items. He had referred the proposal to The Hague.