519 Critchley to Department of External Affairs

Cablegram C28 THE HAGUE, [24 October 1949], 6.55 p.m.

RESTRICTED

Reference my C.26. [1] The Debt Commission has recommended (a) that as of the date of transfer of sovereignty from the Kingdom of the Netherlands to the Republic of the United States of Indonesia the latter assume responsibility for the debt comprising (A) the consolidated external debt calculated as of December 31, 1949 at 871 million guiders, (B) the debt to third countries calculated as of December 31, 1949 at 420 million guilders, (C) the following items in the external floating debt calculated as of December 31, 1949 to the maximum amounts indicated:

1. Swing British Monetary Agreement account F53.5 million guilders, 2. Swing C account 40 million guilders, 3. HI/HG account 80 million guilders, 4. Bretton Woods (opposite this is an asset of the same amount as participation in Interfund and Interbank) 95 million guilders, total 1,559.9 [2] million guilders.

(b) That the Government of the Republic of the United States of Indonesia assume responsibility for both interest and amortization of the debts covered by items (A) and (B) and take over the rights and liabilities under existing agreements for items listed under (C).

2. The foregoing involves a reduction of the external debt due to the Netherlands by the sum calculated as of the 31st December 1949 of two billion Netherlands guilders. The internal debt at the date of the transfer of sovereignty is to be assumed by the R.I.S.

3. No undertakings or escape clauses are mentioned. Although the report states that consideration has been given to the amount of 'extra military expenditures and other expenditures attributable to military action' no figures have been or will be given in support of the recommendation.

4. Unanimity was achieved at the cost of committing any recommendation for a moratorium on interest and amortisation which was strongly opposed by the Netherlands representative.

1 Document 515.

2 A sign her indicates 'repeated as 1,559.5'. The repeated figure was the correct one.

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