On Saturday afternoon we had discussion at the Consulate-General
with Gani and Van Hoogstraten. The latter was accompanied by two
senior officials.

2. Van Hoogstraten said that his Government was willing to join
the Republic in a joint request to the Australian Government
designed to remove the ban, but insisted that this should be
subject to no conditions. Later he modified this to objection to
published conditions. He also gave an assurance that the
Indonesians' share of goods would be unloaded at Indonesian port
or ports and distributed by Indonesians.

3. Gani at first wanted delivery in non-Dutch shipping and the
right of preliminary Indonesian inspection in Australia. Van
Hoogstraten was adamant against discrimination against Dutch
shipping, i.e. against Republican ports being open only to non-
Dutch ships and also refused to consider inspection of the goods
which are Dutch property. Gani then changed his grounds to seeking
guarantees that the Republic would actually get goods. This was
secured by Van Hoogstraten conceding that bills of lading would be
given to the Indonesians and repeatedly affirming that no
Government could incur odium of going back on its word in regard
to promised delivery. Gani again pressed for inspection by an
Indonesian official in Australia, and secured the principle of
this on the compromise that goods would be inspected on arrival at
Indonesian ports before acceptance.

4. It appeared that although there is a general agreement in
principle on a division of goods between the Republic and the
Dutch, no detailed allocation, commodity to commodity, has yet
been made. Also delivery of goods to the Republic is tied up with
the provision to the Dutch of goods from the Interior e.g. rice.

Detailed agreements for this have not yet been made but would be
worked out pari passu with deliveries from Australia.

5. Throughout the talk Gani displayed marked lack of confidence in
the actual fulfilment of Dutch undertakings, but accepted the view
that there were three sanctions in his hands viz:

(a) Inquiry [1] to Netherlands East Indies Government's reputation
in world opinion in the event of non-fulfilment of an agreement
known to third parties and publishable in the event of a breach.

(b) Since the goods cannot all be moved simultaneously, the
shipments must necessarily take some time and satisfactory
handling of the first shipload would be a test of Dutch sincerity;

similarly with subsequent shipments.

(c) In the event of any breach of agreement by the Dutch, the
Indonesians would still be able to withhold further supplies from
the interior and such a breach would almost certainly result in a
revival of the present difficulties.

6. The foregoing points were chewed over during the remainder of
the discussion until, when it appeared that the parties were
substantially agreed, Gani suggested a written agreement with Van
Hoogstraten. The latter agreed to meet him to draft this on
Monday.

7. We feel that the discussion was constructive and that if both
parties meet on Monday in the frame of mind in which they left us,
positive results a-re possible. We are seeing Gani again on
Sunday.