Departmental Dispatch 16/1948 BATAVIA, 29 April 1948

SECRET

SUBJECT: GENERAL POLITICAL SITUATION

Although the general atmosphere prevailing at the present
Kaliurang talks is said to be good, progress in regard to major
issues is still as slow as ever. Solution of the question of
sovereignty during the interim period before the formation of the
United States of Indonesia, currency, and Republican overseas
representation, is the main difficulty. The future plebiscite is
also a ticklish problem.

2. I had a long informal talk at the Consulate-General last night
with the Acting Head of the Dutch Far Eastern Office, Mr.

Eschauzier, whom I know very well. He represents The Hague
interests and during the present talks spends his time between
Djokjakarta and Batavia. Eschauzier told me quite frankly that any
delaying tactics by the Republicans would not reduce the time of
the interim period. With regard to Republican overseas
representation, he told me that this matter was very upsetting to
the Dutch, particularly as the Republic seems to be trying to
arrange for an increase in overseas representation and
participation in some future-at present indefinite-Asiatic Bloc.

However, Eschauzier said that if the Republic confined its
overseas representation only to the present limit this difficulty
would probably be overcome.

3. The currency problem appears to be bound up with Republican
trade, which is being dealt with by sub-committees of the
Delegations, but here again, unless a general overall solution is
found, there does not appear to be an early solution to the
problem, and there is no doubt that both the unstable Netherlands
East Indies guilder and the Republican rupee are a great hindrance
to the well-being of all people living in Indonesia.

4. With regard to sovereignty during the interim period, I asked
Eschauzier what was the Dutch view in respect to the Republic and
he told me that the Republic could only be regarded as a Negara in
the same way as other States which had been formed. They would be
allowed to run their own administrative services, but with Dutch
advisors and under Dutch control. There was no definite answer to
a question regarding the Republican armed forces.

5. I take little notice of the recent criticism by the Provisional
Federal Government in Batavia of the alteration to the Dutch
Constitution, in respect of the future sovereignty of Indonesia,
by The Hague, as I cannot help but feel that this has been pre-
arranged. What 'sovereignty' is going to mean, when it is
achieved, still remains very much in the air.

6. It has been announced that in May a conference will be held in
Bandoeng of representatives of the future member-states and
member-states-to-be, with the addition of representatives of the
minorities. It will be convened at the initiative of the
Delegation of the Kingdom and at the request of the Provisional
Federal Government.

Its primary task will be to work out the plan for the structure of
the United States of Indonesia and to take an Indonesian share in
the blue-print of the Netherlands-Indonesian Union.

7. It is of interest to note that all meetings or demonstrations
on Labour Day, 1st May, have been banned in West Java (Pasundan
State) by order of the Military Commander. Failure to observe the
order will result in a penalty of one year's imprisonment and a
fine of 10,000.

8. The Indonesian political situation, in my opinion, with its
present ramifications will remain a 'hornets nest' for a very long
time to come, unless some drastic international pressure is
exerted on the parties concerned. Unless some reasonable
settlement is made at an early date I feel that in the future,
Indonesia, particularly the Republican element, will look towards
the Asiatic countries for support, rather than rely on other
powers.