Since my letter of the 18th November, 1948 [1], the most important
developments in Indonesia have been the arrival of the high
ranking Netherlands Delegation together with observers
representing the important parties in the States General and the
discussions of this delegation with the Republic at Kaliurang. [2]

The despatch of the two Ministers and Neher to Indonesia is a
noticeable turn in the course of Netherlands policy towards the
Republic. Clearly this turn is due to American pressure which
Cochran has as good as admitted and to the Aide Memoire [3] which
Minister Stikker earlier elicited from Hatta. At the same time the
comments in my earlier letter on the situation here and on
Netherlands policy still hold good.

You will have gathered from reports over the past months and in
particular from Hatta's Aide Memoire that the Republican Prime
Minister has, to use your words, 'taken a risk in his own and in
Indonesia's interests'. There is every reason to wonder, however,
whether he may not in taking this risk have gone too far. His Aide
Memoire, at least by implication, gave the Netherlands complete
power over the Army in the interim period. Hatta in making this
concession felt, I believe, that Dutch troops could not be used
against Indonesians in the face of strong opposition from the
Interim Federal Government, but there are many observers who have
been following Dutch policy in Indonesia since the Japanese
capitulation who see in Dutch insistence on this power a desire to
take military action against the nationalists after a settlement
with the Republic and therefore without international opposition.

It is therefore generally considered that security and army powers
in the interim period are vital issues and that the control of an
army and of arms is the Republic's main sanction against the Dutch
in the Indonesian dispute. These points are, of course, well known
to the Republican political parties and there has been such
opposition to Hatta's policy that his personal backing is now in
doubt. Some indication of the political situation in the Republic
is conveyed in two letters which I am attaching as Appendices A
and B. [4] Reference is made in these letters to a policy
statement by the Masjumi which is also attached as Appendix C. [5]
This statement is important because the Masjumi party is the main
backing of Hatta and the present Republican Government. In the
light of the statement of the Masjumi Political Council it is
extremely difficult to see how informal negotiations can be
resumed outside of the GOC.

In all these circumstances it might have been expected that the
Dutch would open informal negotiations in a way calculated to
strengthen Hatta's position. By assisting him to maintain popular
support at the outset the way could be made easier for eventual
concessions by the Republic which would be balanced by an overall
political agreement, offering advantages to the people of the
Republic. Unfortunately the Dutch have done exactly the opposite;

they have opened the informal talks by demanding unilateral
Republican measures in relation to the observation of the truce.

If the Dutch persist with their present tactics they will push
Hatta too far. I am sure that if he accepts Dutch terms which are
unacceptable to the political parties within the Republic the
future might prove worse for everyone than if there were no
immediate settlement at all.

The results of the Dutch talks at Kaliurang have already been
outlined in my telegram No. K. 198. [6] In this letter I shall
merely fill in the details and enclose some of the more important
documents. Firstly, with regard to the truce discussions, which
took up most of the time at Kaliurang, I am enclosing an initial
Netherlands memorandum (Appendix D [7]), the Republican reply
(Appendix E [8]) and Hatta's suggested joint communique (Appendix
F [9]). From these documents you will be able to judge both the
tone and the extent of the Dutch demands. As far as I can gather,
the Dutch are unlikely to be satisfied with Hatta's proposal for a
joint communique. Politically, truce violations are important both
in the Netherlands and to the Dutch in Indonesia and set a problem
which complicates negotiations to an exceptional degree.

Unfortunately the problem has been deliberately built up by a
Dutch press campaign. As I have mentioned earlier the Army Public
Relations Service has pursued an energetic campaign which confuses
truce violations with practically all incidents and crimes
occurring in Netherlands occupied territory. This campaign instead
of abating is continuing as powerful as ever today.

Much more important than the truce violations is the question of
army control in the interim period. Hatta had told Sassen that in
the light of the reaction of the Army and the political parties he
could not agree to provisions in the settlement permitting the use
of Dutch troops against the Indonesians in opposition to the
wishes of the Interim Federal Government. Sassen not unnaturally
claims that this is a withdrawal from the position Hatta took in
the Aide Memoire he gave to Stikker and there is already much talk
of Republican bad faith among the Netherlands and Netherlands
Indies negotiators. Hence we have an extremely serious issue which
could completely wreck all prospects of a settlement. On the one
hand I find it difficult to see how Hatta could sell capitulation
on such an important point to the people in the Republic. On the
other hand I can appreciate that following Hatta's Aide Memoire,
Stikker or any other Netherlands Minister would have the utmost
difficulty in selling anything but such a capitulation.

Stikker has submitted a memorandum (Appendix G [10]) on the more
general subject of the absorption in the Federal Armed Forces of
the T.N.I., which appears reasonable in many respects, but which
is likely to be unacceptable because of its lack of clarity on
important issues and because control of the Indonesian armed
forces would be subject to agreement with the Netherlands. In
particular the Republic is unlikely to favour a joint staff unless
it is purely an advisory body. It is also unlikely that the
Republic would agree to control of the Indonesian Armed Forces
being subject to directives established with the concurrence of
the Netherlands or at a Union level.