MY 349. [1]

Indonesia. I saw Pearson today when I recapitulated views
previously conveyed to Canadian Government and expressed concern
at latter's attitude, emphasising that in our view, which was
based on first hand knowledge, excuses put forward by Dutch were
not valid.

Main points from lengthy discussion are:

1. Canadian Ambassador at The Hague has been instructed to
emphasise to Netherlands' Prime Minister and Foreign Minister the
embarrassing position in which their action has placed their
friends and urge them to 'find a way out'.

2. Pearson adhered to view that Dutch action, although
regrettable, had been taken under provocation and repeated that
Canadian Government could not support punitive measures at this
stage though it might have to reconsider attitude if Dutch
'remained obstinate'. For the moment they would await outcome of
discussions at The Hague.

3. I stressed regrettable consequences if no positive action taken
to check aggression by Western power. Pearson agreed that effect
on prestige of Atlantic Union and on reputation of the West in
Asia would be regrettable and that Communist hand likely to be
strengthened, but reiterated that Canada could not support
sanctions against friendly Western State in view of failure to
check aggression by (for example) Arab States and Greece's Balkan
neighbours. He added practical value of attempt to impose
sanctions reduced by likelihood of French veto in Security
Council.

I gained impression Pearson was not entirely happy about Canada's
temporising policy but that there was little hope of appreciable
change in Canadian attitude key to which is to be found in
Pearson's statement 'Without the Netherlands there could be no
Atlantic Union'.