Mohammed Yunus, who has been Indian Consul in Djokjakarta for 15
months is leaving tomorrow for the Asian Conference at Delhi. He
has kindly offered to take with him any papers I may wish to send
to you, so I take advantage of this opportunity to bring you up to
date with the situation here. Yunus, who is a close friend to
Nehru, has an excellent background to the Indonesian problem and I
am sure you will find him as useful a contact at Delhi as we have
found him at Djokjakarta.

At the suggestion of the Indian Consul-General I am also including
a duplicate of this letter in the Indian safe-hand bag to Delhi,
in case Yunus is delayed on the way.

Military Situation
With my letter of the 14th January [1] I enclosed a report from
the military team in Sourabaya area. The Committee has since used
this as the basis of a report to the Security Council (attachment
1). [2] The Dutch, who have been anxious to create an impression
of negligible resistance to their forces were infuriated with our
report and their long official communique (attachment 2) [3]
speaks for itself. I need only point out that the local pressmen,
including an important member of the Dutch Information Service,
regarded the communique as beneath the dignity of a responsible
Government and that there has been no contradiction of the facts
as reported by the Committee.

In general the military situation in Central Java may be
summarized as follows:-

(1) The Dutch are too thin on the ground.

(2) They are therefore confining themselves to the big towns, and
to limited patrolling.

(3) They are using artillery to break up concentrations of
Indonesians observed from the air and this is known to have
resulted in numerous casualties among unarmed villagers.

(4) Roads are dangerous and are used only by convoys.

(5) Bridges are burned daily and there are other frequent acts of
sabotage.

(6) According to the Dutch the TNI are terrorising the local
civilian populations to prevent their co-operation with the
Netherlands.

In view of the difficulties which the Dutch are experiencing it
may be expected that more brutal measures will be employed
particularly against villages suspected of harbouring guerilla
troops.

Colonel McDonald gives it as his opinion that the Netherlands
military action has been mismanaged and that the Dutch forces have
based their strategy on the mistaken notion that the capture of
the Republican Government and the main centres in the Republic
would result in a quick capitulation of the TNI. He claims that
already the disposition of forces shows the tendency on the part
of the Netherlands to concentrate in the big towns. He believes
that if the TNI are at all capable they could force a withdrawal
of Dutch forces more surely than an order of the Security Council.

Reports that Dutch reinforcements are now being sent from Holland
and the tendency of the Netherlands to seek international
assistance for a cease-fire support these views.

Visit to Republican Leaders
The Committee visited Hatta and five other Republican leaders at
Bangka on Sat-urday. The results were reported to the Security
Council by telegram (attachment 3). [4] Dr. Roem gave the
Committee a written report (attachment 4) [5] on the experiences
of the internees since the 19th December, which has been airmailed
to the Security Council. Assaat, Chairman of the KNIP (Provisional
People's Representative Body of the Republic) also gave me a
private report (attachment 5) [6] of his experiences. I pointed
out that the document would have little value unless it were
included in the Committee's records, but Assaat insisted it was
for my own information.

In addition to the points included in the reports, the Republican
leaders:-

(a) authenticated the final speeches of Sukarno, Hatta and Natsir
issued on the 19th December. (See my letter of 14 January.)
(b) reported that Radio Australia and the Hilverson radio are
their main source of up-to-date news.

(c) agreed on the importance of the United Nations retaining a
special body in Indonesia.

(d) expressed their desire for increased representation abroad.

(e) denied that the Republican Government or the Republican Army
Command had ever been responsible for planning or sponsoring the
infiltration of armed units into Netherlands territory, save as a
counter measure in the event of a Netherlands military attack on
the Republic. (Hatta added emphatically that the Dutch allegations
regarding documents found at Djokjakarta were not correct. His
policy had been to reduce the number of the TNI by expelling the
irregular units so as to have a smaller but better disciplined
army which could be included at a later stage in the Federal army.

He claimed that he had had full control at the time of the
[military] action save that he would not have had the power to
abolish entirely an army which had been fighting for the
independence of its country. Demobilised soldiers trying to return
to their homes were given as the main explanation of the so-called
infiltrations.)
(f) explained that no powers had been delegated by the Government
to Tan Malakka.

(g) were critical of the BIO decree. [7] (Hatta stressed the
importance of a Cabinet system on the British model and of greater
powers for an interim Government which would look towards a free
Indonesia rather than a return to colonialism.)
(h) considered that the Dutch talk now of elections throughout
Indonesia indicated that the earlier Netherlands objections to
elections had been the existence of the Republic and not the need
to obtain law and order as the Dutch had claimed.

Hatta denied the allegations of Van Royen in the Security Council
that the Republican Government had been supported by communists.

He believed that the Dutch military action had created a chaos of
which the communists might take advantage. He doubted whether the
Dutch authorities would be able to cope with the situation and
maintain security and order.

Hatta believes that the Netherlands want to break up the Republic
into a number of controlled areas; for example, he thinks they are
working towards a puppet state in Central Java under Abdul Kadir.

He stressed that the creation of puppet states would leave the
situation in South East Asia weak and uncertain.

Hatta also commented without commitment on the political
situation. He reiterated the importance of Netherlands recognition
of the Republic followed by general and free elections to a
representative body which could take all decisions regarding the
future of Indonesia. However, he did not believe in free elections
under Dutch control.

Speaking to me privately, Hatta admitted his doubt as to whether
the fighting could be stopped in view of the distrust of the Dutch
created by the military action. He recognized the difficulty of
finding a formula which would provide for internal security,
restoration of Republican authority over the areas previously
held, and withdrawal of Dutch troops. He had little faith in Dutch
goodwill and in their readiness to develop a free Indonesia.

The Republicans on Bangka intend to prepare a written statement
for the Security Council. To facilitate this the Committee is
endeavouring to see that appropriate documents are forwarded to
them without delay. Our own report on the interview with Hatta and
the other internees excluded political issues. Apart from the
disadvantage at which the Republicans were placed, it was clearly
desirable to avoid any possibility of embarrassing the efforts of
Palar and others at Lake Success.

Terms of Settlement
It is apparent that if peace, order and stability are to be
obtained in Indonesia, two things are necessary. Firstly a change
of attitude on the part of the Netherlands and secondly the
establishment of a programme which will permit the co-operation of
the nationalist groups in Indonesia.

Since the Netherlands will not establish a satisfactory programme
themselves this task should be carried out by the Security
Council. I believe the essential points of such a programme should
be-
(1) the restoration of the Republican administration,
(2) free elections throughout Indonesia by a fixed date,
(3) a guaranteed transfer of sovereignty and complete withdrawal
of Netherlands troops within a strictly limited period,
(4) international supervision throughout the interim period,
particularly with regard to the elections.

Serious obstacles are the Netherlands' objections to the re-
establishment of Republican administration and withdrawal of their
forces from Republican areas. Yet without such withdrawals it is
difficult to see how fighting can be stopped. I like the tentative
suggestion of the United States that a new Commission, comprised
of Australia, Belgium and the United States should be established
with expanded powers and with jurisdiction to be extended to the
whole of Indonesia. As I understand its functions would include:-

(a) the determination of whether any Netherlands forces should be
retained temporarily in any area to assist in the maintenance of
law and order, and
(b) the determination of the extent of areas in Java and Sumatra
which would be progressively returned to the administration of the
Republic of Indonesia.

To give these functions to an international tribunal would at
least answer the Netherlands charges that withdrawal of forces and
the establishment of a Republican regime are impossible.

Unsatisfactory attitude of the Netherlands
We can be certain, however, that any programme which provides
safeguards for the early establishment of a free Indonesia will be
rejected by the Netherlands. I have yet to meet the Dutchman who,
when it comes to the point, agrees that a decision must be made
now for the independence of Indonesia.

Attachment 6 is a copy of the statement made by Van Royen to the
Security Council on Friday, January 14th [8], of the programme for
Indonesia which is the 'unalterable aim of the Netherlands
Government'. This programme is certain to form a basis for
Netherlands propaganda but is so hedged with conditions as to
constitute a complete fraud. The principal catches are:-

(a) the Federal Interim Government which will be installed within
one month will be the Government contemplated in the BIO decree,
which will be under the domination of the High Representative of
the Crown.

(b) Elections to a representative body are promised but without a
firm date. The Netherlands will merely 'exert all possible efforts
in order that elections may take place in the third quarter of
this year'. (As the only reasons given for the inability to fix a
date are the 'administrative technical preparations', it should be
possible for the Netherlands to undertake that elections will not
be postponed beyond a fixed date unless the Security Council or
its representative organ in Indonesia certifies that it is
administratively impossible to hold them on that date.)
(c) It is difficult to see how there can be free elections without
recognition of the Republic and withdrawal of Dutch forces.

(d) No guaranteed date is given for the transfer of sovereignty,
the only undertaking being that the Netherlands Government will
'do all within its power to achieve the transfer of sovereignty in
the course of the year 1950'.

(e) The provision for a 'round table conference' to decide the
terms of the Union Statute gives the Netherlands a further
opportunity to hedge on a complete transfer of sovereignty.

Without specific guarantees, the Netherlands statement is, of
course, worthless as a basis for settlement since the Indonesians
are now unable to believe in Dutch integrity. Indeed, experience
has shown that Netherlands intentions with regard to the future of
Indonesia are as unreliable as the wording of Van Royen's
statement.

I understand Jessup has issued a working paper [9] in Lake
Success, setting out the United States views on the future of
Indonesia. This envisages a guarantee of elections in October of
this year and a guaranteed transfer of sovereignty by April, 1950.

Need for financial pressures
The solution of the Indonesian problem, therefore, boils down to
pressures; to the exertion of sufficient financial pressure to
force the Dutch to change their policy and make major concessions
to nationalism in Indonesia.

Basically this requires withdrawal of Marshall aid to Holland. The
South East Asian countries could make a valuable contribution by
supporting a progressive progamme for Indonesia, but they should
prepare for Netherlands refusal to accept it by making plans for
pressure on the United States to withdraw Marshall aid and plans
for the imposition of all possible sanctions against the
Netherlands and Indonesia.

Sanctions will certainly embitter the Dutch, but it is difficult
to see how they could be more embittered than they are now. And
they need not severely hit the local population, providing
satisfactory arrangements are made for food imports.

There is some doubt as to how long the Netherlands could resist
the strong financial pressures of a co-ordinated South East Asian
policy and the withdrawal of Marshall aid to Holland. I should
hope that a threat in the form of a specific ultimatum would be
sufficient to obtain Netherlands acceptance of a reasonable
programme. But in the event of the Dutch remaining stubborn, it
would be necessary to envisage a continuation of pressures over
many months. There are some Dutch who speak of the possibility of
continuing without Marshall help for a year. That may be so, but
the Netherlands financial position in Indonesia is undeniably
shaky and the Dutch must be as vulnerable to sanctions as any
country is ever likely to be. I attach a statement of the local
Government finances (attachment 7) [10] based on the best
information (unfortunately unofficial) I can obtain. More
important than Government finances is the question of balance of
payments. There are no reliable figures available but Van
Hoogstraten told me some months ago that Indonesia could hold its
own providing the prices of major exports, copra, palm oil and
rubber, remain high. If (as seems doubtful) the Dutch are
succeeding in balancing their payments in Indonesia, it can only
be the result of a most rigid restriction on imports.

The Federalists
The Federalists are playing for time. They are divided. Many are
puppets but there is a strong body of opinion concentrated in the
Pasundan and East Indonesian states which is seeking to increase
the pressure on the Dutch and to join forces with the Republicans.

Primarily the policy of Gde Agung, Prime Minister of East
Indonesia, and others of this body is to delay the formation of a
'national federal government' until the Security Council and the
Asian conference have reached decisions on the Indonesian issue.

They hope these decisions will assist them in taking a stronger
line against the Dutch.

The resolution obtained in the Federal Conference ('Assembly for
Federal Consultation') held in Batavia over the past week and
reported to you in my last letter is most indefinite in its
wording. Clause 3, requiring consultation with prominent persons
from the territories not yet organized, has, however, the two-fold
purpose of seeking contact with Republicans and of stalling for
time.

For the implementation of Clause 3 the Assembly for Federal
Consultation has formed a Committee which will, at short notice,
contact the following prominent persons:-Raden Abdulkadir
Widjojoatmodjo, Dr. Assaat, Dr. Darmasetiawan, the Sultan of
Djogjakarta, Dr. Moh. Hatta, Dr. Urip Kartodirdjo, Hadji Agus
Salim, Sutan Shahrir, Ir. Sukarno and Prof. Dr. R. Supomo. It will
be seen that of these ten, eight are prominent Republicans. Abdul
Kadir and Dr. Urip Kartodirdjo are both Federalists who have
worked with the Netherlands Delegation in the discussions with the
Republic.

The BIO Decree which the Netherlands expect the Indonesians to
accept gratefully and which the Federalists are likely to be weak
enough to take, provides for a triumvirate with no real powers. It
is a vague document in which the Indonesian national government
would be crushed between the all powerful High Representative of
the Crown from above and the Netherlands administrators from
below. The High Representative of the Crown would have full
legislative and executive powers.

The final attachment (8) [11] is a report from Supomo (Adviser to
the Republican Delegation) on his interview with Drees. He is the
only Republican, as far as I know, to have been consulted by the
Netherlands Prime Minister.

P.S.

It is of interest to note that the U.K. Consul-General [12] is
reported to have expressed concern at the report from the
Sourabaya area (see Attachment 1) where the team is under the
control of a Britisher, Major Pullen. If true, this is to say the
least unfortunate. Other reports such as Pope's confirm the Team's
observations. It might have been more tactful to have said very
many bridges, rather than hundreds, but I should be surprised if
Pullen's description were inaccurate.