The resolution [1] adopted by the Security Council contains in
para. 3(a) a recommendation for 'the establishment of the interim
Federal Government which is to be granted the powers of internal
government in Indonesia during the interim period before the
transfer of sovereignty'. The resolution further provides that
this Federal Interim Government shall be the result of
negotiations between the representatives of the Government of the
Netherlands and the representatives of the Republic of Indonesia,
with the assistance of the United Nations Commission on Indonesia
on the basis of principles set forth in the Linggadjati [2] and
Renville Agreements. [3]

The resolution also provides that if no agreement is reached by
one month prior to the date mentioned, i.e. 15th March, 1949, the
Commission shall immediately report to the Security Council with
its recommendations for a solution of the difficulties. This means
that within the next day or so, the Security Council may be called
upon to discuss again the situation in Indonesia and the
implementation of the Council's resolution.

There is no clear indication of what the nature of the report of
the Commission will be. Critchley has indicated that he has been
endeavouring to press the Commission to make a further report
stressing the failure of the Dutch Government despite several
requests to make its attitude clear regarding the Security
Council's resolution. These reports, however, have not been
forthcoming because of the absence of the United States
representative [4] on the Commission.

The failure of the Netherlands Government to give any indication
at all of its attitude to the Security Council resolution, let
alone its attitude on para. 3(a), which is the first task to be
performed in Indonesia, makes it clear that the Council is faced
with the position where the Netherlands Authorities have failed to
fulfil a resolution carried by the Security Council under Chapter
7 of the Charter. This means that the Council is now confronted
with the position of having to determine what further action it
will follow. There seems to be three courses of action open to the
Council:-

(1) To give an extension of time to the Netherlands to determine
what attitude it will adopt in the light of Cabinet discussions at
present going on in that country.

(2) A further resolution indicating that unless definite action is
taken by the Netherlands Government before a certain date, the
Council will give consideration to methods by which it can
implement its resolution.

(3) The Council might give immediate consideration to the problem
of implementing its resolution, namely by the application of
enforcement action.

In connection with each of these three points, it is considered
that methods (1) and (2) would both be unsatisfactory on political
grounds. The first suggestion would merely operate as a further
extension of time for the Netherlands to accomplish its own ends
without reference to the Security Council's resolution. It would
merely encourage the policy already successfully pursued by the
Dutch in ignoring the authority of the United Nations insofar as
Indonesia is concerned. The second suggestion is also not
satisfactory in that it would merely act as an encouragement to
the Dutch to speed up their own plans and endeavour to reach some
finality with the Indonesian Federalists for the establishment of
an Interim Government and thus enabling the Netherlands
authorities to present the Security Council with a fait accompli.

In view of this it is considered that the Council should give
immediate consideration to taking enforcement action within
Chapter 7 of the Charter, and to ensure the following out of the
Council's proposals. While the implementation of sanctions might
not prove immediately effective, at the same time they would
combine with the already stiff opposition being experienced by the
Dutch in their consultations with the Federalists, and would no
doubt encourage further strong guerrilla activities against the
Dutch Forces. These three factors combined would increase the
Dutch difficulties and no doubt bring about an eventual change in
attitude towards the establishment of an effective United States
of Indonesia.

The relevant section [5] of Chapter 7 of the Charter provides for
'complete or partial interruption of economic relations of rail,
sea, air, postal, telegraphic, radio, and other means of
communication and the severance of diplomatic relations'. Under
this provision, extensive measures could be taken against the
Netherlands Government provided it was subjected to the severance
of all trade and financial relations and the prevention of
financial, commercial or personal intercourse with other States,
when such actions would probably prove extremely effective.

The only precedent for taking such a course is the application of
sanctions against Italy in connection with the war against
Ethiopia. In this connection the League of Nations established a
Co-ordination Committee and Committee of 18 to consider proposals
for depriving Italy of certain products. It will be noted from
this that full sanctions were not applied to Italy, and in fact
she was subjected to the following restrictions only:-

(1) The prohibition of the exportation, re-exportation or transit
to Italy or Italian possessions, of arms, ammunitions, and
implements of war. States were also asked:

(a) To suspend any measures that they might be applying for the
prohibition or restriction of the exportation, re-exportation or
transit of arms, munitions and implements of war to Ethiopia.

(b) To take such steps as may be necessary to secure that such
articles if exported to countries other than Italy, would not be
re-exported directly or indirectly to Italy or Italian
possessions.

(2) States were asked to render impossible all loans to or for the
Italian Government, all banking and other credits etc.

(3) There was a prohibition of the importation into the territory
of members of the League of Nations of all goods consigned from
Italy or Italian possessions and four Governments were asked to
prohibit the exportation and re-exportation to Italy and her
Colonies of a certain number of articles only. The products
selected were those which, being necessary for the prosecution of
the war, were mainly exported to Italy by members of the League of
Nations and included such things as rubber, bauxite, iron ore,
scrap iron, manganese, etc. Italy was not subjected to an
interruption of cultural relations.

For a variety of reasons it is well known that these measures did
not prove effective.

Applying the experience of the League of Nations in this instance
to the present situation in Indonesia, it would appear desirable
that every effort be made to secure the fullest possible
application of enforcement measures against the Dutch Authorities.

It is suggested, furthermore, that the application of full
sanctions involving the prohibition of import and export trade
with the Netherlands combined with the total severance of
diplomatic relations would, in the present circumstances, prove
most effective. It is unlikely that the Netherlands itself, would
be capable of withstanding the effect of the withdrawal of
European aid by the United States Authorities.

It is further suggested that instructions immediately be sent to
the United Nations Delegation in New York proposing that the
Security Council should be called together immediately the
Commission's report is received from Indonesia.

The Australian representative [6] at the Security Council
discussions might be instructed to press for the early
establishment by the Security Council of a Committee to consider
the application of sanctions to the Netherlands and the completion
of a report by this Committee within a restricted period of time,
say one week from the date of its establishment.

It is also suggested that the Australian representatives [7] in
London, Washington and Ottawa, should take the matter up with the
Governments to which they are accredited with a view to seeking
support for the Australian proposals.

Finally, in accordance with Resolution 2 [8] adopted at the New
Delhi Conference, which provided for close co-operation on the
Indonesian question amongst the States participating in the
Conference, it is thought that these Governments should be
informed of the measures proposed above, and, that support should
be sought for these proposals.