This week my letter will consist of the notes I have given Burton
at Singapore. Unfortunately I have not a spare copy of the
analysis [1] of the military situation which I attached to the
notes but you will be able to get this from Burton when he returns
to Canberra. This analysis was prepared as a first draft for the
report to the Security Council from the Commission. Discussions on
this draft have already shown that it will be considerably
modified by the other members. We believe, however, it is an
accurate representation of the position here as far as we can
ascertain it from the military observers and you may find it
interesting to compare the draft with any final report agreed to
by the Commission.

ATTACHMENT

NOTES ON THE SITUATION IN INDONESIA

The Military Position
In assessing any report of the military situation in Indonesia it
is essential to bear in mind that the Dutch make it extremely
difficult for United Nations military observers to see what they
want to see when and where they want to see it, and that they
intimidate persons capable of giving useful information. Although
economic conditions are improving and there are less disturbances
in some areas, in many others the situation is deteriorating. In
general guerilla activity is not decreasing. There appears to be a
potentiality for a major armed flare-up if negotiations break
down.

The guerillas are particularly strong in the areas around
Djokjakarta and in West Java. Information about other areas and
especially about Sumatra is extremely scanty but it appears that
some members of the Republican emergency government have reached
Atjeh. Reports from Djokjakarta and West Java are that guerilla
leadership is good, morale high and that the TNI are confident
they cannot be crushed by the Dutch. Recently on the eve of his
departure for consultation with Republican leaders at Bangka,
Duanda, Republican Minister for Communications, was visited at his
home in Djokjakarta by a group of guerilla boys with the message:

'You must have more confidence in us, Uncle, than at the time of
Renville'.

The Dutch suffer from insufficient troops and are relying on
mechanised attacks. The main victims of the Netherlands mopping-up
operations are the local populations. As one lad who walked from
Djokjakarta to Batavia said 'We are killed for doing nothing, why
not do something'. Without doubt the common people of Indonesia
are suffering acutely but are conscious of the national struggle.

There is evidence of terror in many areas and reports of
atrocities too numerous to be ignored.

One of the most unfortunate results of the second military action
of the Netherlands was its effect on the TNI and the Republican
police force. Hatta had practically eliminated irregular units and
had created a well disciplined army under the control of the
government. This provided an opportunity for a negotiated
political settlement without widespread disorders. After 19
December, however, irregular bands were reformed and many
Indonesians believe that if there is not an early solution of the
Indonesian dispute, irregular groups under the influence of Tan
Malaka and Darul Islam and irregular bandit gangs will grow in
importance so that Indonesia will become another Burma. At present
Darul Islam groups are creating trouble in East Pasundan (West
Java) and Republican leaders are afraid of the influence of Tan
Malaka in East Java. Otherwise the TNI army is well organized,
communications are good and there is still a national army
prepared to take instructions from an authoritative Republican
Government. At the same time the longer a settlement is delayed
the greater the likelihood that the TNI organization will be
broken up and that there will be a real problem of restoration of
law and order irrespective of a political settlement.

To sum up it seems the Dutch are incapable of imposing a decision
by force and their efforts to enforce 'law and order' are
completely disrupting law and order.

Netherlands Policy
The Netherlands attitude is grievously influenced by colonial-
thinking civilians and soldiers. Military authorities such as
Spoor are a serious obstacle to the development of a satisfactory
policy in Indonesia and they are supported by die-hards in the
civilian administration. By and large the Dutch people do not
understand the situation in Indonesia. They have been confused by
inaccurate propaganda emanating from authorities with a colonial
mentality. At the present time the policy makers are being misled
by reports from the field.

It is too early to assess Van Royen's attitude or to estimate the
extent to which he will be influenced by the 'old gang' at the
Palace. But apart from his opening speech in the preliminary
discussions, which must be taken with caution, there is no
indication that the Dutch have made the fundamental change in
their approach that must be made if peace and stability are to
come to Indonesia. It is true that, whereas in October 1947 there
were few who favoured independence for Indonesia, now most Dutch
will verbally claim it as their only wish. But further enquiry
makes it clear they will insist on granting such independence in
their own way whatever the cost. The Dutch cannot escape from
their philosophy of paternalism. This paternalism is, however, a
rationalization of the basic idea, 'how much can we hold of
Indonesia and how long can we hold it'. The continuation of the
old Dutch policy is evident in the puppet states they have
created. The Pasundan Government, for example, although strongly
nationalistic in sympathy, has no authority. Military and economic
pressures continue to force it to carry out directions of the
military commander and the resident. The Dutch colonial law
permits arrests of Indonesians on any pretext, indeed no charge is
needed for interminable imprisonment, Newspapers are suspended for
publishing items from the foreign press of India, the United
States and Australia. Dutch administration is that of a police
state.

Nationalist Feeling in Indonesia
Nationalist feeling is deep and wide-spread, although it has been
suppressed to an extent that is not always noticeable in the big
cities. Fear generated by a fierce repressive policy of the
Netherlands, and natural submissiveness generated by centuries of
colonialism, prevent the average Indonesian from showing his real
feelings. Underneath the surface, however, there is a current that
cannot be blocked. Even in Batavia, for example, there are 14,000
students in underground Republican schools and an underground
medical university. Indonesian youths leaving for execution
because of their subversive activities are reported to have prayed
for Sukarno and Hatta and that their leaders should not make
concessions to the Netherlands.

Preliminary Discussions
Dutch policy since 1945 culminating in the second military action
has destroyed the confidence of the Indonesians in the
Netherlands, and it will be difficult to have the Republican
leaders accept anything on trust. This lack of confidence
naturally hinders political negotiations but the real factor in
the present situation is the Netherlands approach. A progressive
Netherlands policy could still solve the Indonesian dispute
overnight. Van Royen's opening speech [2] in the preliminary
discussions has already created a favourable impression among the
Republican delegation. On the other hand if the Netherlands policy
degenerates into the old channels of delay and hard bargaining it
can only lead to disaster.

Both parties are beginning the preliminary discussions from
opposite points of view. The Netherlands are determined to obtain
commitments from Republican leaders to attend The Hague conference
before the Republican Government is established at Djokjakarta.

Van Royen says public opinion in the Netherlands demands this. The
Republican leaders are equally determined they can make no
commitments until they are restored as a Government to
Djokjakarta. Palar supports this policy, as do the guerillas and
Republican administrations operations outside the Dutch-held
towns.

There may be opportunities for a compromise but it is necessary to
bear in mind that a policy which puts too much pressure on the
Republican leaders may defeat its ends if it forces the leaders to
concessions unacceptable to large sections of the guerillas.

United States Policy
The United States appears to be pressing for concessions from both
sides. At the moment Cochran is endeavouring to ensure that the
Republicans will not be adamant in refusing discussions on other
matters before they have returned to Djokjakarta. In order to
secure a pliant Republican policy, and in order to exert pressure
on Republican leaders where it is felt most, Cochran has urged
that Hatta should lead the Republican delegation in the
preliminary talks. The Republicans realize, however, the dangers
in such a move, and Hatta is aware of the personal political risk
he would run. He is therefore unlikely to assume leadership at
this stage.

American policy appears to be undecided as a result of the
conflict between European and Asiatic policies-(a conflict which
appears to me to be more apparent than real. The Administration
also seems to be lagging behind American public opinion on the
Indonesian question and to be embarrassed by the demands of the
Senate and Congress for strong financial pressure on the Dutch.

Certainly the American correspondents to whom I have spoken
support my view of the situation here.

Prospects
It seems clear that the United States is not prepared at this
stage to consider economic sanctions against Holland. On the other
hand it seems likely that a befuddled public opinion in the
Netherlands will prevent an adequately progressive Indonesian
policy at The Hague unless the strongest pressure is maintained.

The Netherlands will therefore take advantage of every weakness or
indication of weakness on the part of the United Nations or of the
United States. Although some progress may be possible in the
preliminary discussions, at some stage the big stick will most
probably be required. The only stick in sight which is big enough
is the threat by the United States of a complete withdrawal of
Marshall aid.

The objective should be an overall political settlement within
three months.