856D.6363/785
The Chargé Near the Netherlands Government in the United Kingdom (Schoenfeld) to the Secretary of State
[Received November 13.]
Sir: I have the honor to report that in a conversation yesterday, Dr. C. J. I. M. Welter, Netherlands Minister for the Colonies, commented to me on the greatly rising demands for oil of the Japanese Economic Mission, headed by Mr. Kobayashi, which was now engaged in negotiations in Batavia.
By way of preface, Dr. Welter could not forbear from remarking that he did not think the United States fully appreciated the dilemma of the Dutch position. By putting pressure on Japan in the matter of oil, the United States was inevitably turning Japan’s interest toward the Netherlands East Indies. The latter, without support for a strong policy from Great Britain or the United States, were forced to adjust accordingly. The tendency to reproach them for adapting themselves to the situation, he thought was “illogical.”
Dr. Welter then went on to say that the Governor General in Batavia had reported that Mr. Kobayashi had frankly said that Dutch oil was a matter of life or death for Japan. Other items which figured in the discussions were secondary and even tertiary. Oil was the paramount consideration.
The Japanese, Dr. Welter continued, had originally asked for 450,000 tons of Netherlands East Indies oil over and above the 600,000 tons normally imported by Japan each year, or a total of about 1,000,000 tons annually. Later, they had raised the figure to 2,000,000 tons. Recently, they had asked for 3,150,000 tons in addition to the normal imports of 600,000 tons, or a total of 3,750,000 tons a year. They had also asked for a five-year guarantee from the Dutch Government.
Dr. Welter said the he could tell me in confidence that the Netherlands Government did not propose to accede to the latest Japanese proposals. The Netherlands East Indies produced only 7,000,000 tons of oil a year. They could not meet the Japanese requirements and preserve their other markets. If they tried to do so by increasing production, this would result in the premature exhaustion of the wells. [Page 176] This was not in Japanese interest. They were accordingly making counter proposals under which they would undertake to supply a reasonable amount of oil of their own production. Supplementary amounts should be obtained from other sources,—Bahrein (Standard Oil) and elsewhere in the Middle East (Anglo-Iranian). The oil was, of course, of a different quality. Dutch companies in the Netherlands East Indies could be of assistance in refining and delivering it, provided that the higher costs were met by Japan. The proposals thus roughly outlined were under consideration by those concerned. It was his opinion that the essential thing was to gain time.
Dr. Welter added that Dutch companies had made an arrangement for the shipment of 40,000 tons of oil to Japan monthly for a year beginning August 1940 and for the shipment of two cargoes of “aviation spirit” (20,000 tons) monthly to Japan up to the end of 1940. He said that we had objected to this arrangement and that there had been some pressure through one of the oil companies in the Netherlands East Indies which was American-owned. Dutch Shell, however, had taken the position that it would not go back on its contract unless ordered by the Dutch Government to do so.
Dr. Welter said that he thought it was a mistake to object to such a limited arrangement while negotiations on the far larger and more important problem were in progress. The Dutch had had long experience in dealing with the Japanese and the essential thing was to gain time. Japan’s eventual attitude would depend on the course of events. If the British showed signs of success, the Japanese would moderate their demands. If the British suffered reverses, the tendency would be in the other direction. What happened to the British was, of course, a matter of life or death for the Dutch as well.
Respectfully yours,