Foreign Relations of the United States, 1949, The Far East and Australasia, Volume VII, Part 1

856d.00/9–1449

Memorandum of Conversation, by the Assistant Chief of the Division of Southeast Asian Affairs (Lacy)¹

secret

[Washington,] September 14, 1949.

Participants:	Mr. Soedjatmoko, Representative of the Indonesian Republic.
	Jacob Beam, American Consul General designate at Batavia.
	William S. B. Lacy, Assistant Chief, Division of Southeast Asian Affairs.

Mr. Soedjatmoko, acting under instructions from his government, called at his request. He said he had been directed to advise the Department that Dr. Hatta and his associates at the Round Table Conference at The Hague believed that negotiations had reached a serious impasse. He said that his principals were coming to believe that the Netherlands negotiators were bound by the intransigence of the Dutch Estates General and that it was unlikely that the Netherlands would recede from its present firm position in respect of the outstanding issues presently subject to negotiation. He continued to say that his principals believed the Netherlands would continue to “stall” in the hope that the responsibility for breaking off negotiations could be imposed on the Indonesians. When asked what he believed the ultimate Dutch objective might be of such tactics he replied he believed the Dutch had no particular objective in mind, that he believed during the past several years the Dutch had often embarked upon courses of action without carefully considering in advance the end result thereof.

I asked Mr. Soedjatmoko to enumerate and describe the issues upon which negotiations appeared to have stalemated. From his reply it is apparent that the Indonesians believe the unsolved problems may be categorized as follows:

(1) Political: The Netherlands is determined that the statute of the union contain provisions for a supreme judiciary to which appeal may be sought from lower courts in the Netherlands and in Indonesia. The Indonesians regard such an arrangement as an abridgement of the sovereignty of both partners to the union and believe, moreover, that through some legerdemain of their own the Dutch could make use of the court to their advantage.

The Netherlands wishes the Council of Ministers (the highest expression of the union) to have certain executive powers which shall be effective on both members of the union. The Indonesians resist this proposal, again on the grounds it is, pro tanto, an abridgement of their sovereignty. The Indonesians prefer that the Council of Ministers functions be limited to those of consultation and they cite the constitutional precedents provided by the experience of the British Commonwealth in support of their position.

(2) Economic and Financial: The Indonesians are unwilling to accept the three and a half billion guilder debt which the Netherlands believes they should assume. The Indonesian position is that the new Indonesian state should assume indebtedness incurred up to the time of the Japanese invasion; that the Indonesian states should assume a negotiated portion of the debts assumed on behalf of Indonesia during the Japanese war; but that the Indonesian state should assume none of the indebtedness incurred as a consequence of the first and second military actions of the Netherlands Government.

(3) Strategic: The Indonesians are unwilling to provide the Netherlands bases of a military or naval character on the grounds that the presence of Netherlands forces in Indonesia would serve to fan the flames of exorbitant nationalism, thus making it difficult if not impossible for Indonesian leadership to bring Indonesia into the regional anti-Communist arrangement which the Indonesians believed to be forming.

(4) Miscellaneous: The Indonesians are unwilling to allow New Guinea to establish a special relationship with the Netherlands outside the new Indonesian state. The Indonesians maintain that New Guinea under such a special relationship would be nothing but another Dutch colony in a Southeast Asia freed of colonialism, the presence of which would be a troublemaking anachronism.

In regard to all the above points Mr. Beam and I undertook to remind Mr. Soedjatmoko of the overriding importance of a continued association of a real and lasting character between the Netherlands and the new Indonesian state. Mr. Soedjatmoko expressed his entire general agreement with our views.

In respect to point (3) of the foregoing, Mr. Beam and I tried to impress upon Mr. Soedjatmoko the importance to the Indonesian state of bases as a part of both short-term and long-term plans for Indonesian defense against outside aggression. Mr. Soedjatmoko countered with the suggestion that the Dutch might lend or lease elements of their Navy to the Indonesians for the latter’s use in repelling external aggression and repressing smuggling and other illegal maritime activities. Mr. Beam and I did not evidence any interest in this proposal. In reply to Mr. Soedjatmoko’s question we assured him that the United States had made no representations whatsoever to either Indonesians or Dutch concerning United States interest in acquiring bases in Indonesia. I recited again the Department’s desire that the Indonesians accord the Netherlands base rights on a voluntary basis, pointing out that such arrangements had been highly satisfactory to the Filipinos and to various members of the British Commonwealth.

During the course of the conversation Mr. Soedjatmoko made two interesting remarks:

(a) That the Dutch intention, in imposing a tremendous debt to the Netherlands on the emerging Indonesian state, was to compel the Indonesians to trade with the outside world through Holland in order to liquidate the debt. He asked point blank if the United States did not desire Indonesia to have direct access to the dollar area. We replied that this was a matter for negotiation between them and the Dutch but that speaking generally it seemed to us a sensible resolution of the problem of debt assumption by Indonesia would provide the new Indonesian state with a wide latitude of choice as between the several currency areas of the world. At the same time we made it clear that the United States could not be expected to make its policy on the basis of acquiring new members of a dollar area.

(b) Mr. Soedjatmoko stated that Mr. Nehru was waiting only for a settlement of the Indonesian dispute to commence to call into being a coalition of Southeast Asian states for the purpose of offering regional resistance to Communist aggression.

1. Reported in telegram 791, Ushic 14, September 15, 7 p. m., to The Hague and repeated as 468, Usgoc 427, to Batavia (501.BC Indonesia/9–1549).