856d.00/10–1049: Telegram

The Chargé in the Netherlands (Steere) to the Secretary of State


916. Called on Stikker his home yesterday asking him bring me up-to-date recent developments RTC, particularly the indications to Cochran of likelihood Cabinet will resign. Said to him could not understand how Cabinet resignation this juncture could possibly serve Netherlands’ interests Indonesia or at home, on contrary, could only lead disaster, and asked for explanation of reasons for entertaining such.

Stikker, after reviewing recent negotiations, said, in effect, that Cochran’s recent personal proposals had had practical effect of setting limits beyond which Indonesians would not go and which Cabinet could not possibly recommend to Parliament. The difference between them remained so great Cabinet could see no solution and therefore felt impelled resign.

Said to Stikker my personal opinion last thing Cabinet should do was resign this juncture after six months’ patient negotiation and close approach acceptable agreement. Felt that record, as far as I knew it, would not show that all possibilities of financial-economic agreement had been exhausted. On contrary, thought parties had largely sparred for position thus far, and that world would quickly come that conclusion if breakdown occurred and record made public.

Stikker replied that Netherlands’ Cabinet was getting to point where it did not care what world thought. There was such a thing as being pushed too far. Cabinet had been through 15 months sustained pressure, with severe internal stresses and strains on all important decisions, constantly subjected to party criticism and intrigues (which had led to departure of Sassen and Beel) and now was confronted with whole new series of internal problems incident to devaluation. In these circumstances, and with Netherlands’ foreign assets sadly diminished and country running large trade deficit, it should occasion no surprise if Cabinet felt unable recommend further staggering sacrifice. Should be remembered that Netherlands’ Government has been financing Indonesia since war and that Government has promised Parliament an early end to this drain. Holland was in difficult financial position close to end its resources, and point had been reached where it could not agree assume added burdens beyond its strength to carry and in face great uncertainties.

Cabinet fully aware that breakdown RTC meant chaos Indonesia and probably Holland (where stoppage ECA might ensue) but felt they were confronted with such decision. Added with touch of bitterness [Page 518] that Netherlands’ Government and people felt (and he cited talks with Hatta past week by himself, Hirschfeld and others indicating fundamental basis understanding existed) that real conflict is between US and Netherlands and not Indonesia and Netherlands. Supported that by stating only on that ground could he understand repeated US refusals support Netherlands’ proposals, however reasonable, or indicate clearly what solution it would support. Added that any Dutch proposal seemed be regarded with suspicion by Indonesians and UNCI regardless of merits.

I replied was extremely difficult for any country play impartial role (as US is) particularly when both parties wanted support of that country; that American Government had repeatedly demonstrated its readiness accord tangible friendly aid to Netherlands and approval of declared objectives Netherlands in Indonesia which seemed on point realization.

Stikker acknowledged these arguments, but added that time had come when more postive US support for workable solution was imperative. Said he had had definite impression that Netherlands’ approach to financial solution was regarded as sound and that Netherlands had been taken by surprise by Cochran proposal cancel two billion Indonesian floating debt to Netherlands’ Government. Stikker proceeded criticize “fantastic” Indonesian calculation. In oral note following Baarn meeting (of Netherlands’ military expenditures at Indonesian cost as 3.7 billion guilders) some 100,000 soldiers at 30 guilders per day (and deduction thereof from 6.3 billion total debt) said resultant 2.6 billion implied further. Netherlands’ contribution 1.7 billion to Indonesia after cancellation 1.5 billion (though 1.7 billion presumably would be reduced by internal purge measures).

I commented my understanding Netherlands’ insistence upon final settlement debt question at RTC and said this seemed, imply drastic cancellation inter-government debt if Indonesian Government to carry burden remaining debt in difficult years ahead. Personally did not understand such insistence when financial position so difficult and outlook so obscure. Would have thought it wiser to make generous cancellation for military expenditures and postponed decision on balance for three or four years with agreement now that international commission experts should then recommend or decide fair solution. Stikker pondered this for some time, but did not react, and finally said Cochran would be discussing whole question with Lieftinck and Goetzen on Tuesday. Stikker was at pains to make clear that while he felt Cochran did not fully appreciate difficulties confronting Netherlands’ Government, that Netherlands’ Government was not criticizing Cochran and had faith in his intentions and confidence that he would do utmost to resolve dilemma.

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Came away from meeting with feeling that Stikker had given vent to his feelings, as he is prone to in tight positions, and that, having done so, now, with colleagues, anxiously awaits compromise proposals that will save day. They are thoroughly alarmed both at deteriorating situation militarily in Indonesia and at recent tendency of Indonesians here to harden and even withdraw from previous understandings. Their real hope is that US may find it possible to advance suggestions that both parties can accept with honor. Doubt that Cabinet will resign (a) unless bad press leak should give rise to public furor, (b) unless negotiations should take decided turn for worse, or (c) as long as the still-friendly relations between the parties give some hope for reaching agreement.