Ont. Steff, SESRET CIA HISTORICAL REVIEW PROGRAM RELEASE IN FULL CENTRAL INTELLIGENCE GROUP BASIC DUTCH-INDONESIAN ISSUES AND THE LINGGADJATI AGREEMENT ORE 20 9 June 1947 cory nod _ Ste 290003This document has been s eT approved for release through a rrsovestens teeta eeecanalee the Central Intelligence Agency | pepuacic OF INDONESIA nin INDONESIA UNDER THE LINGGADJATI AGREEMENT s fheCENTRAL INTELLIGENCE GROUP 2430 E Street, N. W. Washington 25, D. C ORE 20 9 June 1947 cory no. BA BASIC DUTCH-INDONESIAN ISSUES ‘AND THE LINGGADJATT AGREEMENT. sugary The signing of the Linggadjati or Draft Agreement between the rep- resentatives of the Netherlands and the Indonesian Republic on 25 March 1947 clinaxed nearly fourteen months of difficult negotiations, Remaining dif- ferences in interpretation of the agreement, however, are so deep and fun= danontal that orderly progress toward final adjustment of Dutch and Indo- nesian aspirations in the islands cannot be expected. The fundamental conflict is botweon the Dutch view that the Nether- lands will continue to be the sovereign power in the Indies until tho United States of Indonesia (USI) is formed, and the Republic's viow that Netherlands sovereignty docs not extend over Republican territory in tho interim poriod, This difference inpedes the process of mutual adjustment and jeopardizes any effort of cither party directed toward tho formation of the UST and tho os. tablishnont of a durablo relationship bctwoen tho Netherlands and the Indow nosian Republic. Stonming fron this basic issue and tho mutual distrust which it has engendored are the following issues which must do adjusted in the next two years before the USI can be cstablished: (1) the reduction of military forces on both sidos; (2) the restoration of Dutch propertics in Republican territory to thoir forncr ownors: (2) the reconciliation of the foreign trade policies of tho licthcrlends Indics Govornmont end te Indone. sian Republic; (4) the political organization of the.portions of tho Indios Which lie outside tho Ropublic; and (5) the control of tho foreign relations of the Republic. In the resolution of those inues, the bargaining positions of the Hothorlands and the Indonesian Ropublic are nearly balanced in political, ceononic, and military terns, Tho resultant delays in nogotiations aro ieading the Dutch to consider an attempt te reach a decision by military force. This,in turn, will aggravate anti-Western sontinont throughout the Far East and might load to a considcration of fo dispute by the UN Scour ity Council,iG Further discussion of baste Dutch-Indonosian issues and the Lingga~ G2eh Aerocnont will bo found in tho Enclosure hereto. Gursont negotiations, i2Guding the Dutch proposal of 27 May 1947 for tho estobvichemne ee a joint interim federal government ponding tho formation of tre USI, arc reported in the CIG Daily Sumery and analyzed in the GIG Weoxly ‘Summary.os ENCLOSURE, Background At the conclusion of World War II a deadlock developed between Dutch and Indonesian plans for the future. The Dutch hoped to establich g commonwealth subject to the Crown, enbracing as equals the ‘letherlands, Surinam and Gurasao in the Western Hemisphere, and the Netherlands Indies, The newly-formed Republic of Indonesia, however, demanded couplete inde. Pendence from the Netherlands. The collapse of Dutch powor and prestige an the early deys of orld War II and the subsequent Japanese occupation Policies of humiliating the white race and stimulating the already strong pationalistic spirit of tho Indonesian peoples, made inossible any re- turn to the pro-war status quo. As Allied power bogan to throaten Jepan's Position in tho Indies, a Japanese-sponsored Independence Proparatory Con. nitteo was formed in Java in the spring of 1945 to lay down the fremvovle of an independent Indonesian Republic, Tho Republic was proclaincd on 17 August 1945 and innodiately began to extend its powor throughout the Indies following tho surrondes of Japan, Allicd rooccupation a nonth lator found Republican governors in several of the outlying islands and Ropublican control well catablished in Java. Thus, a fait accompli facod Dutch authoritics as thoy roturned fe the Indies and provented the restoration of Dutch control in Java, Ma~ dura, and Sumatra, Negotiations to resolve the impasse betwoon the Puteh and the Republic were dclayod until Fobruary 1946 by widening hostilitios betwoon Republic forces on one hand and British and Dutch troops on the gther, Furthermore, the Dutch rofusod to have anything to do with the Frosidont of the Republic, Achmed Sockarno, whom thoy rogarded as a traitor, Nogotiations finally began 10 February 1946 through the good of- ficos of Sir Archibald Clark-Kerr, Britisa spocial representative in the Netherlands Indies, and wore based upon tho Dutch Statement of Policy of that date, This statonont provided for a democratic partnership for the couponent parts of the pro-war Kingdom of the Ncthorlands, with a eloar recognition of tho right of Indonosia, after a givon poried, to clect to leave the partnership. The Dutch, however, ssod tho view that the bost interests of Indonosia would’ be scrved through tho continuanes of one realm, Tho Indonesians answered the Dutch Statenent on 14 tarch 1946 vith @ Sounter-proposal including a lottor from Pronicr Sjahrir, which denacded (a) Dutch recognition of Republican sovereignty in the Netherlands Indies, and () the inmodiate reslization of the Indonesians! right to solfvatat mination, The Republic regarded the Commonwealth suggested by the Dutch as merely an attempt to restore Dutch control under a new nate, /of Conversations continucd during Varch ond April with tho quostion of Sunstra's position within or outside the Republic left in aboyance. Tho Dutch Protocol of 19 May 1946 recognized Republican de facto authority in fova, but not in Sunatra, Sumatra, 1ike othor sroas in tho Indics, ws to be given an opportunity frooly to dotornine its ow status in the proposed free state of Indonesia. In Jume, this Protocol was rejoctod by tho Indo- pesians, and nogotictions wore broken off end cro not restmed unt! carly in October, by which tino a Dutch Connission-Genoral hed arrived in the Tee @ics to carry on the talks. The declaration, on 14 October 1946, of a truco in the Dutels Indonosian hostilitios holped to ercate fevorable conditions for an = ont betwoon the opposing views. The Dutch thon, on 1 tiovenbor 1946, pro- Posed recognition of the Republic's do facto authority in Java and Sinatra and the inelusicn of tho Republic in the Federated States of Indonosias In answer, the Indonesians proposod confirm.tion of Dutch cconomie rights Tndenosia and a reduction of Dutch forces, Agreenent on these points vas Feached at tho town of Linggadjati (inlcnd from Cheriton) on 12\tovonbor 3946, and the draft agroonont (see Appondix A) vas initicliod three dave jeter, Both delogctions then returned to their respective governaonts: to obtain authorization for elgning. During the succeeding nonths, noderate nenbers of both govermonts Sueountered strong opposition fron extrenist elenents, In the Netherlands, conservative military leaders and businessnen felt that Dutch political and Gcononie power in the islands was jeopardized by the vague position of the Crown in the new arrangement (see Appendix A, Article VIII) and by the am- biguous provisions of Article XIV of the Draft Agreenent concerning tho restitution of Dutch property to former oxers. In Indonesia, extronists Fegarded the Agrecnont as a diploratic defeat for tho Republic because the Republic had not boon given iumediate independence, : The Nothorlands Goverment, despite tho opposition, finally ap- Froved the Draft Agrecnent as "basic policy" on 20 Dacenbor 1946, but ite delay in taking this action had added to Indonesian suspicions of Duteh imtentions and had thus made the position of Indonesian propenonts of the Draft Agroenont nore difficult, At tho end of January 1947, though both tho Dutch and the Indow Begians declared their roadincss to sign the Linggadjati Agreonont, they Gisagreed as to the conditions of signing, The Dutch insisted that the indonesians issue a general cease~firo order to inplonont the truce of Ti letober 1946, and agree to the Dutch interpretations of the Agrecnent. {hese interprotations wore onbodied ina statenont ty Dutch Overseas Nin Aster Jonlman ard in the Elueidating Monorandun of tho Comission Generel Prosentod to tho States General on 10 Docenber 1946 in defense of theTingeadjata Agroonent. Tho Dutch interpretations strossod that the Nothor- jands would renain tho sovereign power in the Indies until the establishnont of the UST, and that the lctherlands vould naintain adequate nilltery powor there until satisfactory guaranteos for the continuation of Dutch interests were scoured, While the cease-fire order was finally issued effective 16 Febru- nn ithe Republic atendfastly refused to be bound by Ditch Interpretes {iorss BAintaining that the Republic would recognize only the articlen tt fhe Agreenent itself and the official torrespondence betweon the tue deve setions. Indonesian opposition to the Linggadjati grecnent tneressos fieadily after the initiclling of tho Draft Agreonont, ss a rool af bite for fighting between Dutch and Intonosian forces and of Dutch inststencs on sarap ydherence to thoir interpretations. In order to forestall selec. prea ethe, tgrecnent by the Ropublic's provisional parlianont, the ap, President Soekarno issuot a prosidcnticl docroo increasing the nontership chee body with reproscntstives sclocted fron politiecl parties mores. cegrbly Eisposed to the Agroonont. This nove aroused eonsideratic cetar: sr cns finally passod only undor tho throat of resignation by Prositeet Soegemne and Vico-Presidont Hatta, Final approval of the Lingeaujett Agree pont was givon by the KNIP on 5 March 1947 ina voto of confidenes tn tee Rosen) nee Policies fron which tho influntied Mstionalist and Tissfoond @bslon) Fartios abstainod. Tho deadlock over the inclusion of the Dutch interpretations had boon broken by a letter on 2 March 1947 fron the Chairman of the Corzii sion: roperal to Prentor Sjahrir indicating that tho othorlands Gomeneat aa rite end, te commit: the Republic to those interpretations ani tet the right of the Ropublic to nake its own intorprotations was clearly under- piped: This was accopted by Sjahrir on 16 March 1947 and signetece vero finally affixed to tho Linggadjat! Agroonent on 25 larch 1947, anda joint Ceonente comrittos was innodiately established to inplonont tho cecnolee Provisions in, tho Agreonont, 2. Renaining Issues 2+ Tho Basic Issue of Sovoroignty ‘The signing of the Lingendjati Agreenent left unsettled hany issues in Duteh-Indonesian relations. The nost inportent Gisagreerent, which con- Piteates the resolution of all other issues, is on the questing of sove- relgnty, Proninent Indonesian lecders now regard the Republic as an inde- thority in Java, Madura, and Sunatra (see Appendix A, Article 1) anounts fo recognition of sovereignty. The Dutch, on the oties hond, have enpha- sized that the basic sovereign entity envisioned for the Inifecne the “ "4r Linggadjati Agreenent is not the Republic but the Unite’ States of Indonesia, in which the Republic is but one of three component parts, The Dutch also hold that during the interin period preceding the fortation of the USI, the Netherlands will continue to be the sovereign power in the whole of the Netherlands Indies, ‘This basic dissension, together with the strong nutual suspicions built up through the past yoar of hostilities and of slow, deliccte nego- tiations, is the nost serious inpedinent to the esteblishnent of now polit- ical and’ econonie rolationships between the Dutch and the Indonesians. b. Purpose of the Amreonont This funtanontel difference in views is reflected in the Dutch and Indonesian opinions as to the gonerel nature ond purpose of tho Linggadjati igrcenent. While the Dutch regard it as « "charter of principles" upon which a new Duteh-Indonosian partnership can be built, to the Indonesians it is neroly convenient step toward tho unaltercble goal of conplete indepentenee. Indonosicn nilitary end political lecders heve repeatedly warned the people the Acreement is only a temporary measure, thet its signing has not ended the "national struggle", and thet, if no longer necessery to the na~ tion, it will be abandoned, Withdrawal of Troops No progress has been mde toward inplenenting Article XVI of the Agreenent (see Appendix £), vhich provides for a reduction of the armed forces of both parties directly after the conclusion of the Agreement. In keeping with their misgivings abcut Indonesian intentions, the i y power in the Indies until there cre effective guarantees that the now rule of law will be observed by the In: 3. fis a result, the Dutch have becn reluctant te implenont sirticle ‘The Dutch claim they are obscrving this Article by initiating neces- sary noosures proparctory to reductions in their troop strength. Tne Indo- nesians want innecicte troop reductions without any dilatory proliminaries end have scught to hasten reduction by suggesting that the rate of restora- tion of Dutch properties in Ropublican territory will be Jetermined ty the rate of Dutch troop withdrawels. Furthermore, the facts have not becn lost on the Indonesians that (a) tho Dutch undertook military actbns in Eastern Java after the Agreonent had beon signed; (b) Dutch troops, said to be re- placonents, continue to arrive; and (c) the Dutch plan to sond 60% of the 1947 draft class of 50,000 mon to thc Indics, now that overscas duty for conscripts hes becn authorized by the State Gonoral. For their part, Indo- nesian irregular groups have announced that they will not disband until the end of the “revolutionry period", F:vw” Rostoration of Proportics in {ticle XIV of tho Agrecmont, tho Ropublic recognizes the cl ins Gf non-Indonosicns to the restoration of thoir rights cme ene restitution of iRET Bootes The return to Indonesia of ron-Intonesian busiscosete and pla tae eepctners, However, wll bo complicated ty economia policies mie down by ire Republic, designed to provent ony return to colonisl mance stic exploi- tetlon of nativo resourcos and labor, Tho Republic will contawe te hola guorship of Stato properties such as reilvys, public works, ond utilitica, and of such property as was owned by Jepan in Roputl ican territory. Cortain Guirprises, to be determined as "vital" by a special Republic conmittoo, yi be expropriated oné their former owncrs will be iniewiey Republic ister of Beonomle £ffairs Gani hes coclared that the Republic cannot grant permission to foreign owners to resume oporations bofere sh agreomont is Tenched botwoon the Owner and the Republic concerning such baste matters as Woetor worker soourity, induction of Indonesian porsomnel ints the nanage~ oe Oe tte ontorprise, lend rent, taxtion, import ant oxpore quotes, cnd fuction end distribution policies, pr hore has been sono rocont evidenee thet the single labor orgeniza~ son of the Ropublic, SOBSI, is acting as locel custotias son foreign plants, {done Period of delicate nogotictions with a powertal tet inexperienced dator union is in prospect bofore Dutch cconomie interests may resume thoir activities, and even thon thoy will bo resuncd undo greatly restricted cir- cunstances as compared with thoir pro-war froodoms Cortain foreign companies havo alroady reacted to this policy by demanding assurances that all installations asd facilities, cs well as thoir operations and omployees, will bo undor tho company's direct and Gyelustve control in ordor to facilitate inprovenonte iw the conditions of the workers as operations aro resumed, Foroign Trade dig Problems of reconciling the foreign trade objectives of tho Ro- public with tho trade end shipping controls of the Dutch cies @erive fron fhe conflicts in Dutch and Indonosian views on the Republic's sovercignty droite interim poriod. Tho Dutch trade regulations ce os Jonucry 1947 end their cnforconent, notably in the caso of the US veseel "Martin Behrman", Thrsugefaguod to provont the Republic's engeging in forcige tends except, Shrough Dutch official channels. The decrece sere justifioe ty the Dutch SEuke Grounds that tho products sold in trade by the Republic were ob- tained illicitly trom Buropean estates and nore sone indiscrininately at eereane2oe their volue in the world market, thereby progressively inpov- Tepap ine the Indies. The Republic's view was that such tomas was not i1- Jegal under its rights as a de facto suthority to sell the products of estates under its control, particularly when the ont of meintenance of on tf= the estates and labor since the end of the Japanese occupation had been borne by the Republic. The Republic, by its contention that the formation of regulations governing exports, inports, cnd financial matters in Jeva, lin dura, and Sunctre are mtters for the Republic to decide, has impeded’ the operations of the Joint Economie Cormitteo charge with inplenenting the economic provisions of the Linggadjati fgree-ent, This, in turn, has shaken the feith of Dutch business interests in the efficacy of negotiations with the Republic and has strengthoned tho position of thoso who névocate the use of force to bring about inplenontation of the Lingnajati Agreement. ie Formation of the UST In the political sphere, Dutch cid Indonesian views differ on the organization of the croas of tho Indics which lic outside the Ropublic. The Duteh desire that the USI ombrace ct least three distinct states, moro gr Jess belancod against cach other, to provent the Republic's cchioving © dominent position vis-a-vis tho others, Tho second conponont part of the United States of Indonesia, tho state of Ecst Indonesia, was csteblished at Don Pasar, Ralf, on 24 Doconbor B26, following e sories of conferences, at Nalino in’ July 1946 and at Pang kel Pinang in October 1946, between the Dutch end ropresontatives of the outlying areas, Tho future status of Bornco is still indefinite, Pro- Republican sentinent, ospocially in South Borneo, has provonted the forna- ion of a unitary state in Bornoo, Tho Dutch neanwhile have sponsored the fornation of a separate state of West Bornoo, and are now organizing other regines in Bast and Contral Bornco, The absence of Republic participetion in those confercnees has led pre Republic to charge tho Dutch with violating krticlo II of the Linegadjott igrocnont, which provides for Dutch-Ropublic cooperation in the formtionof rhe USI. | Tho Ropublic further has charged thet tho conferences vere not truly fopresentative since various pro-Republic groups in tho outer islands wero now {neluded, Tho latter groups have announced thoir support of the Republic In amorous assemblies and broadeast resolutions, Furthernore, sovoral statcnonts by Republic officials oppose Dutch Plans to the extent of announcing the Ropublic's intention of bringing the catiro archipelago undor the Ropublic's control. Yieo-Prosidont Hatta hes also declared that tho crontion of the USI is "the first stop toward the uity of tho entire Indonosicn archipclago under the Ropublic repino." &+ fron of the Ropublic Percllel with Ropublic cfforts to draw portions of the outlying islands into its sphore of influonce, thore have boon attenpts to devise ie Republic and to reduce its arcs.” On 25 March 1947, Duteh Oversexe Minister Jonlman stated that Articles IIT and IV of the Linggadjati “ 7i Agreenent "give an opportunity possibly to split the present Republic in such parts as would desire independence -- the oprortunity has been held open for Madura, for Sumatra (integrally or in subdivisions), for the Sunda lands, and whichever other population-groups one might consider, to obtain a position of their own in the federation (USI) — likewise the possibility exists thet an area not now part of the Republic's territory may choose for the Republic.” The leaders of the Pesoendan Party, claiming to represent about 12,- 000,000 Sundanese in West Java, proclaimed’ the independence of a Pasoondan State from the Republic on 4 May 1947, a development which must be viowed in the light of Jonkman's remarks as a part of the Dutch policy aimod at limit- ing the Republic's territory. The Dutch my also attempt to draw Madura and portions of Sumatra avay from Republican control, capitalizing on Sumatran antipathy to any rulo of Sumatra by Javanese. Continual efforts by the Ro- public to penotrate and strengthen Nationalist and pro-Ropublican movements in the outlying islands of the "talino Area, togethor with Dutch counter- efforts to Limit the Republic's area of authority and provent its acquiring a dominant influenco in the Indies, will also constitute a scrious obstacle to tho formation of the USI by tho planned date of 1 January 1949. bh. Foreign Rolations Dutch~Indonesian differences extend also to tho ficld of foreign ro- lations. Tho Dutch view is that, since the Nothorlands will continuo as tho sovereign power in tho Indics until the formation of the USI, tho Indonesians will not be entitled to conduct independent diplomatic relations until after the USI has cone into being. In tho ifitorim poriod, the Dutch plan to cdnit Indonesians to tho foreign service of the Realm and to conduct foreign rela- tions, as thoy rolate to the Indios, through a nowly-cstablishcd Far Eastern Office of the Foreign Ministry in Batavia. Tho Indonesians, however, rogerd these plens as morely Dutch intor- protations of tho Linggadjati Agrecacnt which, as such, cannot be considcrod ‘8 binding upon the Republic, The Republic regards continued Dutch cfforts to retain control of Indonesian represontation abroad as cn attempt to prove to the world that Indonosia is still a part of tho Kingdom of tho Nothorlands; ceordingly, the Republic has proccoded unilateraily to work out tho prolini- nary stops for establishing diplomatic rolations with Auctralic, India, tho Arab League, Egypt, Siem, and Malaya, While tho Ropublie lacks the moans ac- tually to transport its ropresontctives abroad, its insistence upon its right to handlo its own diplomatic affairs prior to the formation of tho USI, and the sympathotic attitude of tho Arab Leaguo, Australia, and India to this con- tention, will lond an international aspoct to Dutch-Indonesian diffcroncoa on this quostion, A. Arbitration Articlo XVII of the Linggadjati Agroonont states that the Dutch and the Republic delegations "shall settlo by arbitration any dispute which night t -9+fe arisc from this Lgrconent and which cannot be solved by joint consultation in conference betweon those delegations"; yet there is @isagrconent between the Dutch and Indonesians oven upon the nattor of settling their disagrccrents, The Netherlands interpretation of frticle XVII holds that it applica only to to relations ketweon the Republic and the Kctherlands but not to matters per— taining to the USI as a whole. The text of the Agroenent scens clearly to indicate, however, that disputes concerning the USI should be included in ar- bitration sottlonents, since tho USI is an intogral part of the Linggadjati Agreenent, Conclusions In summary, the Dutch desire to achieve, through the Linggadjati figreonent, (a) the maintenance of Nethorlanés sovercignty throughout the Indies until the fornation of the USI; (b) the integration of the Repub- lic into e fedoral USI as one of its conponent parts; and (¢) the rosto- ration of economic rights and control of foreign relations. In opposition to these aims, the Indonesian Republic seeks (a) the free exerciso of all the prorogetives of a soveroign state by virtue of the de facto recognition of its authority in Jeve, Madura, cnd Sunatre, includ~ ing the control of ccononic activities within its territory and the conduct of its on foreign rolations; and (b) the contro) of tho entire Indies ar~ chipelago through a unitary UST under Republican domination. The resolution of these divergent ains in the future deponds upon the relative bargaining positions in political, cconomic, and nilitary terns of the two adversaries. In political torns, the Ropublic so.long as the prosence of the Dutch in Java and Sunstre constitutes « nem.ce to tho Republic's exist~ ence. Moderates an? extremists in tho governnent of the Republic vigorously oppose any offort by the Duteh to heir will by forec, but split sport during negotiations, according to th te or oxtrone reactions to Dutch proposals. Indonosien nationlisn is extornally a souree of strength in its unifying force in opposition to Dutch colonialisn, but thore is, in~ red, ternally, on olonent of woakness in its antagd=iss, traditional or fos tovard the doninant Javancso on the part of other othnic groups. Such an onisns can bo used by the Dutch to further a divido-and-rule stratogy ani to convey an inprossion of weakness and disscnsion within the Ropublic. The Notherlands, however, is also politically divided over Inéics policy between consorvatives, business interosts, ond the military on tho one hand, and noderates, liberals, ond left-wing elenents on the other. The forner desire a strong policy ained ct the rapid restoration of Dutch rights in the Indics, while the latter favor nootiated settlenont and the ercation of = partnorship of the Netherlands and the Indics as the best =~ neans of preserving Dutch influence overscas. “e- 7v In international terns, the Republic is strongthoned by tho sympathy of Oricntal pooples who are cise opposed to Western control, such as Intia, Burne, and Viotnan, or who have common tics of religion, such as tho nations of the Arab League. The Republic's struggle for independence also engen- ders widespread sympathy throughout the world, while other nations desiring access to the resources of the Indies are quite willing to deal with the Re- public. The Netherlands, however, retains the monopoly on‘éiplomatic repre— sentation for the Indies and continues to be recognized by other nations as the sovereign authority over the area. In economic terms, the Republic possesses great natural wealth but lacks the technical experience to exploit it to its ow best advantage, ant is prevented from exporting commodities now on hand by stringent Dutch trade regulations ané their enforcoment by naval blockade. The Dutch, for their Fert, need access to the wealth of Java and Sumatra to acquire the foreign exchange nocessary to finance the rehabilitation of the Netherlands and the Indies. The prolongation of the prescnt stalonato will therefore result in financial and economic hardships to both sides. In military terms, the Republican forces arc loss well~oquipped and trained, but thesc disadvantages are balanced by greater case of nobilize- tion and movenent on interior lines of conmunication, Dutch forces, on the other hand, must be supplied across a distanco of nany thousands of niles, require a long period of acclimatization to tropical conditions, and possess complex equipment subject to rapid deterioration in tropical warfare. Fur- thermore, the cost of maintaining over one hundred thousand troops in the Indics places a considerable strain on the cconony of the Nothorlan!s which cannot bo offset by the proceeds of a normal flow of trade until relative coononic stability 4s restored. The Dutch and Indonesian bargaining positions ere thus nearly tal- anced, although the Republic probably can afford sone dolay botter than the Netherlands, which is under inereasing economic pressure. Thia pressure is leading the Duteh to consider scrious: to roach a Aecision by uilitary means, which would result in % nrolonpo and eostly canpaim. This, in turn, would engonder inereasc’l anti-Western fooling in Asia end might load to consideration of the dispute by tho Ur ms Sceurity Council, Continued attonpts at nogotiated settlonont will also be protracted because of the rolative balance of power and tho crucial inportanee of the issues involved. Delays in negotiation, sprarently hopeless stalenates, end the growth of mutual suspicion an1 inpatience increase the possibility of arned clashes in the period of adjustment preceding the creation of the USI. The USI, itself, when and if established, will possess grave weaknesses re- sulting fron its evolution from conpronise te compromise, whose non-observ- ance night easily lead to a final break and the collapse of the whole struc- ture. Meanvhile, the lack of a settlenent continues to make it inpossitle for the rich resources of the Netherlands Indies to contribute to the estab- lishnent of economic stability throughout the world. ms 7APPENDIX A TEXT OF THE DUTCH-r1DC: PREA:BIE Tho Nothorlands Covernzont, represented by the Corrission General for the Nothorlands Indies, and the Governront of tho Remblic of Indonooia, ropresonted by tho Indonesian dologation, roved by a sincero desire to insure good rela+ tions botrcon the peoples of the Notherlands and Indonesia in now forns of voluntary cooperation which offer tho best guaruntoo for sound and strong develoznent of toth countries jn the futuro and which ake 4t possible to zivo row foundation to tho relationship botucen the tuo peoples, agree as follows and vill oubnit this agreorent at the shortest possible notice for the avproval of the respoctive Parliazents: ARTICLE T The Notherlands Governnont recognizes the Governnent of tho Republic of Indonesia as oxercising de facto authority over Java, Madura and Sunatra, The areas occupied by Allicd or Netherlands forces shall'be included gradually, through mutual cooperation, in republican territory. To this end, tho nccessary measures she11 at once be taken in order that this inclusion shall be consleted at the latest on the date nontioned in Article XII, ARTICLE IT Tho Wothorlands Governnent and the Govornnent of the Republic shall co- operate in tho rapid formation of a sovercign de-ocratic state on a federal basis to be called tho United States of Indonesia, ARTICLE IIT The United States of Indonesia shall comprise the entire territory of ‘the Netherlands Indies, with the nrovision, honever, that 4n ease the sonula- tion of any territory after duo consultation vith the other territorios, should decide by doxocratic process that they are not, or not yot, t!ling to join tho United States of Indonesia, they cun establish special relationship for such a torritory to the United States of Indonesia and to the Kingdon of tho Netherlands, ARTICLE IV Tho conponont parts of the United States of Indonesia shall be tho Ropub= lie of Indoncsia, Borneo and the Great Bact without nrejudico to the right of tho population of any territory to decide by dorocratic nrocess that its vosi- tion in tho United States of Indonesia shall bo arranged othervisc, ‘Hthout -2R- fGorogntion of tho provictons of Article III and of tho first saragrath of this article, tho United States of Indonosia nay nuke special arrangorente cone cerning the territory of its capital. ARTICLE V Tho Constitution of the United States of Indonesia shell be doternined by 2 Constituent Assenbly conposed of tho denocratically nominated recresonta tives of the Ropublic and of the othor future partnors of tho United states Sf Prdoucsia to shich tho folloving paragraoh of this article shall apply, Both parties shall consult each othor in the rothod of partieinntion in this Constituent Assonbly by the Rooublic of Indonesia, by the territories pot undor the authority of the Resublic and by the grours of tho population ce tno yineuffictontly, reprosonted with duo obsorvance of the rosponsibi lity of tho Netherlands Government and tho Goverrnent of the Republic, respoctively. ARTICLE VI Zo Bronote tho Joint intorests of the Netherlands and Indonesia, tho Netherlands Governnont and tho Governnont of tho Republic of Indonosia shall Gooverate in the ostablishnent of a Nethorlande=Indonesian Union by chich the Kingdon of tho Netherlands, conprising tho Nethorlands, the Notherlando Indies, Surinan and Curacao, shall be converted into sald union consisting gn tho one hand of tho Kingdon of the letherlands, comprising the Nethor= jards, Surinam and Curacao, and on the othor hand’ the United States of Indonesia, The foregoing paragraph does not cxelude the possibility of a furthor arrangenent of the relations betveen tho Netherlands, Surinam and Curacao. ARTICLE VII (4) Tho Nothorlands-Indonesian Union shall have 4ts oun organs to pro- Rote tho Joint interests of the Kingdon of tho lothorlands and the Unites States of’ Indonesia, (B) Thoso organs shall bs forzed by the Governnents of tho Kingdon of fhe llothorlands and the United Stats of Indonesia and, if necossury, by the Parlianents of those countries, (C) The joint interests shall bo considered to be cooperction on foreign relations, defense and, as far as necessary, finance, as vell ao subjects of an ceononie or cultural nature, ARTICLE VIIL Tho King (Queen) of the Netherlands shall be at the head of the Nether- lends~Indonosian Union, Deerees and resolutions concerning the joint interests shall be issued by the organs of the union in the King's (Gueen'a) nene -b- ——~ In order to promote the interests of tho United States of Indonesia in the Netherlands end of the Kingdom of the Netherlands in Indonesia, a High Commissioner shall be eppointed by the respective Governnents, ARTICLE IX ARTICLE X Statutes of the Netherlands-Indonesian Union shell, furthermore, contain provisions regarding: (A) Safeguarding of the rights of both parties toward one another and guarantees for the fulfillment of their mutual obligations; (B) Mutual exercise of civic rights by Netherlands and Indonesian citizens; (C) Regula tions containing provisions in case no agreement can be reached by the orgens of the union; (D) Rogulation of the manner and conditions of the assistance to be given by tho sorvices of the Kingdom of the Netherlands to the United States of Indonesie as long es the services of the letter are not, or ere insuffi- ciently, orgenized, and (B) Safeguarding in both parts of the union of the fundamental human rights and liberties referred to in the Charter of the United Nations' orgenization, ARTICLE XT (A) The statutes of the Netherlands-Indonesien Union shall be drafted by & conference of representatives of the Kingdom of the Netherlands end the future United States of Indonesia. (8) The statutes shall come into offect efter approval by the respective parlicnonts. ARTICLE XI Tho Nothorlands Government end the Government of the Republic of Indo= nesia shall endeavor to establish the United States of Indonesia and the Netherlands-Indonesian Union before Jan. 1, 1949, ARTICLE XTIL ‘The Netherlands Government shall forthwith take the necessery steps in order to obtain the admission of the United States of Indonesia as a monbor of the United Notions! orgenizetion immedistely after the formation of the ae f®Bee ere een ie PELL Ohots tudonsstetrscem ter ne oe of or eRenrIndonesians to the restoration of their rights aad the restitution cron AE goods as far as they are oxercised or to be found in the territory Tee erate ets tolouthori tyre gi eictwe) seminar ce / be set up to effect this restoration and restitution, ARTICLE xV inorder to reform the Governnont of the Indies in such a way that its STR Teor ape tesa yo mata comtornlae (clecslyfastarsaitie) eye recog- nition of the Republic of Indonesia end to its projected constitutional States nar, the Netherlands Governnont, pending the realisenion ee the United Stetes of Indonesia and of the Netheriands-Indonseiee Union, shell forth TEER initiate the necessary local mecsures to adjust the constitutional und ARTICLE XVI Directly after the conclusion of this egreenent, both parties shall Proceed to reduce their armed forces, They will consult together concerning fhe joxtent ond rate of this reduction end their cooperation se nilitery matters, ARTICLE XVIT (4) For the cooperction between the Netherlands Government and the Governnont of the Republic contenplated in this egreoment, on organization gral be culled into existence consisting of delegutions to ve eppointed by each of the two Governnents with a joint secretariat, (2) The Hetherlands Governnent and the Governnent of the Republic of {Rdonesia shall settle by arbitration any dispute which night erise from feu’ Bereenent end which cannot be solved by joint consultation in con- Rarence between those delegations, In that ease @ cheinmn ss ‘nother The delete wath & deciding vote shall be appointed by egreement between 21 spiteh Serooment eennot'be recched, by the President ational Court of Justice, ARTICLE XVIII This agreement shall be dram up in the Netherlands und Indonesian Nengueges, Both texts shall have equal euthority. 718 ~ sane