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.- ) INTERNATIOf\ BANK FOR RECONSTRUCTION AN OFFICE MEMORANDUM TO: Mro Robert Lo Garner DA TE: August 13, 1948 FROM: Raoul G.M. de Sercey ~ ­ SUBJECT: Indonesia File Mr. E. R. Black, Executive Director, UoS.A., requests that this report with attachments' be handed to Mr. Charles Reid Chief, Southeast Asian Division, State Department, for perusalo When you return the file, please ,. OFFICE SERVICCS 17 - 10 INTERNATIONAL BANK l • RECONSTRUCTION AND DEVE1......,PMENT INTERNATIONAL BANK FOR RECONSTRUCT , _. AND DEVELOPMENT UTING SLIP Dai•----- Roo• No 2 3 'FOR• Action InitialinR AooroTal Preoarine Reply Co11111ent PreTious Papers Filin2 Notin,r and Returni11 Full Report Recommendation I- Information Siarnature 1-- 1,r1c1 IIIWICII llot: INTERNATIONAL BANK FO R RECO NSTRUCT!, AND DEVELOPMENT ROUTI NG SLIP Date 8-10-48 TO- Name Room No. I Mr . de Sercey 420 2 3 q. FOR- Action Initialing Approval Preparing Repl y Comment Previous Papers Filin,z: Noti ng a nd Re t urnin1 - Full Repo rt Recommendation -..___/ Information Signature REMARKS Attached is the original of the report you lent me. I have given Mr . Gould the copy. Many thanks. L. Rist orrlC[ SC RYIC[S 13- 12 \ Ji / I -- ---- July 20th, 1948 Mr. W. A. B. Iliff, Director Loan Department International Bank for Reoomtruotion and Development Washington, D.C. Dear Mr. Iliff: Sketch of the present siillation in t he Netherlands East Indieso Io General In reading these notes one should kee:r in mind the following .£a.C~a---whioh ----- appear to have had considerable bearing on the present situation in this region; a) The instinctive .American sympa.tb.Y towa;rds any movement fof independence. b) The failure of Australia atter t~ war to secure the leadership and markets of Southeast Asia and her hopes that a fading in Dutch power { will open for her at least . his important market. / o) The Ja:i:anese anti-white_propagama which has provided Southeast Asia with many of its slogans. d) The Communist propaganda whioh thriVres on social and political trouble. e) The large anti-foreign movement now in progress in Southeast Asia as a result of the m world wars which have greatly weakened the political and economic influence of tri hite race in this pa.rt of' the world. II. Poli ti. oal Situation A. Sources of In.for tion • .. -. __, 1. A map attadhed hereto wUl s ow the areas visited which include not 1- only Dutch controlled te ritories, out ala a call to Jokiakarta. the seat of the 1 Republican Govemme~t.-~ I 2. In addition to ' conversations with Dutch oivil and military officials, I \ as well as with the President and memJers of the Republican cabinet, contacts •re established with Dutch and f ?reign b~siness circles, the .American delegation to the Good Offices Co ·ssion, militazy observers of the Consular Commission, members ~f the foreign di.plomati.o mi~sions, etc. B. The Dutch s tantlpoin~. 1. Contacts with ~Dutch people either in Holland or in the Dutch East Ind\es, reveal e oo no-:!L derab~e andety concerning the situation in Indonesia 0 To this feeling mwt be &dde inte:r:se strain and bitterness where the Dutch popula­ tion of Indon!Hia i s ounoente._d. f - 2 - 2. The Dutch fa.el they have their backs to the wall. Their country cannot maintain its independence and present standard of living without the Dutch East Indies. Most of the Dutch now operating here have gone through four years of internment followed by a wave of terrasm. Their li.ves are constantly at stake, their properties destroyed, their actions criticized abroad. 3. They have built up this country. They have constantly adapted its economy to suit the requirements of the world. When they first came to the East / Indies it was merely to trade in spices. Now the agricultural production at in­ dustrial level; rubber, quinine, tea, etc., even rice, is derived from specie im­ ported by them from foreign lands. 4. They have either singly, or with the help of foreign capital, dev­ eloped the minera]/4-esources of the islands; oil, tin, coal, etc. s. They have equipped the country with roads, railways, harbors, p~ver stations, etc. 6. Yet they are criticized by most foreign nations and placed at U .N. level on the same basis as Indonesians whom they feel wil1[not be able to make proper use of the equipment they have built up. 7. They consider that bad the present movement not been fanned through foreign interference their 300 years of exper~eme in the Indies would have al­ lowed them to handle the Indonesian question without too much dif'.f'lculty. c. The Republican viewpoint. 1. The Indonesians stand in an easy position. Ideal igtic and socialis­ tic theories so much in vogue in the world these days are their best allies. 2o They claim that the country, .. is theirs and they should be allowed to run it the way they wish to. 3. They claim that they have been exploited by the Dutoh and that they now want to run the country for the benefit of their people. D. Short history of' the Indonesian question. 1. A brief review of the events in the Dutch East Indies since the end of World War II may help in explaining the existing situation. 2. v-J Day found the Dutch population of the archdpelago dispa~sed in civilian and military prison camps. The East Indies camps have been among the worst in tm Far East. Many Dutch have also gone through the horrors of the Siam• Burma railway. 3. The British army was entrusted with the disarmament of the Ja~nese in the Dutch East Indies and sent for the purpose two divisions; one of Indian and one of Gurka troops. 4. These troops maintained a strictly neutral attitude at the origin of the conflict which now opposes the Dutch and the Indonesians. They considered that their duty was to protect the lives of' the former and they kept them grouped within restricted areas. They left the rest of' the country to the Republicans, using Japanese troops to maintain order where and when necessary. - 3 - 5. The Dutch feel that had they been al lowed to bring their army over immediately, they could have stopped the rebellion which under these circumstances was given time to grow roots in the country and to assume the proportion of a na­ tionalist movement. 6. It is only one year later after tre de~rture of the British army that the Dutch were able to tackle the then much more extended Republican problem. 7. They attempted at first to settle the question through negotiations with the Republican leaders but the latter supported by their ?fohammedan corre­ ligionaries in the countr,.,surrounding the archipelago, as well as from other quarters, remained adamant. a. The countries which have recognized the Republican government are; a) de jure: the meni>ers of the Arab league and Afghanistan. b) de facto: India and Australia. c) the case of the recognition by Soviet Russia is not clear yet. d) The u.s.A. and U.K. have recognized the Republic within the frame of the Linggajati agreement. As the latter he.s not beem implemented. this recognition is not yet now.ally effective. 9. Things worsened until the Dutch felt they could only restore not only order, but also the economic life of the country by what is known as "the police action." 10. The remaining sequence of events is better known and consists in the bringing up of the Indonesian case to the U.N. as if it were an international con­ flict instead of a Netherlands F..ast Indies domestic problem. This was followed by the appointment of a Consular Co:rmnission helped by military ~bservers and later by the sending of a Cormnis sion of Good Offices to bring about '5M truce and to act as an arbitrator between the two parties. 11. The police action was halted under foreign pressure when it was on the point of achieving 1 ts aim. The Dutch were only 60 kilometers from the Re­ publican capital. UN intervention brought the Indonesian situation back to where it stood before and turned it into an international problem. 12. Notonly have the negotiations carried through the Good Offices Com­ mission made no progress whatever, but they have now reached a complete deadlock. 13. Accusations of bad faith are hurled at each other by both sides, / whilst among the mediators and spectators, few can be considered neutral. Par­ tiality derived from national or private interests, sympathies built up on ide• lo• gies are everywhere in evidence. 14. Whilst the negotiations at international level are dragging out, the Dutch are proceeding through direct dealings with the natives in an attempt to or­ ganize the country according to their conception of the future federation of Indo­ nesia. A map showing the present political division of the Island is attached hereto. - 4 - 15. With their remarkable patience they have gone from conference to conference with Indonesian so-called leaders until they succeeded lately in creating an increased number of States. By doing so, they are more or less isolating the Republic and reducing its original territory which i:noluded the Islands of Java, Sumatra and Madura to the area limited by the demarkation lines established by the truce commission. 16. Their most recent attempt was still in progress when this report was written and is known as the "Bandoeng Conference" at which gathered all the Indonesian non-Republican leaders and a few Dutch experts.

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