The Dutch Agenda Prevails (December 1946 – December 1948)
If the Truman Administration believed that that the Linggadjati Agreement would lead to a swift settlement between The Netherlands and the Republic, thus obviating close American involvement in the dispute, its optimism was misplaced. As the Dutch implemented their plans for the future of the Netherlands East Indies (NEI), relations with the nationalists worsened and their imposition of a trade embargo on the Republic challenged US hopes of the NEI's speedy reintegration into the world economy. With the situation deteriorating, the US was forced to take a more active role in the search for a solution to the dispute. Washington's friendship with The Hague was tested as, twice, it sought to prevent the use of military measures against the Republic. The Administration was also confronted by the need to reconcile its pro-Dutch stance with the policies of regional powers, like Australia, which supported Indonesian independence. As Washington's specific interest in the NEI became increasingly subsumed in its general concern about the advance of communism in Asia, the State Department continued to encourage bilateral negotiations between the Dutch and the Republic as the best way to resolve the issue. However, by December 1948, the Americans had failed to restrain the Dutch in their quest to eliminate the Republic and the Indonesian dispute had become an international embarrassment for the US.
The closeness of Washington's relationship with The Hague led the Administration to ignore signs of Dutch hostility towards the Republic of Indonesia. During 1946, the Netherlands Government had begun to develop a parallel strategy for the NEI which relied on organising the