The nationalists of the Republic of Indonesia controlled the majority of the most populous islands of Java, Sumatra and Madura, while the Netherlands wanted to establish a federal republic of the United States of Indonesia on the remaining islands with the help of collaborators, which in turn was to remain confederately linked to the Dutch Kingdom (consisting of the Netherlands, Suriname/Guayana and the Antilles).

[6] Those of the Catholic People's Party (KVP) objected to the symbolic role and non-binding nature of the Dutch-Indonesian Union to be established.

[7] Romme envisioned a 'transformation' of the kingdom towards a royal union as a sovereign 'super state', led by the King, serving the higher-level common interests of its constituent parts.

[7][5] The KVP's support of the union went as far as making it one of the party's commitments during the proposed transfer of sovereignty to Indonesia for the 1948 Dutch general election.

[6][10] After the Netherlands had signed a truce with the Republic of Indonesia, the Netherlands-Indonesia Union was established on 1 January 1949 and the transfer of sovereignty took place on 27 December 1949.

The Dutch school system had only educated a very small, European-educated elite; of a population of well over 70 million at the time, just 591 had a university degree.

However, after the collapse of the Indonesian federation, the Netherlands was not prepared to hand over West New Guinea, which had initially been excluded from the Hague Agreement of 1949 (to be settled within a year), to the Indonesian unitary state and only offered to place West New Guinea under the jurisdiction of the Union, which would have effectively meant the continuation of Dutch rule.

As agreed, a year after the signing of the Hague Agreement, on March 24, 1950, the Ministerial Conference of the Indonesian-Dutch Union was held in Jakarta.

Attended by Dutch ministers who flew from the Netherlands, the meeting was intended to celebrate the continued cordial bond of Dutch-Indonesian relations and to discuss the results of the Round Table Conference.

Until February 1956, negotiations on this issue and on an amendment to the Union Treaty continued, but were unsuccessful in view of the unresolved dispute over West New Guinea.

[22] The Indonesian parliament then formally proclaimed the end of the Union and the expiry of all bilateral agreements with the Netherlands on 15 February 1956 by issuing an act titled UU No.

[23][24] In the Netherlands, the General Secretariat was dissolved in 1956 and the Union was removed from the constitution,[24] and with it, the financial and economic parts of the Hague Agreement.