On September 12th 1940, a numerous Japanese delegation of 24 men, headed by their Minister of Trade and Industry, Ichizo Kobayashi, arrived in Batavia to "renegotiate" political and economic relations between Japan and the Dutch East Indies. Among the visitors were also six high-ranking military officers, one of them was Rear-Admiral Tadashi Maeda, who would later became a commander of the Imperial Japanese Navy forces in the occupied Dutch East Indies. The Dutch Embassy in Japan did not actively co-operate in these negotiations, although the Dutch Ambassador in Tokyo, J.C. Pabst, received the first list of Japanese economic demands in June 1940. It was later, however, decided that all further negotiations were to be conducted via Dutch colonial administration in Batavia, and naturally with the help of the Japanese Consulate General in Batavia, led by Consul-Generals Matatoshi Saito (before 1941) and later by Yutaka Ishizawa.
Their first demand was an increase of oil exports to Japan from the existing 570,000 tons in 1939 to 3,750,000 tons, about 50% of total Dutch East Indies production. The Dutch answer was that existing obligations would only permit an increase to about 1,800,000 tons. Kobayashi initially accepted this proposal but was soon recalled to Japan on October 20th, 1940.
In November a new head of the Japanese delegation was appointed, Kenkitshi Yoshizawa, a member of the Japanese Upper House and former Minister of Foreign Affairs, who arrived late in December with a new set of demands. The first was purely political and thus probably deliberately unacceptable:
- adherence to Japan's vision and policy in South East Asia, while other demands from the list were:
- unrestricted rights to explore and exploit minerals all over the Dutch Eeast Indies
- unrestricted fishing and shipping rights in all the waters of the Dutch East Indies
- unrestricted rights to start all sorts of commercial enterprises
- Japan's exports to the DEI must be increased to more than 80% of all imports of the Dutch East Indies
- the existing demand for oil was slightly increased to 3,800,000 tons
- airline and telegraph connections between Japan and the Dutch East Indies He was awaited by a strong Dutch delegation, led by Hubertus Johannes van Mook, then promoted to deputy minister of Economic Affairs, K.L.J. Enthoven, director of Justice, and Prof. Hoessein Djajadiningrat, director of Education and Religions. The negotiations, however, dragged on and remained unsuccessful when Yoshizawa suddenly announced his plan to depart and asked to be received by the Dutch Governor-General Jonkheer A.W.L. Tjarda van Starkenborgh Stachouwer on June 17th, 1941. The latter was worried and even contemplated the possibility that he might receive a declaration of war but to his relief Yoshizawa only handed him a draft declaration of both countries stating that the negotiations had ended without an agreement.
On July 21st 1941, the French Vichy Government accepted Japanese demands for air and naval bases in Southern French Indochina. Four days later President Franklin D. Roosevelt announced the embargo, including a freeze of all bank transfers. Great Britain followed the USA with the same measures the next day and on July 26th, the Dutch government in exile in London joined the embargo. Van Starkenborgh in Batavia had suggested to his government in London to ask for guarantees from the USA and Great Britain in case this embargo would lead to war with Japan but his suggestion came too late. On Monday, July 28th, 1941, the authorities in Batavia published a set of measures that resulted in fact in a stop of all trade with and payments to Japan. Two Japanese tankers, that had just finished loading at Tarakan Island were allowed to leave but a third one that was entering the port was sent away.
On the military level the first British, Australian and Dutch (somewhat secret and informal because there were no formal obligations) consultations started in November 1940 in Singapore to discuss and make up plans in case of a sudden Japanese attack. There had been previous official military contacts between them but these concerned the co-ordination of defences against German raiders between countries that were at war with Germany. A second meeting took place in Batavia and was followed by a third in Singapore in February 1941, in which US military personnel were present as "observers", however in the next conference in April they became full participants. Between July and November 1941 these consultations resulted in co-ordinated reconnaissance flights of American, British and Dutch aircraft on Japanese movements in the South China Sea, the exchange of military codes and maps and appointments of liaison officers. Unfortunately, while returning from one of such meetings with the Allied commanders in Singapore, Lieutenant-General Gerardus J. Berenschot's plane crashed in one of the native suburbs of Batavia and all passengers plus the crew died instantly.
Tensions grew and more and more Japanese citizens began to leave the Dutch East Indies. The Dutch government in exile came to the conclusion that in case of a Japanese attack on American and/or British possessions in that area it would be very improbable that it should stop at the borders of the Dutch East Indies. On November 4th 1941, they took the decision to declare war on Japan if this country would start attacking British or American territories in the Pacific and Southeast Asia. They also authorized the Governor-General in Batavia to do the same, that eventually happened on December 8th 1941. Two days later, on December 10th 1941, the Dutch Ambassador in Tokyo, a 67-year-old retired Brigadier General J.C. Pabst, officially handed over the Dutch Declaration of War to the Empire of Japan to the assistant of Foreign Minister (the Minister himself was apparently too busy), thus ending the pre-war Dutch-Japanese diplomatic relations.