It is 3 AM, following the events of Chapter 12 (beyond this, the time is unspecified). Paul Berlin imagines telling his friends and family the story of how Cacciato walked to Paris. He imagines the objections his friends will have—don’t you need passports to enter a foreign country? don’t you need money? etc. Cacciato tries to think of answers to these objections—ways that Cacciato could, in fact, make it to Paris.
In these “observation post” chapters, it seems that O’Brien—through the voice of Berlin—is thinking through all the criticisms of plausibility that he could reasonably make of the novel. It becomes more and more likely that Berlin is telling himself the story we’re reading, working out the plot holes (or defiantly refusing to work them out) as he moves along.