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CYPHER/CAT A

PRIORITY HONG KONG

TELEGRAM NUMBER 2051

SECRET

SECRET

RLCLIVED IN

CUIVES No. 63 COMMONWEALTH OFFICE

860

TOP COP

R

- 3 OCT 1968 3 OCTOBER 1968

нивор

ADDRESSED CO TELEGRAM NO. 2051 DE 3ÅD OCTOBER REPEATED PEKING.

85

PEKING TELEGRAM NO. 906 : GREY.

WHAT HAS BEEN SAID OF HSUER IS THAT HE QUOTE IS NOT THE PRICE

FOR GREY UNQUOTE AND THAT IT WOULD BE CONSIDERED PREFERABLE TO

RELEASE GREY FOR NOTHING RATHER THAN RISK EMBARRASSMENT WITH LOCAL

COMMUNIST SUPPORTERS BY AGREEING TO SUCH A BARGAIN. THIS RINGS

TRUE, AND THE CHINESE DIFFICULTY IS CLEARLY NO LESS IF HSUEH WERE

RELEASED UNILATERALLY IN THE HOPE OF GREY'S RELEASE SHORTLY

THEREAFTER: THIS WOULD BE TANTAMOUNT TO THE SAME BARGAIN AND THE

EMBARRASSMENT FOR THE CHINESE WOULD BE EQUALLY OR NEARLY AS GREAT.

ON THIS BASIS, ONE HALF OF THE ARGUMENT IN PARAGRAPH 3 OF PEKING

TELEGRAM UNDER REFERENCE FALLS TO THE GROUND.

2. IT IS NOT CREDIBLE TO ME THAT HSUEH'S RELEASE UNILATERALLY

WOULD PUT SO MUCH PRESSURE ON THE CHINESE AS TO OVERCOME THEIR

DIFFICULTY WITH THEIR LOCAL SUPPORTERS AND CAUSE THEM TO RELEASE

GREY IN SPITE OF IT. EVEN IF THIS REMAINING ARGUMENT WERE TO BE

THOUGHT JUST POSSIBLY VALID, IT WOULD STILL BE RASH TO ACT ON

THIS ASSUMPTION SINCE THE EFFECTS OF PUTTING THE CHINESE INTO SO

DIFFICULT A POSITION MIGHT WELL ADVERSELY PREJUDICE GREY'S

CHANCES.

3. THE ADVICE WE WERE GIVEN WAS NOT TO BARGAIN WITH HSUEH, WHICH

MUST INCLUDE NOT IMPLYING AN ATTEMPT TO BARGAIN WITH HIM BY RELEASING

HIM UNILATERALLY. I CANNOT SEE HOW WE CAN JUSTIFY NOT FOLLOWING

THE BEST ADVICE WE HAVE EMANATING FROM THE OTHER SIDE SO LONG AS

THE BALANCE OF PROBABILITY IS THAT IT IS REASONABLY AUTHENTIC.

CIT IS TO BE REMARKED INCIDENTALLY, THAT IF WE DO ACT WITHOUT

SOLID REASON AGAINST THIS ADVICE, THE CHANNEL WILL CERTAINLY BE

CLOSED TO US THEREAFTER).

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857

I REMAIN-

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