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3. IN THESE CIRCUMSTANCES MINISTERS CONSIDER THAT WE SHOULD SE
TO INITIATE SECRET DISCUSSIONS WITH THE CHINESE, SO AS TO MAKE
THE MAXIMUM USE OF MSUEN (WHILE VE STILL HOLD HIM AND CAN THUS
REPRESENT HIS PREMATURE RELEASE AS A GESTURE OF GOODWILL ON OUR
•PART), AND FOR HUMANITARIAN REASONS, THEY FURTHER CONSIDER THAT THE APPROACH SHOULD BE MADE QUICKLY: AND THAT WE SHOULD FROM THE CUTSET BE READY TO OFFER TO INCLUDE LO IN THE EXCHANGE (FOR REASONS ADVANCED IN PARAGRAPH 6 OF PEKING TELEGRAM NO. 765).
4. WE THEREFORE HOPE THAT YOU WOULD SEE NO OBJECTION TO PUTTING
FORWARD AS SOON AS POSSIBLE THROUGH THE CATER CHANNEL A PROPOSI-
TION ON THE FOLLOWING LINES:-
(1) CATER WOULD SAY THAT 10 THE IMPROVED ATMOSPHERE THAT HAS
FOLLOWED THE RESUMPTION OF THE GRANT OF SOME EXIT VISAS TO OUR
MISSION IT OUGHT TO BE POSSIBLE TO SETTLE THE QUESTION OF GREY
MATCH REMAINS AN IRRITANT IN OUR RELATIONS.
(11) A POSSIBLE SOLUTION, PROVIDED IT COULD BE ARRANGED QUICKLY TO TAKE ADVANTAGE OF THE APPARENT READINESS OF THE CHINESE LEADERS
TO MAKE SOME SMALL PROGRESS IN OUR AFFAIRS (SPEED SHOULD BE EMPHASISED IN VIEW OF THE SLOWNESS OF THIS CHANNEL UP TO NOW), WOULD
DE THE EXCHANGE OF GREY FOR HSUEH AND, POSSIBLY, LO ALSO. (111) CATER WOULD ADD THAT HE THINKS HE COULD PERSUADE THE GOVERNOR
TO AGREE TO RELEASE OF HSUEH AND EVEN LO QUICKLY: BUT IT WOULD DE
ESSENTIAL, IF HE IS TO STAND A CHANCE OF GETTING THE GOVERNOR'S AGREEMENT, THAT HE SHOULD RECEIVE SOME ASSURANCE ABOUT GREY'S RELEASE.
5. IF, AFTER SAY FOUR WEEKS, THE CHINESE HAVE NOT REACTED THROUGH THE COVERT CHANNEL, IT WOULD BE OPEN TO US TO PUT A SIMILAR PROPOSAL THROUGH THE MISSION IN PEKING (C.F. PARAGRAPH 4 OF PEKING TELEGRAM NO. 765).
6. WE SHOULD BE GRATEFUL FOR YOUR VIEWS AS SOON AS POSSIBLE.
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