CONFIDENTIAL
PLA
2
Cab
A MAXIMUM OF £150M.) MAY BE PUT INTO BRITISH GOVERNMENT BONDS DENOMINATED IN HONG KONG DOLLARS. THE GOVERNOR SAYS THAT THE FIRST PUBLIC REACTION IN HONG KONG WAS GENERALLY QUITE FAVOURABLE AND THAT THIS WILL NO DOUBT RELIEVE UNOFFICIAL MEMBERS' MINDS TO SOME EXTENT. SAUNDERS OF THE HONG KONG AND SHANGHAI BANK SAID THE NEW ARRANGEMENT WAS QUOTE A GREAT ADVANTAGE TO HONG KONG AS A MEMBER OF THE STERLING AREA UNQUOTE AND THAT IT WOULD QUOTE GREATLY STRENGTHEN THE POSITION OF THE HONG KONG DOLLAR AS A CURRENCY IN ITS OWN RIGHT UNQUOTE. MOST BRITISH NEWSPAPERS REPORT THE NEW ARRANGMENTS BUT NOT PROMINENTLY, AND SOME OF THEM RAISE THE QUESTION WHETHER OTHER STERLING AREA COUNTRIES WILL WISH TO TAKE LEAF OUT OF HONG KONG'S BOOK.
COMMONWEALTH PRIME MINISTERS' MEETING.
6. HIGH COMMISSIONER KAMPALA INFORMED SMITH OF OUR DIFFICULTIES OVER MEETING BEGINNING 15 OCTOBER, OF PRIME MINISTER'S PREFERENCE FOR 7 OCTOBER AND OF OUR INSTRUCTIONS TO POSTS TO SO INFORM COMMONWEALTH GOVERNMENTS AND SEEK THEIR AGREEMENT TO EARLIER DATE. SMITH APOLOGISED FOR NOT HAVING FULLY CONSULTED HOST GOVERNMENT, POINTED OUT DIFFICULTIES FOR BANDA AND OBOTE OF 7 OCTOBER, SUGGESTED AWAITING REACTION OF COMMONWEALTH GOVERNMENTS TO HIS AND OUR APPROACHES BEFORE SENDING FURTHER MESSAGE AND ASKED WHETHER WEEK BEGINNING 21 OCTOBER WOULD BE ACCEPTABLE TO BRITAIN. REPLY SENT ON BEHALF OF PRIME MINISTER STATED DIFFICULTIES OF 21 OCTOBER (SUBSTANTIALLY SAME AS FOR 15 OCTOBER), PRESSED FOR 7 OCTOBER BUT, IF THIS NOT ACCEPTABLE TO COMMONWEALTH COLLEAGUES, SUGGESTED BRINGING FORWARD TO 23 SEPTEMBER (ALTHOUGH THIS WOULD CLASH WITH FINANCE MINISTERS' MEETING) AND AGREED WE SHOULD AWAIT REPLIES TO RESPECTIVE APPROACHES. REPLY ALSO OFFERED EDINBURGH AS ALTERNATIVE TO LONDON.
7R SMITH HAS NOW REPLIED EXPLAINING ADMINISTRATIVE DIFFICULTIES OF BOTH 23 SEPTEMBER AND EDINBURGH. HE EXPECTS TO RETURN TO LONDON TOMORROW, WEDNESDAY, WHEN WE SHALL DISCUSS FURTHER WITH HIM. MEANWHILE OF 7 SUBSTANTIVE REPLIES RECEIVED TO OUR APPROACH NONE WOULD FIND 7 OCTOBER IMPOSSIBLE.
CROSEC
DEPARTMENTAL DISTRIBUTION
C.O. E.A,D,
C.P.P.D.
W.G.A.D.
NEWS DEPT.
H.K. DEPT.
CONFIDENTIAL