SECRET
) PARAS. 10 AND 11. IT WILL CERTAINLY BE POINTED OUT THAT HONG
KONG WAS, WITHOUT DOUBT, THE AREA WORST AFFECTED OF ALL BY IEVALUATION: PARTLY BECAUSE, AS A COLONY, HONG KONG WAS TIED TO
STERLINC. THE PRESENT TEMPORARY AND PARTIAL PROTECTION, IT WILL
BE
PE ARGUED, IS NO ANSWER TO THIS, PARTICULARLY AS WE REMAIN VIRTUALLY TIED TO STERLING. MOREOVER IT WILL NOT PASS UNNOTICED THAT THE FIGURES
YOU QUOTE SHOW THAT WE HAVE MORE MONEY AT RISK NOW THAN IN 1968.
UNOFFICIAL MEMBERS
WOULD NOT BE INCLINED TO AGREE THAT IT WAS OTHER THAN REASONABLE
THAT ALMOST THE WHOLE EFFECT OF ANY FUTURE STERLING DEVALUATION
SHOULD BE BORNE BY THE U.K. SEMICOLON THEIR ARGUMENT IS THAT THE
WHOLE OF THE PREVIOUS AS WELL AS ANY FUTURE DEVALUATION SHOULD
BE PORNE BY U.K. (IT IS UNLIKELY THAT THE RECENT DIVERGENCE OF INTEREST RATES WILL AFFECT THIS VIEW).
4
WHILE I SHOULD BE GRATEFUL FOR YOUR FURTHER VIEWS ON THE POINTS
IN PARAGRAPH 3 ABOVE, I MUST NOW URGE THAT WE DO NOTHING TO
ENDEAVOUR TO HASTEN THIS ISSUE FOR THE MOMENT, AS YOU KNOW,
I HAVE ALWAYS REGARDED THE PUBLIC PROTESTS WHICH WILL FOLLOW THE
ANNOUNCEMENT OF ANY GREATLY ENHANCED DEFENCE CONTRIBUTION AS BEING
LIKELY TO LEAD TO DISTURBANCES UNLESS GREAT CARE IS TAKEN. !
AM ANXIOUS THEREFORE THAT WE LET THE PRESENT WAVE OF BOMBING'' DIE
DOWN, AND ANALYSE THE REAL CAUSES OF IT, BEFORE WE HAVE TO DISCLOSE
PUBLICLY THE RESULTS OF THESE NEGOTIATIONS.
TRENCH
FILES
HKD FED
DEFENCE D
FPAD
ATD
CCD
PS
COPIES TO:
MR D J J BRACK, TREASURY MR A F THORPE, F1(AIR)2 MOD
MR RJ SMITH, DOE, LAMBETH BRIDGE HSE MR P D NAIRNE, MOD
MR R GEDLING, TREASURY
MR E STRETTON, DOE, LAMBETH BRIDGE HSE MR F H GWYNN, MOD
û
PS TO PUS
SIR L MONSON
SIR S TOMLINSON MR WILFORD
MR ROSE
NNNNN
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SECRET