;
Sis. Walion
SECRETARY OF STATE
HONG KONG
1.
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Since returning from Ottawa, I have been taking stock
of the Hong Kong situation. In all the major issues affecting
Hong Kong, the basic problem is that of striking a balance
between British domestic interests, political and economic,
These
and Hong Kong's assessment of their own interest.
issues now seem to be coming to a head simultaneously in a very
awkward way, and it is understandable that Sir Murray MacLehose
should be concerned.
2.
You have had Sir Murray's minute to yourself of
10 August about the sterling balances. I attach a note by
Mr Holland, following further discussion here in the Office
this week. From this, you will see that on this issue at least
while HMG and particularly the Treasury may have been dilatory
in their handling of this matter (though it has been vastly
complicated by the world financial situation), Hong Kong has
not at the moment any ground for complaint that HMG is riding
rough-shod over Hong Kong's interests. Sir Murray in his
minute complains of the Treasury's refusal to take Hong Kong
officials into their confidence. I find Sir Murray's
reaction to the Treasury attitude at the meeting which he
attended fully understandable. But, on the other side, it
must be said that not only would it have been extremely
difficult for the Treasury to discuss possibilities even in
general terms when the future course of action on the Sterling
Agreements as a whole is still wide open for Ministerial
consideration: but also that Hong Kong officials for their
part habitually fight their corner on such matters in a tough,
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