SECRET
Foreign and Commonwealth Office London SW1
W L St Clair Esq HM TREASURY
Telephone 01-
file
110
PA
Your reference
Our reference
Date
23 August 1973
Dear St Clair,
STERLING AGREEMENT: HONG KONG
1. You may like to know that the Hong Kong Financial Secretary has reported to Executive Council on 14 August on the results of his visit to London. The Council predictably expressed concern about the situation, and particularly that they were still not in a position to engage in meaningful discussions of what would follow when the sterling guarantee arrangements expired next month.
They deplored what they called an apparent breach by HMG of an undertaking to conduct a review in March this year. Haddon-Cave confirmed that Executive Council would be kept in touch with developments and that any proposed guarantee arrange- ment would be referred to the Council for advice.
2. The meetings of Hong Kong's Executive Council are confiden- tial and the news has not been released to the press. However, Hong Kong newspapers have published accounts of what they describe as Haddon-Cave's failure to get any satisfaction from his visit here.
3. There is nothing new in all this and nothing that calls for a response from us. But I thought you should know of this concerned reaction from Executive Council in case they refer to it later. Meanwhile Haddon-Cave himself will be coming to London at the end of the month for talks on the Mass Transit contract. He will be negotiating with our people on this on 30/31 August; but he has given no sign of wanting to revert the sterling question at this stage. Presumably he accepts that there is nothing to be done until the Chancellor's message is agreed.
Your 1. drow Shures
A C Stuart
Hong Kong & Indian Ocean Department
cc: D Stone Esq
BANK OF ENGLAND
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