R 360
IMMEDIATE
PHER/CAT A
SECRET
FM FCO $51715Z
RABLE AT 9.21
8 OCT 1973
CAT
PA
177
(HK)
182
SECRET
ORWELL
HIUS)
TO IMMEDIATE BANGKOK TEL NO 395 OF 5/10./73.
FOLLOWING PERSONAL FOR HOLLAND AT CHIANG MAI MEETING FROM STUART.
STERLING GUARANTEE AGREEMENTS.
.
FCO TEL NO 983 TO HONGKONG (BEING REPEATED TO YOU SEPARATELY) IS INTENDED TO BE CO-OPERATIVE IN TONE. WE HAVE TODAY RECEIVED HONCKONG TELEGRAM NO 1133 IN REPLY (ALSO PEING REPEATED TO YOU). THIS ALSO 13 CO-OPERATIVE IN TONE. TREASURY ARE URGENTLY STUDYING THIS REPLY BUT IT IS TOO EARLY FOR THEM TO MAKE ANY COMMENT. WE HOPE THEY WILL BE ABLE TO DO SO DURING YOUR VISIT TO HONGKONG AND WE WILL
INFORM YOU THERE.
2. STRICTLY FOR YOUR OWN INFORMATION OUR TELEGRAM WAS DRAFTED BY THE TREASURY IN THE LIGHT OF THE PROPOSITION THAT A CHANGE IN HONG KONG'S MSP, IN ORDER TO AVOID THEIR GOVERNMENT HAVING TO ACQUIRE MORE STERLING FOLLOWING FROM THE HIVING-OFF OF THE BANKS' STERLING, COULD BE JUSTIFIED TO THE OTHER STERLING HOLDERS, PROVIDED THAT HONG KONG DID NOT CLAIM IT AS A VICTORY AGAINST OUR STERLING POLICY. WALKER AND TO SOME EXTENT MRS HEDLEY MILLER ARE NOT UNATTRACTED BY THIS PROPOSITION, WHICH WE HAVE OF COURSE ARCUED AS STRONGLY AS WE
AS CAN, BUT THEY CANNOT KNOW WHETHER IT WILL EVENTUALLY PREVAIL. YOU OF COURSIE REALISE THIS IS A VERY IMPORTANT MATTER FOR THE TREASURY WHICH HAS TO BE LOOKED AT IN THE STERLING CONTEXT AS A WHOLE. FOR OUR PART WE HAVE TOLD THE TREASURY THAT IF THE DECISION EVENTUALLY LOOKS LIKE GOING THE WRONG WAY, OUR OWN MINISTERS WILL
WISH TO BE CONSULTED.
3. MEANWHILE IN SPEAKING TO HADDON-CAVE WE SUGGEST YOU SHOULD CONFINE YOURSELF TO POINTING OUT HOW THE INFORMATION ASKED FOR IN OUR TELEGRAM WILL ASSIST OUR UNDERSTANDING OF THE TECHNICAL CONSEQUENCES OF THE BANKS WITHDRAWAL. YOU MAY ALSO WISH TO STRESS THE PRESENTATIONAL PROBLEM IN RELATION TO THE OTHER STERLING HOLDERS. THE HONGKONG PRESS WOULD PRESUMABLY WANT TO MAKE MUCH OF ANY ARRANGEMENT, BUT WHAT MATTERS MOST IS WHAT THE HONGKONG
SECRET
/GOVERNMENT