News Department
I lile
Reference KK S
(165)
HONG KONG AND STERLING
LA
محے
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1. I attach a copy of Hong Kong telegram No 1201 which shows the line which Hong Kong are taking in answer to the editorial comment in the Daily Telegraph of 28 September.
2. Your department have agreed to say that the report is pure speculation. You may also wish to make use of the line taken in Hong Kong.
3. Meanwhile a Miss Owen, who announced herself as a freelance preparing a report for the Guardian, has, I understand, contacted Mr Holland. She asked whether the report was true. Mr Holland replied that, if so, it would surprise him. She then asked whether Hong Kong was obliged by its constitution to keep its reserves in sterling. He said he thought not. Finally she asked whether we could or would take steps to stop Hong Kong removing its reserves from London. I understand that Mr Holland replied to the effect that he thought there might be such power but that, speaking personally and not for publication, he thought it unlikely that it would be used.
4. I suggest that if the question arises again or if Miss Owen is known to us and there is any possibility of influencing her writing, we should take the line that on the final question this is purely hypothetical; that there is no sign of unilateral action by Hong Kong, and that we think it in the highest degree improbable that the situation would ever arise.
5. Miss Owen apparently concluded by saying that she would be contacting other people in the FCO for discussion on the EEC's GSP as applied to Hong Kong.
28 September 1973
J
Deses
A C Stuart
Hong Kong & Indian Ocean Department
(17293) 897465 400m 1/73 G.W.B.LM. Cip 867