CONFIDENTIAL
in Hong Kong's very special circumstances will be established
in consultation with HMG when the 24th September reserve figures
are available.
In principle Hong Kong will adhere to the
existing MSP but in the event of a period of adjustment being
needed to restore that level it would not reasonably be withheld." He reacted rather better to this than one might have expected from his earlier telegrams, especially when I made it clear that the rate at which we should allow Hong Kong to come back to MSP would reflect the extent to which the Colony was in fact found to be below it on 24th September, and that we would not refuse any reasonable proposals which Hong Kong liked to make on the basis of the above formula. We also pointed out that under our proposals, though Hong Kong would in principle adhere to the original MSP, de facto this would be reduced over the period as a whole.
5. Mr. Haddon-Cave who had been planning to go on to Nairobi,
decided instead to go straight back to Hong Kong to discover the actual sterling position as at 24th September, and consider whether in the
If he finds light of this he can accept the formula I offered him, that he can, he will then prepare proposals about the rate at which MSP should be achieved. In any event the ball is now in his court.
6.
He
I should also record that as our discussions with Mr. "Haddon-Cave proceeded, the atmosphere became progressively more friendly, especially after we had offered him the formula set out above. expressed the warm hope that some one from the Treasury would visit Hong Kong in the near future, not necessarily for the purposes of any negotiation, but simply for a general exchange of views and to learn about Hong Kong's current situation at first hand.
Es
(F. R. BARRATT)
24m
a korban 1977