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1.

I would fully endorse Mr Stuart's comments on this

admirable report from the Governor of Hong Kong.

2. It is perhaps for consideration whether it does not merit a formal despatch in reply from the Secretary of State, endorsing the policy approach outlined by the Governor and commending the vigour with which, despite the difficulties, the problems are being tackled.

3. The problem referred to in paragraph 6 of Mr Stuart's minute is inherent in the Hong Kong situation. We are dealing with a place which, were it not where it is, would by now have become a prosperous and independent city state like Singapore. We have to strike a balance between treating it as such in order to respond to Hong Kong pride and susceptibility, and maintaining our colonial interests and responsibilities. As Mr Stuart says, a great deal rests on the Department at this end in preserving (and in helping the Governor to preserve) this delicate balance.

4.

On the technical problems raised in paragraph 7 of Mr Stuart's minute, my own inclination would be, as suggested by Mr Wilford in his telegram, to print the despatch complete under "Secret Eclipse" grading. I think if it were to remain graded Confidential we should perhaps find ourselves considering

d

extensive bowdlerization (eg in paragraph 7 to 9) than just

the omission of paragraph 20.

12 February 1973

ཉམས་

Dan Watin

(Duncan Watson)

imore

I should like to endorse the propinal at para 2 above. A pronal Indorsement of her policia and a wnd of praise ismuld sin demora encouragement to the Swarmor, and welsau caficmation of his judgment. I also apu with for D watson aber printing. It would to a pity to authorem back to Alla dupata - and my mind part is in some wayp woen koon Musitive.

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