CONFIDENTIAL
Mr Lee tomorrow and hopes to sound him out on the implications
of Mr Y K Pao's acceptance while he was here that Masters would
have to be British. In this Mr Y K Pao is, as the Governor has
already commented, in a rather special position, since he already
has a number of British Masters.
5. As far as I know, Mr Heseltine has not yet been consulted.
It looks, however, as if the Prime Minister's reaction may be
to direct that the DTI should offer enough to get Mr Y K Pao to
transfer a significant number of ships and not to bother about
the remaining Hong Kong owners if they do not want to come into
the scheme.
6. From a Hong Kong political point of view this is a pity.
We do not want to give the impression that the Government is in
Mr Y K Pao's pocket. But I do not think the DTI will give way
on British Masters; and from listening to the industry's
representatives, I think that, if they did give way, there
would be a major political row in this country. If the other
Hong Kong owners are not prepared to come onto the new register
on this basis, then they may have to stay off it.
7. I think we should await the Governor's comments on
Mr Y K Pao's position before considering the next step.
12 July 1973
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CONFIDENTIAL
A C Stuart
Hong Kong & Indian Ocean Department
/PS