22. UNLESS BRITISH GROUP ARE PREPARED TO GO THIS FAR THE POSSIBI- LITY OF A MERGER AS AN LATERNATIVE WAY OF MEETING THE REQUIREMENT SHOULD BE FLOATED WITH THE STEERING GROUP WHILE BRITISH GROUP IS STILL IN THE FIELD. SIR DOUGLAS CLAGUE BELIEVES THAT IT MIGHT WELL BE ''POLITICALLY'' WELCOME TO HONG KONG GOVERNMENT TO HAVE A MERGER BETWEEN BRITISH AND ITALIANS. BUT, AS MENTIONED ABOVE, IF WE ONCE FALL OUTSIDE IT MIGHT BE IMPOSSIBLE TO GET BACK IN AND IN ANY CASE ITALIANS WOULD, PRESUMABLY, BE LESS KEEN IF THEY THOUGHT WE WERE USING THEM AS A LIFEBELT INSTEAD OF GIVING THEM BENEFIT OF OUR ASSUMED POLITICAL ADVANTAGE.
23.
LETTER SHOULD ALSO MAKE THE POINT ABOUT REPAYMENT FOR
EXPENSES.
24.
SIR D CLAUGE WILL BE SEEING COVERNOR AND OTHERS IN THE COURSE
OF THE NEXT FEW DAYS AND WILL REPORT IF ANYTHING SIGNIFICANT EMERGES BUT IS CONVINCED THAT AT LEAST A LETTER AS OUTLINED WILL BE NECESSARY AND ADVISES STRONGLY THAT IT BE SENT WITHOUT FURTHER DELAY AND WITHOUT AWAITING OUTCOME OF ANY FRUTHER DISCUSSIONS HE MAY HAVE. HE ALSO ADVISES EARLY TALKS WITH ITALIANS TO TRY TO FORM UP A MERGER UNLESS CIVILS HAVE SIGNIFICANTLY REVISED THEIR VIEW,
25. PLEASE INFORM SCOTT (G.E.C.) CODD IS ADVISING HIM TO CONTACT *. YOU.
DTI PLEASE REPEAT COPY TO MISS LACKEY (CRE2).
ASTON
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SENT AT 1125Z/20 EJH
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