MR WALKER
No Voction of present pending and Palks between the. Barratt Bay (and
Ванай
Haddon Cave next week
Сс
Mr Payton (B/E)
Miss Pestell (FCO)
Mr Stuart (FCO)
ts
RECEI
IN
ther
REGISTE
0.51
10 JUN 1974
HRK STIO.
STERLING GUARANTEE
HONG KONG
Mr Aust (FCO)
PA
The Hong Kong Government has asked us to consider again changing the provision for accidental breach in respect of the nine months guarantee.
We have had 2. It might be worth rehearsing the background to this. endless difficulties with Hong Kong over the interpretation and application of the six months guarantee - more than with all the other participants put together. The latest of these involved the meaning of the provision for accidental breach where it emerged, late in the day, that Hong Kong had been in breach of the declaration for several months
After owing to a misunderstanding of the accidental breach provision. a good deal of discussion, Hong Kong finally accepted our proposals for compensation which involved a slight reduction from the compensation which Hong Kong would have received had they adhered to the declaration throughout the period.
reserve,
The
3. The Hong Kong Government has recently put the question of the management of their external affairs to the Executive Council. main reason was to formulate Hong Kong's attitude to the new nine months guarantee offer, but the question of the accidental breach provision came up and was discussed. It appears that the Hong Kong Government, following the advice of Ex Co, decided:
4.
To make another attempt to pursuade HMG to change the accidental breach provision.
b.
As far as the new guarantee is concerned, to keep sending in advices on the assumption that Hong Kong will participate.
As far as (a) is concerned, my reading of the tone of the telegrams
is that the Hong Kong Government does not seriously expect us to change our mind. They are going through the motions of asking for a
1