[Dear Walker,]
CONFIDENTIAL
48
overtaken
Pla
4th April 1974.
A
Sterling Guarantee:
Hong Kong
We have a number of comments to offer on the draft letter to Haddon-Cave enclosed with your letter of 3rd April, and these have been incorporated in the attached re-draft. There seems a need to re-state the "formula" in full since at prosent it is spread over three differen pieces of paper. It also seems necessary to say something about maintenance of MSH under the March 1974 declaration.
I have, as you know, be on concerned that Australia, New Zealand and Ireland all have special arrangements for valuation which do not oblige them to buy sterling to maintain MSH and to this extent Hong Kong is being discriminated against. Nevertheless, there should be sufficient room to manoeuvre in the new declaration to render a special arrangement unnecessary. I suggest therefore that a reference to part of the 10% reduction in MSP being used to provide a working margin should be included in the letter.
Finally, I think it might be advisable to send a short telegram tomorrow saying that a letter setting out a considered reply to Hong Kong's latest telegram is on the way.
I am copying this to the recipients of your letter.
[Yours sincerely,]
D.A.Walker, Esq.
HMT
(Sd.) STANLEY PAYTON