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RECORD OF CONVERSATION
STERLING AGREEMENTS: HONG KONG
1.
I went as arranged from Tokyo to long Kong to see Mr Philip
Haddon-ave. We had a long conversation on the evening of ?4
January and an extended discussion at lunch on the 25th. Mr Blye and Mrs Jones were present at the latter discussion. 2. Mr Haddon-Cave apologised for not having fulfilled his undertaking to Mr Barratt during the latter's visit to Hong Kong in November to set out his (Mr Haddon-Cave's) views on possible
content of a "gentlemen's agreement". Mr Haddon-Cave explained that two changes in the scene had caused him to revise his views. The first of these was the oil situation, which had developed to a point where there were great uncertainties in the situation. The second was the deterioration in the United Kingdom industrial situation and the effect which the latter in particular had had on the gilt-edged market. As a result of falls in the latter, there was really no advantage to Hong Kong in the right to
In those circumstances diversify. They were in effect locked in.
Mr Haddon-Cave did not think that he could sell to the Executive
Council, for example, the proposition that he had traded a guarantee for a gentlemen's agreement giving Hong Kong a right to diversify in circumstances in which they were locked in.
3.
Similarly, Mr Haddon-Cave thought that the uncertainties of he situation were such as to make it impossible to accept the
He also did obligations involved in a longer-term guarantee.
not see how IMG and the UK would be able to negotiate such longer-
term guarantees between now and the expiry of the existing
unilateral declaration.
In those circumstances he thought that
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/what
W/7.