b)

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vacant possession of Victoria

Barracks that would coincide with

or be very closely related to the

increase to 75%.

4.

It was the view of the HK Government that with the

necessary drive and goodwill it was probable that vacant possession

of these two lots could be given within the years proposed for the

two increases, that is to say 77/78 and 78/79.

5.

The feasibility of this time schedule could only be

considered in the light of the report of a qualified working party

and H.E. therefore proposed that one be convened immediately.

6.

H.E. said that the HK Government could only obtain agreement

for the two stages of this very substantial increase if they were

closely related to the recovery of these tangible capital assets.

It followed that should vacant possession not be forthcoming through

no fault of the HK Government within the time scale eventually

agreed, there should be a corresponding postponement in the increase

of HK's contribution.

7.

H.E. then stressed the presentational point that although

the Minister of State's visit was the culmination of a year of

negotiations, the impression had been given to the public that the

negotiations started with his arrival, and there was little that

could be done to disabuse them. If it were to be announced or

implied that agreement in principle had been reached during this

week the public would strongly criticise the Government for having

given way too soon. It was therefore extremely important that the

impression should be given to the public that while the talks had

been useful and had made progress, no agreement had yet been reached.

H.E. suggested it should be announced that the discussions would be

continued during his visit to London in the first week of December.

By that time it would have been possible to prepare the HK public,

and to announce an agreement, which by that time may be in a final

form that could prove acceptable.

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