in November.
CONFIDEN HAL
The Prime Minister noted that the way now seemed
clear for the sale of Olympus marine engines to China.
Mr. Huang said that the Chinese Vice-Premier would not be coming to London in order to discuss the question of a military alliance but only to develop co-operation in the economic and commercial fields. In saying this, he had in mind the reaction of the Soviet Union to the visits paid recently by Premier Hua to Yugoslavia and Romania: the Soviet Union had accused China of forming a military alliance with those countries. The Prime Minister said that, as Mr. Huang would be aware, Yugoslavia and Romania were very independent-minded countries but they were also circumspect in their relations with the Soviet Union while refusing to be brow-beaten by her. Mr. Huang agreed that the Yugoslavs and the Romanians enjoyed both the determination and the necessary preparations to maintain their sovereignty and independence. It was necessary for the United States and the countries of Western Europe to pay careful attention to the situation in the Balkans and to support Yugoslavia and Romania in their just cause of preserving their sovereign independence. The Prime Minister commented that the UK enjoyed good relations with both countries. President Ceausescu had visited London shortly before Premier Hua's visit to Romania. So far as Yugoslavia was concerned, the West had no desire to see her absorbed into any so-called Western Bloc but would react if there were to be any move to absorb her into the Soviet Bloc.
The Prime Minister went on to say that he understood and had taken note of Mr. Huang's thesis to the effect that war was inevitable, although it might be postponed. The UK conducted careful assessments of the Soviet position: we were aware that the Soviet Union had moved towards a position of greater equality in military terms but we did not believe that because of this the Soviet Government woud move in the direction of war in Western Europe. The risks involved in this would be too great and the present Soviet leadership was in any case elderly, conservative and cautious. The Prime Minister said that he thought the UK's own position was a sensible one; the UK would maintain her
CONFIDENTIAL
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