CODE 18 - 77

CONFIDENTIAL

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Reference

AIR SERVICES

12. Again, since the meeting with the Secretary for Economic Services had been dropped from the programme, nobody raised this subject with me, though there were several passing references to the bitterness British "selfishness" on this subject caused. I did mention the topic in my final round up briefing with Dr Wilson and made sure he understood that all the faults were not on one side (in particular I explained the somewhat sharp practice employed by Cathay Pacific in obtaining their permit to operate to Bahrain).

13. On my last day in Hong Kong, a typically tendentious, obviously inspired article appeared in the South China Morning Post, in anticipation of Mr George Rogers' visit that was about to take place. I attach a copy (incidentally, lest any one had any doubt, the Hong Kong Government freely admitted that they do place articles in the local press when it suits them to do so, though they did not actually admit to placing this one). I am afraid that this is a field in which there will always be friction between Hong Kong and London, given the undisguised determination of the DOT to derive the maximum economic advantage for the UK from Hong Kong traffic rights. I made it plain to Dr Wilson that we, in Hong Kong and General Department, had a lot of sympathy with Hong Kong in this, but that there was little we could do as long as the DOT remained within the letter of the rules: they were not likely to be moved by our simply accusing them of being unfair to Hong Kong.

W.E. Qatill

7/3

CONFIDENTIAL

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