3
(a)
5.
as regards the accusation that his group was merely imposing their own mad policies on Hong Kong, he conceded that he had a problem since they could point to few supporters in Hong Kong and no sympathy at present for their aims from China. He conceded that he had no right to advise the Chinese Government how to act. However he maintained that it was his right to strive to change the British Government's policy towards Hong Kong. (He referred-to allegations that had been made after publication of 'Hong Kong a to answer' and denied that he was part of a Russian plot to embarrass China. He added he had many criticisms of Russia and had no time for Trokskyists).
Turning to the future of Hong Kong he gave a clear and accurate analysis of Britain's and China's positions on the treaties. He identified the N.T. lease as the main problem and said that the problem was not 1997 but a date in the early to mid 1980s by which time something positive would have to be said if confidence were to be sustained and a flight of capital out of Hong Kong avoided. He supported this assertion by referring to the reluctance of international bankers to lend for long term projects in Hong Kong and in particular to Kadoorie's statements at the time of the ECGD guarantee for the power station. He thought that the test case would be the second airport and that the ECGD solution could not be used both because of the amount of capital involved and because only a small proportion of the expenditure would involve British equipment the bulk being civil engineering works.
6.
He gave two reasons why China would not change its posi- tion on the lease:
(a)
(b)
7.
because the Chinese position on the "unequal treaties" was likely to be upheld in international law. (He quoted Dr. Hickling, a reader in law at SOAS, as his authority and referred to India's annexation of Goa which he said the International Court of Justice had not ruled as being illegal because of the unequal nature of the original treaty of cession).
because China's border dispute with Russia/rested on similar treaties and China would not be prepared to concede anything in this area. He also referred to China's position on the Indian frontier dispute and stressed that China's policy was consistent in all these cases.
Easey ruled out solution to the N.T. lease problem based on a unilateral abrogation of the treaty by U.K. with passive Chinese connivance (e.g. by Hong Kong Government issuing N.T. leases running beyond 1997) on the grounds that this would not satisfy international investors and bankers. He said that many clever people had tussled with this problem for years without coming up with any solution. He thought that it was insoluble and that China and Britain would cook up a deal for Hong Kong's reversion to China. This would be done in secret and without consul- tation with the people of Hong Kong and the takeover, would be swift and without warning. His ahalysis of the benefits
to U.K./...