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CONTINUE UNTIL AGREEMENT WAS REACHED OR FOR THE SITUATION TO REVERT TO THE PRESENT POSITION. HOWEVER, IN THE EVENT THAT WE WERE NOT PREPARED TO ACCEPT THE FOREGOING PROPOSAL, THEN INDONESIA WOULD CANCEL THE ARRANGEMENT OF 19 SEPTEMBER 1975 AND INSIST THAT CPA REVERTED TO BOEING 707'S WHILE GARUDA CONTINUED WITH DCSS. WE NATUARLLY POINTED OUT THE PROCEDURAL OBJECTIONS TO THAT ACTION, BUT HE FLATLY CONFIRMED THAT INDONESIA WOULD TAKE THE THREATENED STEPS EVEN IF (AS HE THOUGHT LIKELY) IT LEAD TO
TERMINATION OF ALL AIR SERVICES BETWEEN HONG KONG AND INDONESIA.
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5. NEITHER LATHAM NOR MCARTHUR NOR MYSELF NOR THE EMBASSY ARE
HAPPY WITH THIS HOBSON'S CHOICE: BUT WE ARE ALL CONVINCED THAT
RISAKOTTA WILL NEITHER IMPROVE UPON HIS OFFER NOR FAIL TO
IMPLEMENT HIS THREAT IF WE REFUSE IT. WE THUS HAVE NO CHOICE
BUT JOINTLY TO RECOMMEND ITS ACCEPTANCE.
6. WE WOULD BE GRATEFUL FOR INSTRUCTIONS BY GMT 3200 ON 11 MARCH (BECAUSE LATHAM MUST LEAVE THAT DAY FOR LONDON TALKS). HOWEVER,
WE HAVE ARRANGED WITH RISAKOTTA TO SEE HIM ON 13 MARCH IF YOU
CANNOT COORDINATE REPLY BY SATURDAY. I SHOULD ADD THAT WE HAVE
TRIED TO DEFER DATE OF DECISION BY VARIOUS DEVICES SUCH AS
DEFERRING SETTLEMENT OF ISSUE UNTIL MEETING IN JUNE. HOWEVER, RISAKOTTA WILL NOT ACCEPT ANY SUCH DELAY AND WE CONSEQUENTLY
NEED EARLIEST GUIDANCE.
STUART
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HK & GD
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