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FIDENTIAL

141327Z MAR 79

TO FLASH HONG KONG

TELEGRAM NO 196 OF 14 MARCH

2011/9

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1. THE FOLLOWING IS THE TEXT OF A LETTER, MARKED STRICTLY PERSONAL AND CONFIDENTIAL, AND DATED 14 MARCH, FROM THE SECRETARY OF STATE TO THE GOVERNOR. ORIGINAL FOLLOWS Y AVAILABLE BAG.

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IN YOUR LETTER TO ME ON 13 FEBRUARY LAST YEAR, YOU AGREED TO POSTPONE YOUR RETIREMENT UNTIL THE SUMMER OF 1979. I HAVE NOW SPOKEN TO THE PRIME MINISTER AGAIN, WHO HAS AGREED THAT I SHOULD WRITE TO YOU ABOUT THE PROBLEMS WE FACE IN APPOINTING A NEW GOVERNOR IN PRESENT CIRCUMSTANCES.

LEAVING ASIDE THE DOMESTIC ANGLE HERE, WE ARE AT A PARTICULARLY SENSITIVE MOMENT IN OUR NEW RELATIONSHIP WITH CHINA. YOUR OWN VISIT TO PEKING WILL BE AN IMPORTANT MILE- STONE, AND COULD OPEN THE WAY TO THE SOLUTION OF THE KEY ISSUE OF LEASES IN THE NEW TERRITORIES. IT WILL BE IMPORTANT TO FOLLOW THROUGH ANY NEW OPENING IN A PERIOD WHEN THE CHINESE LEADERSHIP SEEM IN A HOOD TO MAKE DECISIONS. BUT I DO NOT UNDERESTIMATE THE COMPLEXITY OF THE PROBLEM, AND WE SHALL NEED TO RELY MORE THAN EVER ON YOUR GUIADANCE, EXPERIENCE AND JUDGMENT DURING THIS PERIOD.

WITH ALL THIS IN MIND, THE PRIME MINISTER AND I WOULD BE VERY GRATEFUL IF YOU FELT ABLE TO AGREE TO EXTEND YOUR TENURE OF OFFICE FOR A FIXED PERIOD, EG UNTIL APRIL EXT YEAR. WE ARE ALREADY CONSCIOUS OF HAVING POSTPONED YOUR RETIREMENT TWICE, AND I AM FULLY AWARE OF THE PERSONAL INCONVENIENCE WHICH A FURTHER EXTENSION COULD

CAUSE YOU.

IF YOU FEEL THAT YOU REALLY CANNOT ACCEPT A FURTHER EXTENSION, PLEASE SAY SO FRANKLY. IF, ON THE OTHER HAND, YOU CAN AGREE TO STAY ON UNTIL NEXT APRIL, THERE WOULD BE OBVIOUS ADVANTAGE IN ANNOUNCING THIS (SUBJECT TO THE QUEEN'S APPROVAL) AS SOON AS POSSIBLE, PREFERABLY BEFORE YOUR VISIT TO PEKING.

GUEN

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