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FM PEKING 030830Z SEP 80

TO IMMEDIATE FCO

TELEGRAM NUMBER 552 OF 3 SEPT 80

·4 SEP 1980

AND TO IMMEDIATE HONG KONG (PERSONAL FOR GOVERNOR)

DESKBY FCO AND HONG KONG 049900 Z

do wake

TOCOPY

FROM HEAD OF CHANCERY

92

FOLLOWING FOR CLIFT, HKGD

FCO TELNO 4501 HONG KONG LEASES AND THE FUTURE

1.

MORRICE'S LETTER WITH ENCLOSURE ARRIVED ON 1 SEPTEMBER.

WE HAVE YET TO RECIVE A COPY OF THE GOVERNOR'S LETTER OF

22 AUGUST.

2.

THE AMBASSADOR HAS NO COMMENT ON THE DRAFT RECORD OF THE

MEETING OF 8 AUGUST OR ON THE POINTS TO MAKE.

3. WE TAKE THE POINT IN PARAGRAPH 3(A) OF HONG KONG TELNO 1081 (WHICH REFERS TO THE QUOTE POINTS TO MAKE UNQUOTE AS MUCH AS TO THE SUPPLEMENTARY BRIEF). BUT DISCUSSION BETWEEN

OFFICIALS WOULD ONLY FOLLOW FROM A CHINESE REQUEST, WHICH

COULD HARDLY BE REFUSED, TO EXPRESS VIEWS ON THE SOLUTION TO

THE LEASES PROBLEM. WE AGREE THAT IF SUCH DISCUSSION DID

TAKE PLACE THERE WOULD BE NO NEED TO INFORM THE PRESS. THE LINE PROPOSED IN PARAGRAPH 3(B) OF HONG KONG

TELNO 1981 IS FINE.

see (93

27) ob

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4K K026/17

b. THE SUPPLEMENTARY BRIEF LEAVES OPEN WHETHER WE SHOULD

LEGISLATE BEFORE A LEASE WAS ISSUED OR ONLY IF AND WHEN IT WAS

CHALLENGED. WE MUST NOT FRIGHTEN THE CHINESE OFF BY INSISTING

ON LEGISLATION. ON THE OTHER HAND WE DO NOT KNOW THAT IT

WAS THE NEED FOR LEGISLATION WHICH CAUSED THE CHINESE TO REJECT

OUR EARLIER PROPOSALS, AND IT MIGHT BE UNWISE TO MISS AN OPPORTUNITY TO SECURE CHINESE ACQUIESCENCE, PARTICULARLY AS LEGISLATION MIGHT SUIT THEM LESS WELL WHEN A CHALLENGE

HAD ACTUALLY MATERIALIZED.

5. I WOULD ACCORDINGLY SEE SOME ADVANTAGE IN EXPLAINING TO THE CHINESE THAT IF GRANTED A LEASE COULD BE CHALLENGED, IN WHICH CASE WE SHOULD NEED TO LEGISLATE RETROACTIVELY.

WE COULD ADD THAT IT MIGHT BE LESS EMBARRASSING FOR BOTH

PARTIES IF THE NECESSARY LEGISLATION WERE ARRANGED BEFORE ANY

CHALLENGE MATERIALIZED. PARAGRAPH 4 OF THE SUPPLEMENTARY

BRIEF COULD THEN BE TIDIED UP BY INSERTING QUOTE IDEALLY

UNQUOTE AT THE BEGINNING OF THE SECOND SENTENCE AND DELETING

THE SQUARE BRACKETS.

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16. THE ABOVE

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