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if we contributed to such a loss of confidence in Hong
Kong that it affected its value to them. But for
ourselves, the paradox is that a crisis of confidence
in Hong Kong could bring forward by several years the
risk of excessive demands for immigration to the UK.
(d) When the Gibraltar amendment was first passed in the
House of Lords, we advised the Hong Kong Government to sit tight until Ministers had decided how to play the hand
tactically. They have avoided any precipitate action or lobbying and will take it very much amiss if the proposals which they have already put forward are rejected without
consultation.
1
(e) One should not exaggerate the value of the concessions
already made to Hong Kong. We have used them in a propaganda way to get maximum credit for HMG, but they are applicable to all dependent territories and were far short
of what Hong Kong really wanted. It is true that had it
not been for the Gibraltar amendment the Hong Kong Govern-
ment would have accepted the situation. They were ready to
do so because it was explained to them that including a
reference to ''British nationality' in the Bill created
real problems for us. But it would be wrong to maintain
that the Gibraltar amendment has not made a fundamental
difference, or that HMG's known antipathy to the amendment
would make a further concession for Hong Kong unnecessary
if it is not reversed. The character of the category of
CBDT has already been altered by the Gibraltar amendment.
(f) Reassurance for Hong Kong will thus clearly be
necessary. We will need to make use of the Governor's considerable influence with Unofficials to explain why a
''British national'' solution is still politically impossible for Hong Kong. We will keep his and their confidence if we are seen to be taking the initiative in thinking of a reasonable concession at a fairly early stage, for example, after a Falkland Islands amendment
were carred in the House of Lords. At the very least, if
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