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5. THE POLICY ASSUMPTIONS ON WHICH PARA 37 IS EASED ARE NOT CLEAR. IT IS DIFFICULT TO SEE HOW EXPERTS COULD HAVE TALKS ON SATISFACTORY PRACTICAL ARRANGEMENTS WITHOUT KNOWING THE END PURPOSE OF THE ARRANGEMENTS (FIRST SENTENCE OF PARA 37). ON OUR SIDE WE WILL WANT ARRANGEMENTS FOR THE CONTINUATION OF BRITISH ADMINISTRATION : THE
CHINESE WILL PROBABLY WANT TALKS DIRECTED TO THE PROCESS OF TRANSITION (PARA 3 ABOVE). THE SECOND AND THIRD SENTENCES ASSUME THAT THE POLICY OF RECOGNITION OF SOVEREIGNTY AGAINST CONTINUED BRITISH ADMINISTRATION WILL HAVE BEEN APPROVED. BUT SHOULD THE PM, AND WILL SHE IN ANY CASE WISH, TO OFFER IT BEFORE SHE HAS
ESTABLISHED IN HER TALK WITH DENG WHERE THE CHINESE POSITION IS IMMUTABLE AND WHERE THERE IS GIVE? LORD BELSTEAD AND HMA PEKING WILL HAVE VIEWS ON THIS BUT AS SEEN FROM HERE THE PARA
MIGHT READ
''THERE IS THEREFORE LIKELY TO BE A WIDE GAP BETWEEN THE POSITIONS OF THE TWO SIDES. BUT IN ORDER TO MAINTAIN CONFIDENCE IT IS ESSENTIAL THAT IT SHOULD NOT BE PRESENTED AS UNBRIDGEABLE. AT THE LEAST THE PM SHOULD SEEK AGREEMENT TO AN EARLY COMMENCEMENT OF TALKS THROUGH DIPLOMATIC CHANNELS AIMED AT MUTUALLY ACCEPTABLE ARRANGEMENTS FOR THE FUTURE''.
NEW PARA : IF THE CONCEPT OF A ''MANAGEMENT CONTRACT IS ACCEPTABLE IN LONDON, THEN DEPENDING ON THE COURSE OF THE TALKS, IT WILL BE FOR CONSIDERATION WHETHER THE PM SHOULD INDICATE, WITHOUT PREJUDICE TO THE POSITION OF EITHER SIDE ON SOVEREIGNTY, THAT WE WOULD BE PREPARED TO DISCUSS SUCH A CONCEPT. OTHERWISE THE FIRST STAGE OF THE TALKS AFTER HER VISIT WOULD BE DEVOTED ON OUR SIDE TO CONVINCING THE CHINESE THAT CONTINUED BRITISH ADMINISTRATION AND AUTHORITY ARE ESSENTIAL TO CONFIDENCE IN HK: AND ON THE CHINESE SIDE TO AN EXPOSITION OF THEIR POSITION ON SOVEREIGNTY AND THEIR BELIEF THAT THEIR PLAN WOULD WORK, BUT THE TALKS WILL INEVITABLY REACH A POINT WHERE IF BREAKDOWN IS TO BE AVOIDED, WITH ALL THE ATTENDANCE CONSEQUENCES, ONE SIDE OR BOTH WILL HAVE TO SHIFT. CONFIDENCE IN HONG KONG WILL NOT WAIT LONG FOR SIGNS OF PROGRESS. THE TALKS SHOULD THEREFORE SE FIXED FOR AN EARLY AND PREFERABLY ANNOUNCEABLE DATE''.
YOUDE
LIMITED HK vGD FED MR GIFFARD
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COPIES To:
MR RUSH FORD
LEGAL ADV