CODE 18-77

Reference HKK 040/5...

655

Лой.

15

CBA

Mr Hum Mr Clift

3

See

Pan

SECRET

4 (on which I have minted separty) and

Paras 62 9.

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FUTURE OF HONG KONG:BRIEFING OF THIRD COUNTRIES

1

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Ms Sutter of the US Embassy and Mr Giordano of the Italian Embassy called on me on 12 December, and Ms Halliday of the New Zealand High Commission on 13 December, to discuss the latest round of talks and current state of play.

Ms Sutter

2. Ms Sutter now calls after every round of talks and is well informed. I told her that Mr Donald had recently briefed Mr Wolfowitz. She grumbled, not for the first time, that Washington had not yet told the Embassy here. I spoke to her on the lines of the telegram already drafted, (which has since issued) giving Washington a line to take with Mr Wolfowitz on the last round and developments since Mr Donald's visit. I explained that we

I explained that we were now trying to draw out the Chinese on their plan, which we realised did not include an authorititive link between the UK and Hong Kong. We were doing so without prejudice to the final outcome. thought we had now cleared the air and successfully pushed to one side for the time being the sovereignty and administrative obstacles. For the first time the Chinese had elaborated in some detail on their plan in certain areas. There was some common ground and some encouraging points had been made eg on full financial independence, GATT etc.

However there were still problems and a number of points on which we did not agree. We had asked further questions and expected at the next round to have some answers, and to discuss further areas on which we were submitting working papers. We also touched on the recent Chinese threat to reconsider timing if there was turmoil in Hong Kong. Ms Sutter agreed that early intervention by the Chinese would be very much a Last resort for them.

4. Ms Sutter sought information on the 12 point plan as we now know it. I agreed to let her have the basic points as given to us in the talks. I stressed the need for this and for her reports to be classified secret. Mr Giordano

5.

I spoke to Mr Giordano on generally similar but less specific lines. In addition he was interested in whether our change of Ambassador meant a change of style or policy. I said I expected neither, although the policy was kept under review all the time. He asked about the views of the

+KK040|5

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/Executive

See (656 667)

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