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Jac animosity in the region against the Vietnamese, who now constitute the vast majority of refugees awaiting resettlement

in Hong Kong.

8. I do not see a potential problem with the BDTCs in Hong Kong if we accept more Vietnamese for resettlement here. Public opinion in Hong Kong will know perfectly well enough that we are doing so reluctantly at Hong Kong's urgent request in order to help Hong Kong. As Unofficials in Hong Kong have made clear, it is rather failure on the part of HMG to do what is necessary to secure resettlement of the refugees elsewhere which will create resentment. There has been a considerable ground swell of popular opposition to the humanitarian approach the Hong Kong Government has taken on the refugee problem while at the same time they restrict severely the entry from China of those who

have close connections with the territory.

9. On timing, the delay you propose is not a simple matter. You, David Waddington and Richard Luce have given assurances of our urgent consideration of this problem, and a reply was promised in July. This general timing is well known in Hong Kong, where a reply is expected soon. There is considerable speculation about what it will be. There are already rumours in Hong Kong of a delay. I understand your reasons for wanting to delay the response until after the recess; there is in any case now not enough time remaining to do anything else. But I have to say that such a delay will greatly increase suspicion about HMG's intentions and criticism of HMG, and lead to further lobbying of MPs. I would not be too worried about that if the end result was a reply which was satisfactory from the Hong Kong point of view. But a delay followed by an unsatisfactory response would give us the worst of all worlds.

10. I am very worried about the situation which is arising, and would welcome the chance to talk to you urgently about it.

CONFIDENTIAL

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