CONFIDENTIAL

(b)

(c)

there will be a price and the negotiations will not be easy. The Vietnamese are tough and, as their dealings with the Americans reveal (paragraphs 17-20), they are touchy if mishandled (ie patronised or treated other than on a basis of equality). My subsequent visit to Hong Kong (paragraphs 23-33) was invaluable in that within the space of 36 hours I was able to contrast the hard but settled existence of Vietnamese farmers in the Red River Delta with the quasi- prison conditions which now await those who leave Vietnam in the Hei Ling Chau Detention centre in Hong Kong (paragraphs 26-28). I know which I would prefer and have little doubt that when the word gets back to Vietnam about the new policy, and associated conditions in Hong Kong camps, the outflow will dry up. The number of post 15 June arrivals now coming forward for voluntary repatriation in the detention centres suggests that deterrence (ie difficult conditions and no prospect of resettlement) is beginning to work. The early repatriation of a batch of volunteers, suitably publicised, could be very effective. I fear that there is no alternative but to be harsh in order, in the long-run, to be kind;

UK/Vietnamese Bilateral Relations (paragraph 10)

I made clear that Vietnam's illegal occupation of Cambodia and the problem of Vietnamese boat people in Hong Kong were serious difficulties in our bilateral relations. I believe that this message got home: Deputy Foreign Minister Nien talked about a British "two obstacles" policy which sums it up rather well. The Vietnamese say that they would like an early improvement in our bilateral relations, no doubt for economic and developmental reasons. I hope that this will add to the pressure on them to do a suitable deal over repatriation;

Vietnam's Economic Prospects (paragraphs 11 and 12)

The Vietnamese admit that their own mistaken economic policies have contributed to their difficulties, although there are other "objective" causes.

evidence suggests that the country is having difficulty in feeding itself and the leadership is beginning to realise that cooperation with the Soviet Union and CMEA is not an effective alternative to Western assistance. It would mean trading more with the West and exploiting Vietnam's two advantages,

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CONFIDENTIAL

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