CONFIDENTIAL
177101
08
MDLOAN
THAT SOME SMALL RELAXATION WAS JUSTIFIED. THE TWELVE HAD AGREED IN JANUARY NOT TO BLOCK WORLD BANK LENDING FOR HUMANITARIAN PROJECTS. THE BAN ON MINISTERIAL VISITS REMAINED. EC PARTNERS RECOGNISED HOWEVER THAT UK AND PORTUGAL WOULD NEED TO MAINTAIN MINISTERIAL CONTACTS BECAUSE OF THEIR RESPONSIBILITY FOR HONG
KONG AND MACAO.
5. WENSLEY MENTIONED AMERICAN EXASPERATION AT THE LACK OF A CHINESE RESPONSE TO THEIR OVERTURES. MCLAREN SAID THAT PRESIDENT BUSH WAS OUT ON A LIMB AND WOULD CERTAINLY NEED SOMETHING FROM THE CHINESE IF HE WAS TO MAINTAIN CONGRESSIONAL AND PUBLIC SUPPORT FOR HIS POLICY. THE JAPANESE HAD SURPRISED MANY BY THE EXTENT TO WHICH THEY HAD BEEN PREPARED TO KEEP IN STEP WITH WESTERN PARTNERS ON POST-TAINANMEN MEASURES.
6.
IN REPLY TO A QUESTION MCLAREN SAID THAT THERE WERE NO SIGNS THAT THE CHINESE WERE PREPARING TO CHANGE THEIR POLICY ON TAIWAN. PEOPLE TO PEOPLE CONTACTS AND TRADE WERE STILL BEING ENCOURAGED. THE MILITARY OPTION REMAIND VERY UNATTRACTIVE. BRITISH POLICY WAS TO INCREASE INFORMAL LINKS. WE HAD ESTABLISHED A VISA ISSUING A OPERATION IN TAIPEI THE CHINESE HAD ASKED QUESTIONS BUT HAD NOT OBJECTED AND AN EDUCATION OFFICE TO PROMOTE BRITISH HIGHER EDUCATION. PERMISSION HAD BEEN GIVEN FOR BRITISH AIRWAYS AND ONE OTHER AIRLINE TO EXPLORE THE POSSIBILITY OF DIRECT FLIGHTS TO TAIWAN, BUT IT WAS TOO SOON TO SAY WHETHER ANYTHING WOULD COME OF THIS. WENSLEY COMMENTED THAT QUANTAS HAD ALMOST REACHED AGREEMENT TO ESTABLISH AN AIRLINK WITH TAIWAN BEFORE JUNE 1989 BUT THE ARRANGEMENT HAD COME UNSTUCK WHEN THE TAIWANESE SOUGHT RECIPROCITY WHICH THE AUSTRALIANS WERE UNWILLING TO CONCEDE.
THE AUSTRALIANS WERE ALSO LOOKING AT THE FACILITATION OF VISAS: A SANITISED IMMIGRATION OFFICER WOULD VISIT TAIPEI SHORTLY.
HONG KONG
7.
WENSLEY SAID THAT OUR VIEWS WOULD BE OF PARTICULAR INTEREST BECAUSE OF THE POLICY REVIEW THE AUSTRALIANS WERE CONDUCTING. THE AUSTRALIAN PROGNOSIS HAD BECOME MORE GLOOMY SINCE TIANANMEN. MCLAREN SAID THAT THE JUNE 1989 EVENTS HAD CERTAINLY MADE THINGS MORE DIFFICULT. THEY HAD INCREASED FEARS ABOUT 1997 AMONG HONG KONG PEOPLE WHILE THE POPULAR REACTIONS IN HONG KONG TO TIANANMEN SQUARE DEMONSTRATIONS AND FINANCIAL ASSISTANCE HAD LED TO GREATER SUSPICION OF HONG KONG AMONGST CHINESE LEADERS. HOWEVER, THE CHINESE HAD REAFFIRMED THEIR COMMITMENT TO THE JOINT DECLARATION AND IT REMAINED VERY MUCH IN CHINA'S INTEREST TO SEE
PAGE
2
CONFIDENTIAL