SECRET
064010 M AN 8345*
CHINESE SOURCES WERE QUOTED AS SAYING THAT THE AGREEMENT COULD BE CHANGED, BUT THAT THERE WAS NO QUESTION OF FURTHER CONCESSIONS ON THE FIRST POINT.
3.
ON THE TALKS, CHINESE SOURCES DESCRIBED THE LATEST ROUND AS QUOTE BACKPEDDLING UNQUOTE BY THE BRITISH SIDE. THE TWO SIDES HAD NOT AGREED ON THE BROAD PRINCIPLES ON CONSULTATION. WHILE THE BRITISH SIDE HAS AFFIRMED THE NEED FOR IT IN AN ABSTRACT WAY, THEY HAD DENIED IT IN SUBSTANCE. THE BRITISH SIDE HAD QUOTE RENEGED UNQUOTE ON THE SECRETARY OF STATE'S OFFER OF SETTING ASIDE AN AMOUNT OF RESERVES FOR THE SAR. THEY NOW DEMANDED NEW CONDITIONS, INCLUDING NEEDING TO RAISE DOLLARS 10 BILLION IN LOANS. . ALTHOUGH NONE OF THE FOUR OPTIONS PREVIOUSLY PUT TO THE CHINESE INVOLVED BORROWING, THE BRITISH SIDE WERE NOW SAYING IT WAS NECESSARY. PEOPLE SHOULD HOLD NO ILLUSIONS ABOUT THE AMOUNT OF THE ACCUMULATED EARNINGS OF THE EXCHANGE FUND.
THE SOURCES CLAIMED THAT THE CHINESE HAD TWO BASIC
PRINCIPLES DURING THE TALKS:
4.
THE CHINESE DID NOT INTEND TO ASK QUESTIONS ABOUT WORK AND
FINANCIAL ARRANGEMENTS OF THE AIRPORT BEFORE 1997: AND
ANY AIRPORT WORKS OR IMPORTANT ISSUES STRADDLING 1997
AND REQUIRING THE FUTURE SAR GOVERNMENT TO SHOULDER RESPONSIBILITIES AND OBLIGATIONS MUST BE RESOLVED WITH
THE CHINESE THROUGH CONSULTATIONS.
ALTHOUGH THE CHINESE HAD MADE MANY CONCESSIONS, THE BRITISH HAD NOT, BUT KEPT CHANGING THEIR MINDS AND MOVING BACKWARDS.
5. WE DO NOT THINK THAT THESE DISTORTIONS OF THE POSITION SHOULD GO UNANSWERED. WE ARE UNDER CONSIDERABLE MEDIA AND POLITICAL PRESSURE TO SET THE RECORD STRAIGHT. WE THEREFORE PROPOSE THAT EHRMAN AND MACLEOD BRIEF A LIMITED NUMBER OF MORE RELIABLE JOURNALISTS TOMORROW, ON A BACKGROUND BASIS, REBUTTING THE POINTS IN AN UNEMOTIONAL WAY ALONG THE LIENS OF MIFT.
GRATEFUL IF YOU WOULD CONFIRM THAT YOU HAVE NO OBJECTION TO THIS PROPOSAL DESKBY 25233OZ.
6.
WILSON