RESTRICTED
HKC 181/22
20
116254
MDHOAN 7652
RESTRICTED
FM FCO
TO DESKBY 24010OZ JAKARTA
TELNO 309
OF 231645Z JULY 91
AND TO DESKBY 24010OZ HONG KONG, BTC HONG KONG
31
BTC HONG KONG FOR CARRICK HOMC
YOUR TELNO 454 : UK/INDONESIA BILATERAL AGREEMENTS
كت
24/7
1. ALTHOUGH IT HAS BEEN THE LONGSTANDING POLICY OF HMG TO PURSUE AIR SERVICES AGREEMENTS SUI GENERIS, WE ACCEPT THERE MAY BE DE FACTO LINKAGE IN THIS CASE. THE QUESTION REMAINS AS
TO HOW WE USE THIS TO OUR BEST ADVANTAGE AND IN THE LEAST RISKY MANNER. WE DO NOT THINK YOUR TACTICS IN THIS PARTICULAR CASE WILL PRODUCE THE BEST RESULT. IT SEEMS TO US THAT USING THE INDONESIAN DESIRE FOR A HONG KONG/INDONESIAN ASA TO LEVER PROGRESS ON THE OTHER TWO STALLED AGREEMENTS, BEFORE THE ASA IS IN THE BAG, RISKS JEOPARDISING ALL THREE. A STAND OFF NOW, FOR EXAMPLE, ON THE DOUBLE TAXATION AGREEMENT (DTA) WILL RENDER THE SEPTEMBER ASA TALKS FRUITLESS. YOU DISAGREE, BUT THE POSSIBILITY CANNOT BE DISCOUNTED. ON THE OTHER HAND, WE BELIEVE THAT PURSUING THE ASA TO ITS EXPECTED CONCLUSION IN
SEPTEMBER PRESENTS NO SUCH RISK. IF THE INDONESIANS AGREE A WORDING ON TERRITORY FOR THE ASA, THEN WE WILL HAVE GAINED A LEVER FOR THE OTHER TWO AGREEMENTS AT MINIMAL COST TO OURSELVES. PROGRESS ON THE OTHER TWO AGREEMENTS WILL HAVE BEEN DELAYED, BUT THEY HAVE WAITED FIVE YEARS, AND CAN WAIT ANOTHER SIX WEEKS OR SO. IF NO AGREEMENT IS REACHED, AT WORST WE WILL HAVE ACHIEVED STANDSTILL. AND IN SUCH A SITUATION
WILL NEED TO CONSIDER OUR OPTIONS FURTHER (PARA 3 OF OUR
TELNO 307).
2.
AS
YOUR ARGUMENT MAY FURTHERMORE BE FOUNDED ON THE ASSUMPTION THAT ALL THREE AGREEMENTS ARE OF EQUAL IMPORTANCE. WE DO NOT BELIEVE THIS TO BE SO. THERE IS CONSIDERABLE
PRESSURE ON BOTH SIDES FOR AN EARLY CONCLUSION OF THE ASA. WELL AS THE IMMEDIATE AND LONG TERM COMMERCIAL IMPORTANCE OF THE DEAL, THERE IS ALSO THE WIDER POLITICAL IMPORTANCE TO HMG OF A SUCCESSFUL PROSECUTION OF THE ASA SEPARATION PROGRAMME ON BEHALF OF HONG KONG. OF THE HONG KONG ASAS CURRENTLY UNDER NEGOTIATION, THE HK/INDONESIA ASA HAS THE BEST CHANCE OF BEING BROUGHT TO AN EARLY CONCLUSION, AND WE MUST NOT WEAKEN THAT
1
PAGE
RESTRICTED