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[LORD HENLEY] possible. It is still necessary to resolve some of the financing issues with the Chinese and we hope that that can be done so that the airport can be ready on time.

Finally, perhaps I may reiterate that we believe that there will be a good deal of water flowing under the bridge between now and 1997. However, I stress that it is not only in our own interests that those matters are resolved but also in the interests of the Chinese and of the people of Hong Kong.

4.55 p.m.

Lord Callaghan of Cardiff: My Lords, there can be no doubt that the Government have had a difficult hand to play ever since the signing of the Sino-British agreement. However, I cannot congratulate them on the way that they have played it. The old saying is, "You should speak softly and carry a big stick". That is fine, but one should not speak loudly if one has no stick. I fear that the Government have got themselves into a cul-de-sac because they have totally misunderstood the basis of negotiations with the Chinese Government, who are not a democratic government. They do not therefore accept the normal canons of behaviour that we in this country, or indeed in the western world generally, accept. The Government have got themselves into a cul-de-sac; they cannot now satisfy the people of Hong Kong completely, and we are now endangering our long term relations with China. It is attïble example of ineptitude.

When I went to Beijing in May, I had a long talk with President Jiang Ze Min. On my return I reported fully to the Prime Minister on what I thought the position was. I told President Jiang Ze Min that I believed that the British Government were negotiating in good faith and wished to come to an agreement but that it was quite obvious from the difference between us that there would have to be a compromise in the view that we were expressing. I am not privy to any secret discussions; we all know that secret discussions about which we know nothing take place nowadays. However, on public ground no compromise has been made that the Chinese could accept.

They are not a democratic Government. If they were, we should be starting from a different basis. However, they believe that the proposals which the Governor of Hong Kong has made-I believe that he has been the guiding spirit, and much responsibility rests upon him--have stretched the spirit, if not the letter, of the agreement to the uttermost, and the string will stand no more. They believe that the British have been seeking to-I shall not continue. I have taken up my time.

I simply say this to the Government. The Government have no particular strength on this matter. They are building on sand at present. They should recognise their weakness and begin to negotiate on the basis of reaching a settlement.

Lord Henley: My Lords, I respond briefly to the noble Lord, for whom I have the utmost respect. As I believe the noble Lord admitted, the negotiations are very difficult. We negotiate from very different positions of strength. I have to say to the noble Lord that

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there has been considerable compromise by Her Majesty's Government throughout the many negotia- tions which have been held; and there will be many more negotiations. I reject his criticisms of our attempts to negotiate. There have been many meetings. I stress that there have been compromises by Her Majesty's Government. We would obviously be prepared to consider any further proposals by the Chinese Government.

However, it is important at this stage that we go ahead on this particular front. We intend to do so. We have offered further meetings; and certainly further Chinese meetings have been offered with the Government later this month.

Lord Geddes: My Lords, I welcome the Statement from the Minister on two counts, first, that a Statement has been made, and, secondly, certainly from the British side, that talks are to resume. To my knowledge exactly a year ago bar two days this House had a quite significant debate on exactly this subject. There were many speeches from noble Lords of enormous eminence who warned Her Majesty's Government that they must take this matter very carefully indeed. In that context, I agree almost wholeheartedly with the comments of the noble Lord, Lord Callaghan.

Her Majesty's Government have got themselves into a cul-de-sac. Perhaps I may instance briefly one example thereof. I refer to the statement, if I heard it correctly, about not only pursuing the single seat-single-vote system but that Her Majesty's Government had thought that the limited proposals were uncontroversial with China. By definition, the single seat-single vote system is not acceptable to China, not least on the criterion of the through train. They have said that consistently. I urge the Government, please, to take on board that one has to negotiate with the Chinese in the way that the Chinese accept, and not as Westminster accepts, which the Chinese simply do not understand.

Lord Henley: My Lords, my noble friend is quite correct in that we thought that some of our proposals were largely uncontroversial in Hong Kong. We also thought that some of them were largely uncontroversial in China. I have to say to my noble friend that we were able to reach a common view in talks on a number of matters. As I said to the noble Lord, Lord Callaghan, talks will certainly continue, and we have proposed a further round of talks in December. We will keep our door open and be prepared to continue discussions with the Chinese Government for the benefit of the future of the Chinese Government, ourselves and the people of Hong Kong. I certainly take note of what my noble friend had to say, with his great experience of the Far East, and I am sure that my right honourable friend the Foreign Secretary will take it on board.

Lord Marsh: My Lords, is the noble Lord aware that since negotiations in this round began, there have throughout been voices which warned the Government of the impossibility of achieving results on the stand which they were taking? There is a division between the business community and the government, or a large section of it. Sir Percy Cradock and virtually every other

402 LD79/20 Job 3-7

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